Health and Sustainable Agriculture
Editor: Christine Jakobsson
Sustainable Agriculture
1
Agricultural Cooperation
From Past to Present
Svetlana Golovina
Kurgan State Agricultural Academy , Kurgan, Russia
Cooperative practices in Russia have a history of more than a century. New forms of collective activity in the spheres of manufacturing, services and living conditions have been generated because of the necessity to over- come the difficulties caused by a severe climate, features of agricultural production, and extreme economic, politi- cal and social conditions. The development of coopera- tive societies in Russian agriculture usually accelerated during periods when the production was individualised, i.e. at the end of the 19th and the start of the 20th cen- tury (Stolypin reform), within the NEP (New Economic Policy) years (the 1920s) and during the last reform (from the end of the 1980s).
Experience of cooperation of people has been collected through centuries. Obshina (village community), artel, skladchina and mutual aid are among pre-cooperative
1 Artel (from the Tatar orta = community, ortak = common). A small voluntary association of individuals who come together for a limited or indefinite period for the purpose of performing some economic activ- ity. The members of an artel donate labor, tools, and even capital and divide the profits according to the amount and quality of the labor they contribute.
2 “Skladchina,” from the verb “skladivat,” (collect) which means to put something in common.
forms of collective action in Russia. The origin of the first true cooperative societies is connected with such impor- tant circumstances as cancelling serfdom (1861) and the advent of legally free peasants. The development of the cooperative movement during the last decade of the 19th century was caused by the growth of industry, banking and trade and expansion of commodity-money relations in villages (Podgorbunskih and Golovina, 2005).
The number of cooperatives in Russia in 1914 reached 32,975, including credit cooperatives (13,839), consumer cooperatives (10,000), agricultural cooperatives (8,576), re- pair cooperatives (500) and others (60). The number of co- operatives in Russia was only exceeded in one other coun- try, Germany. During the next years Russia was foremost in the world regarding cooperative development; in 1916, cooperative societies numbered 47,000 (Table 57.1).
The October Revolution brought significant amend- ments to the evolution of cooperation; after land nation- alisation, production cooperation was strongly supported by government. Up to 1919 the agricultural communes, in which land and all means of production were social- ised and distribution of income carried out equally per head, were the basic economic form of cooperatives.
CASE STUDY Russia
57
CASE STUDY Russia
The purpose of the NEP was to restore agriculture by means of cooperation. It included a number of measures contributing to a transition from command methods of management to economic, which promoted cooperative practices in Russia (Table 57.2).
However, towards the end of the 1920s the curtail- ment of the NEP policy and complete collectivisation radically changed traditional methods of managing and organisation forms of agricultural production. Collective farms became the basic model for agricultural collective organisations. Other forms of cooperation existing earlier in agriculture were gradually liquidated.
The new stage in cooperative development has come since the second half of the 1980s. The government has recognised the necessity for small producer systems, which could adapt to changes in consumer demand more quickly and more flexibly, satisfy the needs in small-scale production and a wide range of services more operatively and qualitatively, and make better use of labour resources.
The result was the law ‘About cooperation in the USSR’
in 1988.
Now a legal basis for agricultural cooperatives is con- stituted by the law ‘About consumer cooperatives (con- sumer societies and unions) in the Russian Federation’
(1992), clause 116 of the first part of the Civil Code of the Russian Federation (1994) and the Law of the Russian Federation ‘About agricultural cooperation’ (1995).
According to this legislation, the cooperative sector of the Russian economy includes production and consumer cooperative societies (Figure 57.1).
Agricultural production cooperatives are commercial organisations uniting citizens for agricultural production within uniform enterprises. The members of the coopera- tive pool a part of their property or financial resources.
The cooperative can cultivate the land, which: 1) is brought by its members in share funds; 2) is transferred to it in rent; or 3) is redeemed by the cooperative society.
In the first and third cases the land becomes the property of the cooperative. The members of the cooperative are
Table 57.1. Development of Russian cooperation in the beginning of the 20th century, number of cooperatives (Podgorbunskih and Golovina, 2005).
Type of cooperatives 1901 1917 Growth (times) Credit cooperatives 837 16,055 19 Consumer societies 600 20,000 33 Agricultural societies 137 6,032 44
Agricultural artels - 2,100 -
Butter-making artels 51 3,000 59 Handicraft and other artels - 600 -
Total 1,625 47,787 29
Table 57.2. Number of Russian cooperatives in 1922-1925 (thousands).
(Results of Soviet Authority Decades in Figures: 1917-1927, pp. 419- 423).
Types of cooperatives 1922 1923 1924 1925
Consumer cooperatives 22.0 17.8 21.1 24.5
Industrial producer coopera-
tive 17.2 7.4 7.7 13.2
Agricultural cooperatives 22.0 31.2 37.9 54.8 including:
communes 1.9 1.8 1.5 1.8
artels 8.4 6.8 7.4 8.8
joint cultivation of land (TOZ) 5.0 5.3 4.6 4.6 Agricultural subsidiary – pro-
duction cooperatives 1.8 2.4 3.0 9.1
Association in agricultural production processing and
marketing 4.7 4.3 4.3 8.6
Universal agricultural associa-
tion 7.0 10.4 17.0 21.9
Total 135.9 73.5 91.0 132.1
Figure 57.1. Classification of cooperative organisations in the Russian Federation.
Production Cooperation
Consumer Cooperation
Production cooperatives Agricultural production cooperatives
Consumer societies Agricultural consumer cooperatives Consumer credit cooperatives of citizens Consumer building and loan cooperatives
obliged to contribute their labour in the production. The income of the cooperative society is distributed according to labour contributions of its members.
Agricultural consumer cooperatives are non-commer- cial organisations of people who own small individual farms, peasant farms and legal entities for agricultural product processing and realisation, supplying resources and rendering services.
Agricultural commodity producers can create different kinds of agricultural consumer cooperatives: processing, marketing, servicing, supplying, insurance and credit co- operatives:
• Processing cooperatives engaged in agricultural pro- duction (manufacture of meat, fish, dairy products, bakery products, vegetable, fruit and berry products)
• Marketing cooperatives carrying out sales of products and also the storage, sorting, drying, washing, pack- aging, packing and transportation of such products
• Service cooperatives performing ameliorative, trans- port, repair and building activities, veterinary services and breeding, work on application of fertilisers and plant protection, consulting and auditor activities
• Supply cooperatives organised for purchasing means of production, fertilisers, feed, mineral oil, spare parts, and other goods which are necessary for agri- cultural and raw material production
• Insurance cooperatives carrying out various sorts of service such as personal and medical insurance, insur- ance of crops, property and land
• Credit cooperatives carrying out consumer lending and savings of members’ money resources.
Table 57.3. Number of agricultural consumer cooperatives (The report of Minister of Agriculture of Russian Federation November 27th, 2007, http://www.mcx.ru/index.html?he_id=981&news_id=3981&n_page=1).
The national project ‘Development of APK’ and other state programmes initiate the formation of coopera- tive societies of a vertical type in domestic agriculture.
However, many newly established cooperatives do not function in reality (Table 57.3).
The establishment of new cooperatives runs very unevenly in various parts of the Russian Federation.
Moreover, the dynamics of the creation of processing and marketing cooperative societies differ significantly.
According to the last census, the basic kinds of services for owners of individual farms and peasant farms are pro- vided by individual businesses and corporations, and the main sales channel for agricultural products is the collec- tive-farm market, i.e. small markets where farmers sell their produce themselves (Table 57.4).
Types of cooperatives 01.01.2006 According to National
Project (plan) Created according to
National project * Share of working cooperatives in total quantity
Agricultural consumer cooperatives, total 776 2,550 3,576 55.7
including: credit cooperatives 511 1,000 1,075 66.8
processing cooperatives 121 550 689 43.0
supply and sales cooperatives 144 1,000 1,812 53.7
* - during 2006 and 10 months of 2007.
Table 57.4. Functioning of consumer cooperatives and collective- farm markets in different federal regions of the Russian Federation (Information Bulletin of Minister of Agriculture of Russian Federation, No 11-12, 2006).
Federal region Number of mar-
kets
Number of coopera-
tives
Share of coop- eratives in total number of mar-
kets, %
Central 1228 185 15.1
Northwestern 344 18 5.2
South 813 113 13.9
Prevolga 1022 271 26.5
Ural 254 40 15.7
Siberia 745 183 24.6
Far East 306 13 4.2
Russian
Federation 4712 823 17.5
Although both the government and agricultural pro- ducers have realised the necessity for collective action in the stages before and after farm production, some factors interfere with the development of cooperative societies in Russia (Golovina, 2007):
• Cooperation was discredited during the Soviet period and through the first years of the last reform and, as a consequence, most agricultural manufacturers have a negative attitude to it
• Individual farmers and other small producers have no experience of collective action, its organisation and management
• Formal and informal institutional conditions for coop- eratives are created very slowly
• The cooperative movement develops too slowly and the production of more profitable and less risky value- added products are monopolised by investor-orientated firms with capital that originates from outside agricul- ture. The owners of these firms are not concerned about the problems of the village and rural communities.
However, the government is concerned about the de- struction of agricultural production and the degradation of rural territories. It has realised the necessity for col- lective structures which work in the interests of agricul- tural producers. The process of cooperative formation is initiated by the development and realisation of particu- lar programmes. Special institutional structures in the Ministry of Agriculture and the regional departments have been created. Nevertheless, the implementation of projects resembles the former administrative procedures (with plans and reports), and it has not yet been realised that cooperative societies created in this way are doomed to a short life. The top-down procedure for establishing cooperatives leads to low involvement from the side of the farmers, but on the other hand, this procedure helps to accelerate the process of cooperative establishments.
World history shows that viable cooperative socie- ties should be created only by certain types of producers;
namely producers motivated to agricultural production;
well informed on procedures of the establishment of coop- erative societies and cooperative principles; trusting other potential members of the cooperative and prepared to be involved in cooperative activity. In Russia, most farmers,
with few exceptions, consider agriculture only as a tempo- rary means of survival. Many land owners do not accept cooperation as a way to solve difficulties with deliveries and sales of products and provision of services. Due to economic and social instability, fellow villagers distrust not only government and local authorities, but also neigh- bours and potential partners. Moreover, the demographic situation of the village, meaning the ageing of the rural population, is not conducive to cooperative development.
The future of agricultural cooperation depends in many respects on which organisational models are created for the cooperatives (Nilsson, 1998). An analysis of the co- operative legislation in Russia and the bylaws developed by the new cooperatives indicates that the internal organi- sation of the traditional cooperative model is not suitable when modern market strategies are to be introduced and implemented. In such a situation a traditional coopera- tive society is doomed to be inefficient. The members get weak incentives to invest, poor motivation to participate in the cooperative’s activities and in the management, and difficulties in attracting professional managers; moreover problems may arise due to vaguely specified property rights. To avoid waste of resources, time and effort, it is necessary to find the shortest way to create ‘new gen- eration cooperatives’ (Cook, 1995), which are ready to compete with other organisational forms and which have the potential for effective business and performance of the important social functions. The main attributes of this cooperative model are open membership, tradable deliv- ery rights, differential voting power, individualised own- ership and top-qualified leadership.
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