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Aspects of Soviet rural development
ASPECTS OF SOVIET RURAL DEVELOPMENT*
ROBERT C. STUART Associate Professor of Economics. Douglass College, Rutgers University, New Brunswick, New Jersey 08903, USA
(Received: 20 February, 1975) INTRODUCTION
In recent years, Soviet researchers have devoted increasing attention to the broad question of how the rural sector of the Soviet economy should develop as the economy matures. Although this subject has been viewed from a wide range of differing perspectives in a substantial volume of literature, a persistent theme has been the desirability of state transformation of agriculture to an essentially industrial base to substantially lessen rural-urban differentials in levels of living and to raise the efficiency of agricultural production. Such a pattern of Soviet agricultural development is seen by Soviet authors as in harmony with, and indeed essential for achieving, an advanced level of economic development in the Soviet Union. First, from an ideological standpoint,‘the ‘industrialisation’ of agriculture is to alter the character of life and work in Soviet rural areas, gradually raising peasants to working class status and transforming Kolkhoz-cooperative property to state property. For a general discussion of this subject see, for example, Semin.’ The legal point of view is expressed by Pavlov.2 Second, such a pattern of development recognises a new role for the agricultural sector appropriate for a higher stage of Soviet economic development. This role implies overt subsidisation of agriculture by th? state, especially in the form of capital inputs. (Soviet observers view this as a reversal of past policy appropriate to lower levels qf economic development, namely transfer of product out of agriculture at relatively low prices along with labour outflow, both to underwrite the industrialisation effort. See, for example, the discussion in Chapter 3 of the work of * This research was in part financed by a ‘grant from the Ford-Rockefeller Foundations Program in Support of Social Science and Legal Research on Population Policy and The Rutgers University Research Council. The views expressed are those of the author.
165 Agricultural Administration Printed in Great Britain
(2) (1973-43
Applied Science Publishers Ltd, England, 1975
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Semin.‘) Further, it implies productivity gains through better input usage and substitution, especially capital for labour as the latter becomes relatively more scarce.in rural areas. In addition, it is hoped that the rapid outflow of labour from rural areas can be slowed down, seasonal imbalances in rural labour utilisation lessened and younger, more qualified, persons retained in the rural sector by income and career incentives. Finally, the industralisation of Soviet agriculture is designed to significantly expand the rural infrastructure, storage facilities, transportation networks and so on. Thus agriculture is to become more capital intensive, producing a more highly processed product which must be made readily available to the dominant urban community, (Soviet authors have noted that over time an increasing share of agricultural output requires some degree of industrial processing before distribution. See, for example, Ambartsumov. 3, Soviet planners have discussed, and in some cases implemented, partially or fully, a number of measures appropriate to the sort of agricultural transformation outlined above. For example, in an effort to raise participation and improve the level of rural living, incomes have been increased substantially in recent years. (For evidence on this question, see Bronson and Krueger;4 on rural-urban differentials see Matthews.‘) In addition, an effort has been made to bring the amenities of urban life to rural areas and thus attempt to stem the rapid outflow of population from rural to urban areas. (On standards of living see Matthews5 (pp. 64-70) and on the extent of rural-urban migration see Stuart and Gregory.6) A much discussed and controversial scheme to make the village attractive has been the Agrogorod, a major effort to transform the structure and style of Soviet rural settlement. (For a discussion of the Agrogorod scheme originally proposed by Khrushchev see Wadekin.‘) Organisational change has always been viewed as an important mechanism for adjustment of the Soviet economic structure. Historically, Soviet agricultural production has been organised in state farms (Soukhozy), collective farms (Kolkhozy) and in the subsidiary private sector attached to both. The state farms are state-owned organisations operating fully within the planning apparatus in a fashion similar to industrial enterprises. The collective farms, on the other hand, are in theory a cooperative form of organisation differing from the state enterprises in terms of both organisation and operation. In recent years, however, there have been substantial changes in the collective farm as a rural production organisation.8 At the same time; there has been a continuing pattern of downgrading the role of the Kolkhoz vis-a-vis the Sovkhoz.g One aspect of the Soviet transformation of the rural sector which has received only limited attention is the injection of industry. The development of industrial facilities in concert with agricultural production facilities has been advocated by Soviet economists as an important means by which the rural sector will in general be transformed to an industrial base while at the same time lessening such problems as the sharp seasonal imbalance in rural labour utilisation.
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The purpose of this paper is therefore to examine, within the broad context of the nature, impact and development of Soviet agricultural transformation, industrial activity in Soviet rural areas. (As we shall see, there are a large number of activities in rural areas which, in one way or another, could be classified as industrial. In this paper we focus upon inter-Kolkhoz organisations, subsidiary enterprises of both Kolkhozy and Sovkhozy and more grandiose agro-industrial complexes. Our definition of rural industrial activity is, therefore, very broad.) We begin with a discussion of the manner in which rural industry has been. organised and developed. Further, we attempt to assess the importance of this activity, and, finally, to consider both the positive and negative aspects of its role in the Soviet rural sector.
THE
NATURE
OF SOVIET
RURAL
INDUSTRY
The development of industrial activity in conjunction with agricultural production, and especially on an inter-farm basis, is not a recent development in the Soviet countryside. Discussion of this subject dates from the 193Os, a time when considerable numbers of small enterprises were established. (In 1927 Kolkhozy of the RSRSR had 1500 small industrial enterprises; their number expanded to 4227 by 1929. The pressure, however, was to develop collective farms, and little was done to develop the food industry per se. See Morzov.“) In recent years, however, substantial differences have been appearing not only in the nature of subsidiary industrial activity but also in the scale on which it is to be developed and the goals which it is to fulfil in the future development of the rural sector. Soviet rural but non-agricultural activity (such as electricity generation, food processing, marketing and so on) is difficult to classify in any systematic and useful fashion. Indeed, Soviet authors typically do not agree on any single pattern of classification. As a preliminary approach, however, it is useful to distinguish between: (1) inter-Kolkhoz activity (organisations and/or contractual arrangements) and (2) Kolkhoz and/or Sovkhoz subsidiary industrial activity. The inter-Kolkhoz organisation, although not necessarily purely industrial in character, has expanded in importance in recent years. Historically, the interKolkhoz organisation has been associated with forms of activity not feasibly (or well) carried out within a single farm, for example the generation of electricity. The inter-Kolkhoz form of organisation has long been integrated into Kolkhoz law (see, for example, the discussion in a number of sections of Pavlov’ ‘) and, in recent years, has been involved in a much broader range of activities including materials production, processing, marketing, etc. (The post-war development of inter-Kolkhoz organisations is discussed by Beliaev. r ‘) A second type of industrial production activity is the small factory;typically operated on a seasonal basis as labour is available. These sorts of enterprises may be operated on both state and
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collective farms typically involved with such activities as manufacturing of bricks, ~_ production of flour, processed foods and so on. The most complex and potentially most interesting form of rural industrial activity is the agro-industrial complex. As we shall see, this expression covers a considerable variety of organisational types and arrangements. In recent years, however, the emphasis has been on industrial-type processing and the preparation of agricultural products for urban markets. Typically a large vertically and/or horizontally integrated arrangement is involved. For example, a large sugar beet processing factory may be located amongst a group of specialised Kolkhozy and Sovkhozy (producing sugar beets) and obtaining labour from a nearby village of a city type. While Soviet authors seem to agree that the agro-industrial complex is the appropriate path for further development of Soviet agricultural production, there is considerably less agreement over the precise organisational arrangements to be utilised, let alone rules of operation. In the sections which follow, we attempt to analyse the impact of various forms of rural industrial activity and, in addition, to outline the problems and prospects of this type of activity.
THE
IMPACT
OF SOVIET
RURAL
INDUSTRY
To assess the impact of Soviet rural industry, we focus upon two questions: How important is rural industry in its various forms and how much has it contributed to improved utilisation of labour resources in rural areas? (Many possible indicators might be used to assess the impact of rural industry. The attempt here is preliminary and in particular leaves for a separate study the important question of changing rural levels of living.) What major problems have arisen in the introduction and operation of industrial-type production in Soviet rural areas? In carrying out this investigation we use indicators substantially on the grounds of data being available. Thus we focus upon the number and organisation of rural enterprises, input and output patterns and so on. In doing so, we set aside at this stage the possibility of a broader cost-benefit type of analysis, a decision which in fact reflects a Soviet dilemma since most Soviet rural production organisations of an industrial type are designed to achieve multiple goals-more product, better utilisation of labour resources, profitability, and so on. However, the Soviet literature reflects the difficulty of ordering the priorities and especially the extent to which possible small scale unprofitable rural industry should be compared with similar but profitable urban large scale industry. Finally, the available data on Soviet rural industry is at best fragmentary. We must, therefore, settle for a partial picture. Let us consider first inter-farm (typically inter-Kolkhoz) cooperation. This cooperation may be by means of a legal contractual arrangement, or it may as an
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example be by means of an inter-Kolkhoz type of organisation. These organisations are typically utilised for seasonal activity and where scaleeconomies are important. Thus a number of Kolkhozy will supply labour and t%rm a basically permanent unit handling construction activity in member Kolkhozy. Management of the construction brigade is typically handled by a consortium of the Kolkhoz chairmen. As we have already noted, the number of such organisations has expanded significantly in recent years. Indeed between 1960 and 1970 the number of such organisations grew from 3095 to 4255 while during the same period the number of Kolkhozy declined from 43,981 to 33,044. (Narodnoe khoziaistvo SSR Moskva: Statistika selected years. Note that while the number of Kolkhozy declined quite sharply during these (and indeed previous) years, their importance in the rural sector declined rather more slowly. See Stuart.‘) In addition to expansion in the number of inter-Kolkhoz organisations, their activities have changed. While activities of the early years of inter-Kolkhoz organisations, for example construction, still predominate, they are now increasingly involved in forage production, forestry activity, processing of poultry, factories for the processing of agriculture products, services such as rest homes and so on. (See, for example, the breakdown by region and function given in references 13 and 14.) Regional differentials are important. In 1970, for example, in Belorussia 126 of 128 inter-Kolkhoz organisations were involved in construction activity. In Kazakhstan, for the same year 48 out of 50 inter-Kolkhoz organisations were in construction, while in Moldavia, construction accounted for only 32 out of 114 such organisations. It seems fair to generalise that, apart from the RSFSR, the Ukraine and possibly Georgia, expansion of inter-Kolkhoz organisations in spheres of activity other than construction has been limited. (It is interesting to note that in 1970, of 10.7 million rubles granted as long term credit by Gosbank to Kolkhozy to develop subsidiary enterprises, the RSFSR, Ukraine and Georgia together accounted for 9.2 million rubles, or almost 86%. See reference 15.) Although there is no systematic data on contractual ties, one might expect them to have increased in importance, especially given recent Soviet emphasis upon direct connections between producer and user-a matter discussed further in a subsequent section. Selected characteristics of inter-Kolkhoz cooperation are summarised in Table 1. A second and possibly more significant pattern of rural development is the creation of a specifically industrial base in conjunction with Kolkhozy and/or Sovkhozy. Such an operation may serve to produce inputs for agriculture, for example fertiliser, or to produce agricultural (food) products, typically involving the industrial processing of basically agricultural produce. The latter category has expanded in importance in recent years. (Soviet authors note that, over time, an increasing share of Soviet agricultural output is, in fact, processed in some fashion prior to utilisation. See, for example, Ambartsumov.’ 6, The organisational format of this agro-industrial cooperation varies widely and hence classification is difficult. For example, a state or collective farm may have a
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TABLE CHARACTERISTICS
Year
Number of Kolkhozy
1
OF INTER-KOLKHOZ COOPERATION (SELECTED YEARS)
. Number -_... of Inter-bollchoz
IN THE. USSR
organis-‘:-..J arl”nS an” enterprrses
N;$k:o;f shareholders
1950
121,353
n.a.
n.a.
1956 1958 1960
83,021 :z%;’
1,187 349 3,095
1962 1964 1965 1968 1970 1972
39:733 37,616 36,276 35,600 33,044 31,611
3,431 3,104 3,355 4,186 4,554 5,068
n.a. 3%5 421680 46,281 47,296 y; 67:813
Money income of subsidiary enterprises as a portion of Kolkhoz money income (%) 10.3 :I:6 6.70 2:; 4.5 n.a. n.a. n.a.
Sources: Narodnoe khoziaistvo SSSR, Moskva: Statistika. Selected years, Sel’skoe khoziaisrvo SSSR, Moskva: Statistika (1960) pp. 51 and 64. n.a.-not available.
factory (zauod) for the single purpose of processing some of the farm output. In this case, the manager of the farm will most probably serve as the manager of the factory. (This arrangement is encouraged by many Soviet observers on the grounds that it minimises the proportion of personnel involved in the administrative functidn. A saving of 15-17 % in the size of the administrative apparatus has been suggested. See Rymarenko and Vasilenko. ” For a more detailed picture of industrial capacity in Kolkhozy in 1971, see Kahan. ’ *) A greater degree of horizontal and vertical integration is attained by the &o-industrial complex-in a sense, a territorial type of organisation combining the farm, processing and other functions. Vertical integration, that is uniting vertical stages in the production process, including product distribution, is emphasised in the Agro-Zndustriul Kombinat. Finally, the agro-industrial ob’edinenie is a broad-based, self-managed combine producing farm products but also maintaining storage, sales activities and so on. Such a classification is substantially arbitrary and indeed is the subject of ongoing debate in the relevant Soviet literature (see, for example, the comprehensive discussion in Lozna19). However, the absence of formal classification is of little importance, except in the sense that the interpretation of aggregative data, that is when appraising different organisational forms, is very difficult. There is, however, a great deal of emphasis upon the need for local initiative and the resolution of peculiarly local problems. (Most authors stress the importance of local factors and indeed the widely varying organisational forms found in practice bear out this emphasis. See for example, Medvedev2’ and Morzov.’ ‘) In this sense, the prevailing pattern of industrial activity is more a function of diverse forces operating over a relatively long period of time rather than the execution of a specific decree.
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RURAL
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In recent years, however, decrees have encouraged the development of industrial activity in rural areas and especially have noted difficulties in execution, a matter discussed later in this paper. Soviet authors, however, have emphasised the need to observe a number of important preconditions before industrial production activity is developed. (See, for example, Pavlenko22 and Zem1ia‘nskii.23) Thus it is emphasised that rural industry must support and be integrated with, but not supplant, basic agricultural production. Labour must be available, and, in particular, material supplies must be available. Local conditions must be taken into account, and, for many, profitability must be achieved.24
THE
RELATIVE
IMPORTANCE
OF RURAL
INDUSTRIES
How important is the industry of Soviet rural areas? As we note from Table 1, the number of inter-Kolkhoz organisations and enterprises has grown quite substantially in the post-war period, as has the number of participating enterprises, although money income as a share of Kolkhoz money income has declined. These indications must be interpreted with caution. First, the declining number of Kolkhozy might well result in a greater concentration of inter-Kolkhoz organisations if one assumes that primarily weak farms were converted or amalgamated. (Weak collective farms would be much less likely to have substantial inter-farm connection.) Second, for the Kolkhoz sector, money accounting grew substantially in importance during this period. Thus, while the money income earned by subsidiary enterprises grew in absolute size this growth was swamped by the growth of Kolkhoz money income. (Other selected indicators tend to suggest growth for the inter-Kolkhoz organisations. For example, the volume of construction-repair work done by inter-Kolkhoz organisations increased from 407.6 million rubles in 1960 to 1749.1 million rubles in 1968. In 1968, these organisations were undertaking 39 % of capita1 construction work in Kolkhozy in the USSR as a whole, and substantially more than this in some republics. See Miftakhov.’ 5, Unfortunately no similar data are available for enterprises operated in conjunction with state farms. Some idea of their growing importance can, however, be obtained from the limited evidence presented in Table 2. Employment, as estimated here has risen quite substantially. Also, in some regions, there is evidence to suggest expansion, at least after a period of decline in the early 1960s. (On the declining importance of subsidiary enterprise in the 1960-1964 period see Solov’ev. ’ 6, In Belorussia, for example, between 1958 and 1967 the number of spirit factories on Sovkhozy increased from 28 to 54, and in 1966 were said to produce 50 % of the spirits produced in that republic at an average cost 8% below that achieved by similar factories operating under the Ministry of Food Industry (see references 26
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TABLE 2 CHARACTERISTTCS
Year
0F SUBSIDIARY
ENTERPRISES
Employment : average annual
1950 1960 1962 1964 1966 1968 1970 1972
0~ STATE FARMS
Number of enterprises: all types
137,000* 655,000 798,000 845,000 818,000 1,092,OOO 1,200,OOO 1,300,oOO
57,507
Sources: Narodnoe khoziaistvo SSSR. Moskva: Statistika (SelectedYears) Sel’skoe khoziaistvo SSSR, Moskva: Statistika, (1971) pp. 656-57. * Theseare estimatesonly, derived as the difference.between the average annual employment in state farms and subsidiary enterprisesand those engaged in agriculturai activities only.
(p. 7a) and 27). In Kazakhstan, after 1965, a substantial effort was made to expand brick production in Sovkhoz enterprises and with a substantial injection of funds from Gosbank.28 In 1962 the first agro-industrial combine was established in Central Asia on the basis of Sovkhozy and Kolkhozy and employing 9000 persons.” In the Russian republic, between 1966 and 1969 the number of subsidiary enterprises increased by 4500. 3O These are, however, limited examples, and most seem to pertain to industrialtype activities long existing in rural areas, for example, production of construction materials, construction activity and so on. Indeed one writer has suggested that in Moldavia, the inability to sell or properly process fresh fruit, grapes and vegetables results in losses of one hundred million rubles (measured in purchase prices) annually (see reference 26, p. 79). Such losses are not uncommon and can be found in many regions. What has happened to the output of subsidiary enterprises? The data in Table 3 suggest a mixed picture. In some areas of production (such as those traditionally existing, like wine), there has been growth. Production of vegetable preserves is TABLE 3 PRODUCTION OF NON-AGRICULTURAL IN KOLKHOZY AND SOVKHOZY
Product
Wine-Fruit and Berry (‘000 Dekalitres) Vegetables(preserved-‘000 tons) Bricks (millions) Lime (‘000 tons) Timber (millions of ms)
AND PROCESSED PRODUCTS (SELECTED YEARS)
1964
1967
1970
2,008 65.7 2526.2 381 16.3
2,981 39.8
4,490 55.1
3E76’8 16.2
‘E” 16.2
Sources: Data for 1964 and 1967 from A. Pronin,r4 (p. 48). Data for 1970from Sel’khoz-1970, pp. 658-9.
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RURAL
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less than in 1964 although with some growth in recent years. (In the RSFSR, agroindustrial complexes have been developed under the Ministry of Food Industry. In 197 1, under this Ministry, there were 59 fruit Sovkhozy of which 20 had processing capacity. In addition, under the same Ministry there were seven agrarianindustrial complexes with 3 1 factories, 18 Sovkhoz-factories and 34 specialised fruit Sovkhozy. See Rymarenko and Vasilenko. 3*) In terms of output performance, the injection of industrial-type production into rural areas, and especially into the more sophisticated areas such as food processing, must be considered at best a limited success. However, this picture may well change over time with a serious commitment by the state. Also, the publication of comprehensive data on this type of activity may change this preliminary assessment. (Although systematic data for these subsidiary enterprises were published in Sel’khoz-1970, there is little other data, and even in this case, output classifications frequently diverge from those used by other units, for example, the Ministry of Food Production. Thus it is very difficult to compute output shares of these subsidiary enterprises in any systematic fashion.) In terms of the significant question of improving the utilisation of rural labour, unfortunately the available data are such that only preliminary observations can be made. For collective farms, monthly participation data are available for most post-war years. To the extent that these data include all types of productive activity on collective farms, one might expect a reduction of seasonal differentials if subsidiary enterprises and inter-Kolkhoz activities are in fact helping to offset the seasonal imbalance. As one would expect, the absolute size of the collective farm labour force has been declining from approximately twenty-five million (annual average) in the 1950s to approximately sixteen million (annual average) in the early 1970s. (Data for selected years from 1953 through 1966 are available in the work of Reed3 ’ and data for 1970 are estimated .from Paskhaver. 3 ‘) However, the relative importance of the seasonal fluctuations remains great. In 1953, for example, participation of labour in collective farming varied from a high of approximately 32 million in July and August to a low of 18 million in January and February. In 1970, monthly participation fluctuated from a high of 21 million in July to a low of 12 million in December, January and February. (These sort of data should be interpreted with some care. In the present case, for example, a person working only one day in a given month will be counted as a full participant for that month. For a discussion of measurement problems, see Reed.32) Sef’khoz-1970 (p. 475) gives labour utilisation data (monthly by regions) for industrial enterprises of collective farms. It is striking that for the country as a whole, labour utilisation in industrial enterprises of Kolkhozy by months is very even throughout the year, suggesting little, if any, offset to the imbalance arising from agricultural activities per se. Indeed in a number of regions these enterprises demand greater labour inputs in the summer months, the period when demand by agriculture is itself at a peak.
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C. STUART
There is very little solid evidence on which to judge the importance of subsidiary enterprises in the sphere of labour utilisation. Participation rates in such enterprises in Kolkhozy have always been lower than in Sovkhozy. To the extent that Sovkhozy and related enterprises are growing in importance while there is an overall reduction of labour inputs to agriculture per se, then the magnitude of the problem will decline. (For a similar conclusion see Kahan’* (Appendix A, pp. 6-Q.) This is, however, a hazy conclusion and says little about the effectiveness of new forms of organisation in dovetailing seasonal labour needs. The long term goal of slowing down the outflow of rural labour by developing attractive rural career opportunities is even more questionable.
RURAL
INDUSTRY-PROBLEMS
AND
PROSPECTS
In terms of any reasonable time horizon the development of industrial and related forms of organisation in Soviet rural areas is in its infancy. If advanced Western economies can serve as an example, it is undoubtedly the mould in which Soviet agricultural production will be cast in the future. What sorts of problems have arisen thus far, and what sorts of solutions can we expect in the future? First, there is the very basic question as to the appropriate organisational form which rural industry is to assume, and the success criteria by. which it is to be judged. Soviet economists differ on the question of which organisational form is best, although most support the notion of regional differences (and hence local initiative) as being important. Some have argued, for example, that industrial type enterprises in rural areas must compete with and be judged by the criteria applied to similar enterprises located in urban areas. Thus many authors argue that rural enterprise should be profitable. (On the question of profitability see, for example, Proninz4 (page 47); for a more general discussion of criteria, see for example, Zamlainskiiz3 (pages 62-63)). On the other hand, others argue that such a,comparison is difficult since the suggested benefits of rural enterprise extend beyond any profitability calculus-fewer administrative personnel, better seasonal use of labour, reduction in the rapid outflow from rural areas of skilled labour, and so on. In the absence of agreement on these subjects, there have tended to be substantial regional differences not only in the extent and type of enterprise developed, but also in the performance levels achieved. (It is interesting to note that while many Soviet observers argue for better control and integration of the subsidiary enterprise into the state system (for example, material supplies), they stress the need for decisions to be taken locally. For a discussion of the need for local decision-making see, for example, Solov’ev26 (page 80), Medvedev” (page 30) and Semin. 34) A second important problem for the development of rural industry is the matter of planning and control. Although the control over economic activity in Soviet rural areas has always been inadequate, recent decrees suggest the continuing
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RURAL
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presence of serious inadequacies in subsidiary enterprises. (There have been a number of decrees pertaining to the operation of subsidiary enterprises. For the most recent criticism, see reference 35. For an earlier and remarkably outspoken criticism, see reference 36.) Thus it has been reported that farms have even built enterprises in urban areas. In addition, funds generated from the activities of subsidiary enterprises have been siphoned off and used for extra-legal purposes. Abuses have also been found in labour utilisation-urban dwellers have been hired at pay rates above legally adopted scales. It is difficult to say how widespread these abuses are. However, they undoubtedly arise in part from the traditional difficulties of planning in rural areas. In addition, accounting and control procedures have, historically, been very weak in rural areas. (For a discussion of this problem in relation to collective farms, see Stuart* (pp. 19ff). On the question of accounting and control in inter-Kolkhoz organisations, see Valovoi. 37) A third problem of rural industrial enterprise in the Soviet Union is the continuing irregularity of material supplies. Idle time is to be expected since, in many cases, the activities of rural enterprises are to be dovetailed with purely agricultural activities. However, idle time frequently results from inadequate material supplies as many enterprises are not integrated into the state supply system. Thus, in spite of decrees emphasizing the need to expand the role of soiuzsel’khoztekhnika (the state organisation responsible for the distribution of machinery and equipment in rural areas) material input supplies are simply not available in the form and frequency demanded by rural enterprises. (This problem is constantly emphasised in the Soviet literature. See, for example, Pavlenko. 3 *) In recent years an effort has been made to expand credit to rural enterprises, especially long term credit supplied by Gosbank. (For a discussion of credit provisions, see Valovoi3’ (page 41).) However, credit can be of only limited assistance if no material supplies and equipment are available for purchase. A fourth and related problem is that of guaranteeing appropriate labour inputs. In the short run, the effort will be directed towards fuller annual utilisation of labour, so that, as urbanisation continues, productivity increases in rural production can at least in part offset the shift of productive ,labour out of rural into urban areas. In the long run, it is anticipated that a restructured rural environment (working conditions and levels of living) will stop the outflow of productive labour from rural areas. A final problem is that of product distribution. Historically, the distribution of products produced in Soviet rural areas has been bad. Even though efforts have been made to better supply urban areas with rural produce, much remains to be done. (The matter of supplying urban areas with rural produce deserves separate attention. For a discussion of the Soviet techniques as applied in the case of the city of Moscow and environs, see Leversedge and Stuart. j9) In the literature pertaining to rural industry, there has been considerable emphasis upon meeting only local needs from locally available inputs. Recently, however, there has been
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emphasis upon the need to improve channels of distribution, and esptially focus upon the need to establish direct ties (priamye soiazi). (Direct ties began to develop in the late 195Os, and while of limited scope, they are important in some regions and for some products. In the Russian Republic, for example, in 1970 only 69 % of milk sales and 10% of potato-vegetable sales were by direct tie; in the Moscow region, direct ties are much more important, accounting for up to 70 % of potatovegetable sales. See Mineev and Sigov. 4 Their paper,does note, however, that in the Soviet case, direct ties have involved serious transport losses.) These ties are to be established between enterprises producing in rural areas and urban consumers such as restaurants and the evidence seems to suggest that the importance of direct ties in distribution has expanded in recent years. (As a case in point, in the Moscow region, in 1965, of 470 specialised stores in the capital, only 90 purchased potatoes and vegetables directly from farms. By 1970, this number had increased to 300 stores in addition to 100 restaurant outlets. See Karavaev.41) CONCLUSION
Although a reading of the Soviet press might suggest that the problems outlined above could significantly retard the development of industry in rural areas, advances can be expected, for a number of reasons. First, as we have noted, Soviet economists view the industrialisation of agriculture as the appropriate path of development. This path is seen to facilitate the growth of rural productivity both through better use of available inputs, notably capital from the state and seasonally idle labour, and also outputs, for example processing of ‘non-standard’ produce, much of which is presently wasted. Moreover, the injection of state capital and, along with it, industrial technology, is designed to alter the pattern of agricultural production, especially in line with the demands of an increasingly urbanised society. Thus the long neglected investment in processing and infrastructure for better distribution will alter the basic nature of a significant portion of Soviet agricultural production. (This case assumes, of course, that sufficient capital investment will, in fact, be forthcoming and that appropriate organisational mechanisms for its proper utilisation will be established.) Second, the injection of industry into Soviet rural areas is viewed, as we have noted, as a social transformation of the countryside. Rural work-and hence careers-is to be more attractive while rural levels of living are to be enhanced both through injections of income and especially through enhancement of ‘social consumption funds’. In this respect, one might note the significant improvement in rural levels of living over the past twenty years. REFERENCES 1.
SEWN,
Moskva:
S. I., Preodolenie sotsial’no-ekonomicheskikh Nauka.
1973.
razlichii
mezhau gorodom-i
dervenie,
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‘AVLOv, I. V. (Ed.), Pravovye voprosy sblizheniia kolkhoznoi i obshchenarddnoi sobstvennosti, vloskva Gosiurizdat, 1963. 3. ~MBARTSUMOV,A. A., Ekonomicheskie sviazi promyshlennosti i sel’skogo khoziaistva Pri :otsializme, Moskva: izd. muskovskoso universiteta, 1972? p. 35. 4. SRONSEN,D. W. and KRUEGER, C. B., The revolution m Soviet farm household income, 1953-1967. In: The Soviet rural Community, James R. Miller (Ed.), University of IlIinOts Press, Urbana, 1971, pp. 214-58. 5. MATTHEWS, M., Class and society in Soviet Russia, Walker and Company, New York, 1972, 2.
3. 65.
STUART,R. C. and GREGORY, P. R., A model of Soviet rural-urban migration, University of Houston, Department of Economics. Working Paper Series 740, No. I. 7. WADEKIN, K.-E., Rural reconstruction and the Agrogorod, Radio Liberty Research PaPer
6.
No. it 10.
11. 12. :: 15: 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.
26, 1968.
STUART,R. C. The collective farm in Soviet agriculture, D. C. Heath, Lexington, Mass., 1972. STUART, R. C., The changing role of the collective farm in Soviet agriculture, Canadian Slavonic Papers 2 (1974), pp. 145-9. MORZOV, V., Problemy sozdaniia agro-promyshlennogo kompleksa, Voprosy ekonomiki. 5 (1970), pp. 8697. PAVLOV, I. V. (Ed.), Pravovoe poloshenie kolkhozov v SSR, Moskva: Gosiurizdat, 1961. BELIAEV, Z. S., Pravovoe poloshenie mezhkolkhoznykh ob’edinenii i fondov. Moskva: Gosiurizdat. --_) 1962. _. .~, chanter . ..- r__. .I. Narodnoe khoziaistvo SSR v 1960 g. Moskova: Statistika, 1961, pp. 506-7. Narodnoe khoziaistvo SSR v 1970 P. Moskva: Statistika. 1971. DD. 392-3. Sel’skoe khoziaistvo SSR, Moskv& Statistika, 1971, pp.‘502-3.- AMBARTSUMOV, A. A., Ekonomicheskie sviazi promyshlennosti i sel’skogo khoziaistva Pri sotsializme, Moskva: Izd. Moskovskogo Universiteta, 1972, p. 35. RYMARENKO. V. and VASILENKO. G.. Aararno-nromvshlennve ob’edineniia progressivnaia forma organizatsii proizvodstva, i?ko,orn%a sel’ikogo-knozia&va, 12 (1971), p. 71. KAHAN, A., The problems of the agrarian-industrial complexes in the Sovtet Union. Paper nresented at the Banff ‘74 International Slavic Conference. D. 9. ~OZNA, G., Razvitie agrarno-promyshlennye komplaksov’i-ob’edinenii, Ekonomika sel’skog knoziaistva, 11 (1971), pp. 98-107. MEDVEDEV, N.. Rasshirat’ koopteratsiiv sel’skokhoziaistvennogo i promyshlennogo trudy, Ekonomika sel’skoao khoziaistva. 4 11966). D. 30. MORZOV. V., Strukturnye problemy formirovaniia agrarno-promyshlennago kompleksa, Voprosy ekonomiki, 3 (1973), pp. 90-l. PAVLENKO. S.. Organizatsiia nodsobnvkh nrednriiatti i promyslov v kolkhozakh i sovkhozakh, Ekonomikh Sklskogo Khozi&stva. 4 (1967X pp. 38-44: ZEMLIANSKII, F., Promyshlennye proizvodstva kolkhozov v sisteme ekonomicheskikh sviazei goroda i sela, Ekonomika sel’skogo khoziaistva, 5 (1972), 58-64. PaONiN, A., Razvitie podsobnykh predprilatti i promyslov v kolkhozakh i sovkhozakh, Ekonomika sel’skogo khoziaistva, 4 (1969), p. 47. MIF~AKHOV, KH., Mezholkhoznye stroitel’nye organizatsii kak forma proizvodstvennoi kooperatsii kolkhosov, Voprosy ekonomiki. 6 (1970), pp. 108-9. SOLOV’EV. B.. Puti oreodoleniia sezonnosti v isnol’zovanii truda v derevni, Voprosy ekonomiki, 5 (1966).
Z: 29. 30. 31. 32. 33. ^_
34.
35.
-p. i6.
-
Problemy sel’skoi promysmlennosti,. Ekonomika sel’skogo khoziaistva, 10 (1970), p. 61. FEDIAKIN, A., lz opyta stroitel’stva knpichnykh zavodov v sovkhozakh, Planovoe khoziaistvo, 9 (1972), pp. 128-32. SUCHILIN E. ATTMETOV, SH., SIGAREV, M., GUR’IANOV, K., Pervoe agropromyshlennoe ob’edinenie u’zbekistana, Ekonomika sel’skogo khoziaistua, 10 (1964). pp. 58-62. KOSTIN, L. A:, Povyshenie efiktivnosti truda v novykh usloviiakh khoziaistvovaniia, Moskva: Mysl’, 1971, p. 175. RYMARENKO,, V. and VASILENKO, G., Agrarno-promyshlennie ob’edineniia progressivnaia forma orgamzatsii proisvodstva, Ekonomika selskogo khoziaistva, 12 (1971), p. 72. REED, R. H., Estimates and Projections of the Labor Force and Civilian Employment in the USSR: 1950-1975, International Population Reports, Series p-91, No. 15, Washington, DC, 1967, p. 29. PASKHAVER, I. S., Balans trudoyvkh resursov kolkhozov Moskva: Statistika, 1972. . SEMIN, S., Agrarno-promyshlennye kompleksy i sotsial’nye preobrazovanua oerevm, Ekonomika sel’skogo khoziaistva, 5 (1972), pp. 945. 0 merakh po uporiadocheniiv deiatel’nasti podsobnykh predpriiatti i promyslov v sel’skom khoziaistve, Ekonomicheskaiu fareta, No. 31 (Augu_st, 1973). p. 22.
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36. 0 ser’eznykh nedostatkakh v .razvitii podsobnykh predpriiatti i promyslov v kolkhozakh i sovkhozakh, Resheniia Partii ipravitel’stvapo khoziaistvennym voprosam Moskva: Politizdat 8 (1972), pp. 56-9. 37. VALOVOI, D., Organizatsiia i deiatel’nost’, Ekonomika sel’skogo khoziaistva, 11 (1966). p. 39. 38. PAVLENKO, S., Organizatsiiv podsobnykh predpriiatti i promyslov v kolkhozakh i sovkhozakh. Ekonomika sel’skogo khoziaistva. 4 (1967), p. 43. 39. LEVERSEDGE,F. M. and STUART, R. C., Soviet agricultural restructure and urban markets, Canadian Geographer, 1975 (in press). 40. MINEEV, V. and SIGOV, I., Priamye sviazi po realizatsii produktsii prigorodnykh kolkhozov i sovkhozov, Voporosy ekonomiki, 4 (April, 1967), pp. 34-7. 41. KARAVAEV, V., Priamyesviazi i puti ikh dal’neishego razvitiia, Ekonomikasel’skogo khoziaistva, 12 (1971), pp. 73-80.
ROBERT C. STUART Associate Professor of Economics. Douglass College, Rutgers University, New Brunswick, New Jersey 08903, USA
(Received: 20 February, 1975) INTRODUCTION
In recent years, Soviet researchers have devoted increasing attention to the broad question of how the rural sector of the Soviet economy should develop as the economy matures. Although this subject has been viewed from a wide range of differing perspectives in a substantial volume of literature, a persistent theme has been the desirability of state transformation of agriculture to an essentially industrial base to substantially lessen rural-urban differentials in levels of living and to raise the efficiency of agricultural production. Such a pattern of Soviet agricultural development is seen by Soviet authors as in harmony with, and indeed essential for achieving, an advanced level of economic development in the Soviet Union. First, from an ideological standpoint,‘the ‘industrialisation’ of agriculture is to alter the character of life and work in Soviet rural areas, gradually raising peasants to working class status and transforming Kolkhoz-cooperative property to state property. For a general discussion of this subject see, for example, Semin.’ The legal point of view is expressed by Pavlov.2 Second, such a pattern of development recognises a new role for the agricultural sector appropriate for a higher stage of Soviet economic development. This role implies overt subsidisation of agriculture by th? state, especially in the form of capital inputs. (Soviet observers view this as a reversal of past policy appropriate to lower levels qf economic development, namely transfer of product out of agriculture at relatively low prices along with labour outflow, both to underwrite the industrialisation effort. See, for example, the discussion in Chapter 3 of the work of * This research was in part financed by a ‘grant from the Ford-Rockefeller Foundations Program in Support of Social Science and Legal Research on Population Policy and The Rutgers University Research Council. The views expressed are those of the author.
165 Agricultural Administration Printed in Great Britain
(2) (1973-43
Applied Science Publishers Ltd, England, 1975
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Semin.‘) Further, it implies productivity gains through better input usage and substitution, especially capital for labour as the latter becomes relatively more scarce.in rural areas. In addition, it is hoped that the rapid outflow of labour from rural areas can be slowed down, seasonal imbalances in rural labour utilisation lessened and younger, more qualified, persons retained in the rural sector by income and career incentives. Finally, the industralisation of Soviet agriculture is designed to significantly expand the rural infrastructure, storage facilities, transportation networks and so on. Thus agriculture is to become more capital intensive, producing a more highly processed product which must be made readily available to the dominant urban community, (Soviet authors have noted that over time an increasing share of agricultural output requires some degree of industrial processing before distribution. See, for example, Ambartsumov. 3, Soviet planners have discussed, and in some cases implemented, partially or fully, a number of measures appropriate to the sort of agricultural transformation outlined above. For example, in an effort to raise participation and improve the level of rural living, incomes have been increased substantially in recent years. (For evidence on this question, see Bronson and Krueger;4 on rural-urban differentials see Matthews.‘) In addition, an effort has been made to bring the amenities of urban life to rural areas and thus attempt to stem the rapid outflow of population from rural to urban areas. (On standards of living see Matthews5 (pp. 64-70) and on the extent of rural-urban migration see Stuart and Gregory.6) A much discussed and controversial scheme to make the village attractive has been the Agrogorod, a major effort to transform the structure and style of Soviet rural settlement. (For a discussion of the Agrogorod scheme originally proposed by Khrushchev see Wadekin.‘) Organisational change has always been viewed as an important mechanism for adjustment of the Soviet economic structure. Historically, Soviet agricultural production has been organised in state farms (Soukhozy), collective farms (Kolkhozy) and in the subsidiary private sector attached to both. The state farms are state-owned organisations operating fully within the planning apparatus in a fashion similar to industrial enterprises. The collective farms, on the other hand, are in theory a cooperative form of organisation differing from the state enterprises in terms of both organisation and operation. In recent years, however, there have been substantial changes in the collective farm as a rural production organisation.8 At the same time; there has been a continuing pattern of downgrading the role of the Kolkhoz vis-a-vis the Sovkhoz.g One aspect of the Soviet transformation of the rural sector which has received only limited attention is the injection of industry. The development of industrial facilities in concert with agricultural production facilities has been advocated by Soviet economists as an important means by which the rural sector will in general be transformed to an industrial base while at the same time lessening such problems as the sharp seasonal imbalance in rural labour utilisation.
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OF SOVlET
RURAL
DEVELOPMENT
167
The purpose of this paper is therefore to examine, within the broad context of the nature, impact and development of Soviet agricultural transformation, industrial activity in Soviet rural areas. (As we shall see, there are a large number of activities in rural areas which, in one way or another, could be classified as industrial. In this paper we focus upon inter-Kolkhoz organisations, subsidiary enterprises of both Kolkhozy and Sovkhozy and more grandiose agro-industrial complexes. Our definition of rural industrial activity is, therefore, very broad.) We begin with a discussion of the manner in which rural industry has been. organised and developed. Further, we attempt to assess the importance of this activity, and, finally, to consider both the positive and negative aspects of its role in the Soviet rural sector.
THE
NATURE
OF SOVIET
RURAL
INDUSTRY
The development of industrial activity in conjunction with agricultural production, and especially on an inter-farm basis, is not a recent development in the Soviet countryside. Discussion of this subject dates from the 193Os, a time when considerable numbers of small enterprises were established. (In 1927 Kolkhozy of the RSRSR had 1500 small industrial enterprises; their number expanded to 4227 by 1929. The pressure, however, was to develop collective farms, and little was done to develop the food industry per se. See Morzov.“) In recent years, however, substantial differences have been appearing not only in the nature of subsidiary industrial activity but also in the scale on which it is to be developed and the goals which it is to fulfil in the future development of the rural sector. Soviet rural but non-agricultural activity (such as electricity generation, food processing, marketing and so on) is difficult to classify in any systematic and useful fashion. Indeed, Soviet authors typically do not agree on any single pattern of classification. As a preliminary approach, however, it is useful to distinguish between: (1) inter-Kolkhoz activity (organisations and/or contractual arrangements) and (2) Kolkhoz and/or Sovkhoz subsidiary industrial activity. The inter-Kolkhoz organisation, although not necessarily purely industrial in character, has expanded in importance in recent years. Historically, the interKolkhoz organisation has been associated with forms of activity not feasibly (or well) carried out within a single farm, for example the generation of electricity. The inter-Kolkhoz form of organisation has long been integrated into Kolkhoz law (see, for example, the discussion in a number of sections of Pavlov’ ‘) and, in recent years, has been involved in a much broader range of activities including materials production, processing, marketing, etc. (The post-war development of inter-Kolkhoz organisations is discussed by Beliaev. r ‘) A second type of industrial production activity is the small factory;typically operated on a seasonal basis as labour is available. These sorts of enterprises may be operated on both state and
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collective farms typically involved with such activities as manufacturing of bricks, ~_ production of flour, processed foods and so on. The most complex and potentially most interesting form of rural industrial activity is the agro-industrial complex. As we shall see, this expression covers a considerable variety of organisational types and arrangements. In recent years, however, the emphasis has been on industrial-type processing and the preparation of agricultural products for urban markets. Typically a large vertically and/or horizontally integrated arrangement is involved. For example, a large sugar beet processing factory may be located amongst a group of specialised Kolkhozy and Sovkhozy (producing sugar beets) and obtaining labour from a nearby village of a city type. While Soviet authors seem to agree that the agro-industrial complex is the appropriate path for further development of Soviet agricultural production, there is considerably less agreement over the precise organisational arrangements to be utilised, let alone rules of operation. In the sections which follow, we attempt to analyse the impact of various forms of rural industrial activity and, in addition, to outline the problems and prospects of this type of activity.
THE
IMPACT
OF SOVIET
RURAL
INDUSTRY
To assess the impact of Soviet rural industry, we focus upon two questions: How important is rural industry in its various forms and how much has it contributed to improved utilisation of labour resources in rural areas? (Many possible indicators might be used to assess the impact of rural industry. The attempt here is preliminary and in particular leaves for a separate study the important question of changing rural levels of living.) What major problems have arisen in the introduction and operation of industrial-type production in Soviet rural areas? In carrying out this investigation we use indicators substantially on the grounds of data being available. Thus we focus upon the number and organisation of rural enterprises, input and output patterns and so on. In doing so, we set aside at this stage the possibility of a broader cost-benefit type of analysis, a decision which in fact reflects a Soviet dilemma since most Soviet rural production organisations of an industrial type are designed to achieve multiple goals-more product, better utilisation of labour resources, profitability, and so on. However, the Soviet literature reflects the difficulty of ordering the priorities and especially the extent to which possible small scale unprofitable rural industry should be compared with similar but profitable urban large scale industry. Finally, the available data on Soviet rural industry is at best fragmentary. We must, therefore, settle for a partial picture. Let us consider first inter-farm (typically inter-Kolkhoz) cooperation. This cooperation may be by means of a legal contractual arrangement, or it may as an
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OF SOVIET
RURAL
DEVELOPMENT
169
example be by means of an inter-Kolkhoz type of organisation. These organisations are typically utilised for seasonal activity and where scaleeconomies are important. Thus a number of Kolkhozy will supply labour and t%rm a basically permanent unit handling construction activity in member Kolkhozy. Management of the construction brigade is typically handled by a consortium of the Kolkhoz chairmen. As we have already noted, the number of such organisations has expanded significantly in recent years. Indeed between 1960 and 1970 the number of such organisations grew from 3095 to 4255 while during the same period the number of Kolkhozy declined from 43,981 to 33,044. (Narodnoe khoziaistvo SSR Moskva: Statistika selected years. Note that while the number of Kolkhozy declined quite sharply during these (and indeed previous) years, their importance in the rural sector declined rather more slowly. See Stuart.‘) In addition to expansion in the number of inter-Kolkhoz organisations, their activities have changed. While activities of the early years of inter-Kolkhoz organisations, for example construction, still predominate, they are now increasingly involved in forage production, forestry activity, processing of poultry, factories for the processing of agriculture products, services such as rest homes and so on. (See, for example, the breakdown by region and function given in references 13 and 14.) Regional differentials are important. In 1970, for example, in Belorussia 126 of 128 inter-Kolkhoz organisations were involved in construction activity. In Kazakhstan, for the same year 48 out of 50 inter-Kolkhoz organisations were in construction, while in Moldavia, construction accounted for only 32 out of 114 such organisations. It seems fair to generalise that, apart from the RSFSR, the Ukraine and possibly Georgia, expansion of inter-Kolkhoz organisations in spheres of activity other than construction has been limited. (It is interesting to note that in 1970, of 10.7 million rubles granted as long term credit by Gosbank to Kolkhozy to develop subsidiary enterprises, the RSFSR, Ukraine and Georgia together accounted for 9.2 million rubles, or almost 86%. See reference 15.) Although there is no systematic data on contractual ties, one might expect them to have increased in importance, especially given recent Soviet emphasis upon direct connections between producer and user-a matter discussed further in a subsequent section. Selected characteristics of inter-Kolkhoz cooperation are summarised in Table 1. A second and possibly more significant pattern of rural development is the creation of a specifically industrial base in conjunction with Kolkhozy and/or Sovkhozy. Such an operation may serve to produce inputs for agriculture, for example fertiliser, or to produce agricultural (food) products, typically involving the industrial processing of basically agricultural produce. The latter category has expanded in importance in recent years. (Soviet authors note that, over time, an increasing share of Soviet agricultural output is, in fact, processed in some fashion prior to utilisation. See, for example, Ambartsumov.’ 6, The organisational format of this agro-industrial cooperation varies widely and hence classification is difficult. For example, a state or collective farm may have a
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C. STUART
TABLE CHARACTERISTICS
Year
Number of Kolkhozy
1
OF INTER-KOLKHOZ COOPERATION (SELECTED YEARS)
. Number -_... of Inter-bollchoz
IN THE. USSR
organis-‘:-..J arl”nS an” enterprrses
N;$k:o;f shareholders
1950
121,353
n.a.
n.a.
1956 1958 1960
83,021 :z%;’
1,187 349 3,095
1962 1964 1965 1968 1970 1972
39:733 37,616 36,276 35,600 33,044 31,611
3,431 3,104 3,355 4,186 4,554 5,068
n.a. 3%5 421680 46,281 47,296 y; 67:813
Money income of subsidiary enterprises as a portion of Kolkhoz money income (%) 10.3 :I:6 6.70 2:; 4.5 n.a. n.a. n.a.
Sources: Narodnoe khoziaistvo SSSR, Moskva: Statistika. Selected years, Sel’skoe khoziaisrvo SSSR, Moskva: Statistika (1960) pp. 51 and 64. n.a.-not available.
factory (zauod) for the single purpose of processing some of the farm output. In this case, the manager of the farm will most probably serve as the manager of the factory. (This arrangement is encouraged by many Soviet observers on the grounds that it minimises the proportion of personnel involved in the administrative functidn. A saving of 15-17 % in the size of the administrative apparatus has been suggested. See Rymarenko and Vasilenko. ” For a more detailed picture of industrial capacity in Kolkhozy in 1971, see Kahan. ’ *) A greater degree of horizontal and vertical integration is attained by the &o-industrial complex-in a sense, a territorial type of organisation combining the farm, processing and other functions. Vertical integration, that is uniting vertical stages in the production process, including product distribution, is emphasised in the Agro-Zndustriul Kombinat. Finally, the agro-industrial ob’edinenie is a broad-based, self-managed combine producing farm products but also maintaining storage, sales activities and so on. Such a classification is substantially arbitrary and indeed is the subject of ongoing debate in the relevant Soviet literature (see, for example, the comprehensive discussion in Lozna19). However, the absence of formal classification is of little importance, except in the sense that the interpretation of aggregative data, that is when appraising different organisational forms, is very difficult. There is, however, a great deal of emphasis upon the need for local initiative and the resolution of peculiarly local problems. (Most authors stress the importance of local factors and indeed the widely varying organisational forms found in practice bear out this emphasis. See for example, Medvedev2’ and Morzov.’ ‘) In this sense, the prevailing pattern of industrial activity is more a function of diverse forces operating over a relatively long period of time rather than the execution of a specific decree.
ASPECTS
OF SOVIET
RURAL
DEVELOPMENT
171
In recent years, however, decrees have encouraged the development of industrial activity in rural areas and especially have noted difficulties in execution, a matter discussed later in this paper. Soviet authors, however, have emphasised the need to observe a number of important preconditions before industrial production activity is developed. (See, for example, Pavlenko22 and Zem1ia‘nskii.23) Thus it is emphasised that rural industry must support and be integrated with, but not supplant, basic agricultural production. Labour must be available, and, in particular, material supplies must be available. Local conditions must be taken into account, and, for many, profitability must be achieved.24
THE
RELATIVE
IMPORTANCE
OF RURAL
INDUSTRIES
How important is the industry of Soviet rural areas? As we note from Table 1, the number of inter-Kolkhoz organisations and enterprises has grown quite substantially in the post-war period, as has the number of participating enterprises, although money income as a share of Kolkhoz money income has declined. These indications must be interpreted with caution. First, the declining number of Kolkhozy might well result in a greater concentration of inter-Kolkhoz organisations if one assumes that primarily weak farms were converted or amalgamated. (Weak collective farms would be much less likely to have substantial inter-farm connection.) Second, for the Kolkhoz sector, money accounting grew substantially in importance during this period. Thus, while the money income earned by subsidiary enterprises grew in absolute size this growth was swamped by the growth of Kolkhoz money income. (Other selected indicators tend to suggest growth for the inter-Kolkhoz organisations. For example, the volume of construction-repair work done by inter-Kolkhoz organisations increased from 407.6 million rubles in 1960 to 1749.1 million rubles in 1968. In 1968, these organisations were undertaking 39 % of capita1 construction work in Kolkhozy in the USSR as a whole, and substantially more than this in some republics. See Miftakhov.’ 5, Unfortunately no similar data are available for enterprises operated in conjunction with state farms. Some idea of their growing importance can, however, be obtained from the limited evidence presented in Table 2. Employment, as estimated here has risen quite substantially. Also, in some regions, there is evidence to suggest expansion, at least after a period of decline in the early 1960s. (On the declining importance of subsidiary enterprise in the 1960-1964 period see Solov’ev. ’ 6, In Belorussia, for example, between 1958 and 1967 the number of spirit factories on Sovkhozy increased from 28 to 54, and in 1966 were said to produce 50 % of the spirits produced in that republic at an average cost 8% below that achieved by similar factories operating under the Ministry of Food Industry (see references 26
ROBERTC. STUART
172
TABLE 2 CHARACTERISTTCS
Year
0F SUBSIDIARY
ENTERPRISES
Employment : average annual
1950 1960 1962 1964 1966 1968 1970 1972
0~ STATE FARMS
Number of enterprises: all types
137,000* 655,000 798,000 845,000 818,000 1,092,OOO 1,200,OOO 1,300,oOO
57,507
Sources: Narodnoe khoziaistvo SSSR. Moskva: Statistika (SelectedYears) Sel’skoe khoziaistvo SSSR, Moskva: Statistika, (1971) pp. 656-57. * Theseare estimatesonly, derived as the difference.between the average annual employment in state farms and subsidiary enterprisesand those engaged in agriculturai activities only.
(p. 7a) and 27). In Kazakhstan, after 1965, a substantial effort was made to expand brick production in Sovkhoz enterprises and with a substantial injection of funds from Gosbank.28 In 1962 the first agro-industrial combine was established in Central Asia on the basis of Sovkhozy and Kolkhozy and employing 9000 persons.” In the Russian republic, between 1966 and 1969 the number of subsidiary enterprises increased by 4500. 3O These are, however, limited examples, and most seem to pertain to industrialtype activities long existing in rural areas, for example, production of construction materials, construction activity and so on. Indeed one writer has suggested that in Moldavia, the inability to sell or properly process fresh fruit, grapes and vegetables results in losses of one hundred million rubles (measured in purchase prices) annually (see reference 26, p. 79). Such losses are not uncommon and can be found in many regions. What has happened to the output of subsidiary enterprises? The data in Table 3 suggest a mixed picture. In some areas of production (such as those traditionally existing, like wine), there has been growth. Production of vegetable preserves is TABLE 3 PRODUCTION OF NON-AGRICULTURAL IN KOLKHOZY AND SOVKHOZY
Product
Wine-Fruit and Berry (‘000 Dekalitres) Vegetables(preserved-‘000 tons) Bricks (millions) Lime (‘000 tons) Timber (millions of ms)
AND PROCESSED PRODUCTS (SELECTED YEARS)
1964
1967
1970
2,008 65.7 2526.2 381 16.3
2,981 39.8
4,490 55.1
3E76’8 16.2
‘E” 16.2
Sources: Data for 1964 and 1967 from A. Pronin,r4 (p. 48). Data for 1970from Sel’khoz-1970, pp. 658-9.
ASPECTS
OF SOVIET
RURAL
DEVELOPMENT
173
less than in 1964 although with some growth in recent years. (In the RSFSR, agroindustrial complexes have been developed under the Ministry of Food Industry. In 197 1, under this Ministry, there were 59 fruit Sovkhozy of which 20 had processing capacity. In addition, under the same Ministry there were seven agrarianindustrial complexes with 3 1 factories, 18 Sovkhoz-factories and 34 specialised fruit Sovkhozy. See Rymarenko and Vasilenko. 3*) In terms of output performance, the injection of industrial-type production into rural areas, and especially into the more sophisticated areas such as food processing, must be considered at best a limited success. However, this picture may well change over time with a serious commitment by the state. Also, the publication of comprehensive data on this type of activity may change this preliminary assessment. (Although systematic data for these subsidiary enterprises were published in Sel’khoz-1970, there is little other data, and even in this case, output classifications frequently diverge from those used by other units, for example, the Ministry of Food Production. Thus it is very difficult to compute output shares of these subsidiary enterprises in any systematic fashion.) In terms of the significant question of improving the utilisation of rural labour, unfortunately the available data are such that only preliminary observations can be made. For collective farms, monthly participation data are available for most post-war years. To the extent that these data include all types of productive activity on collective farms, one might expect a reduction of seasonal differentials if subsidiary enterprises and inter-Kolkhoz activities are in fact helping to offset the seasonal imbalance. As one would expect, the absolute size of the collective farm labour force has been declining from approximately twenty-five million (annual average) in the 1950s to approximately sixteen million (annual average) in the early 1970s. (Data for selected years from 1953 through 1966 are available in the work of Reed3 ’ and data for 1970 are estimated .from Paskhaver. 3 ‘) However, the relative importance of the seasonal fluctuations remains great. In 1953, for example, participation of labour in collective farming varied from a high of approximately 32 million in July and August to a low of 18 million in January and February. In 1970, monthly participation fluctuated from a high of 21 million in July to a low of 12 million in December, January and February. (These sort of data should be interpreted with some care. In the present case, for example, a person working only one day in a given month will be counted as a full participant for that month. For a discussion of measurement problems, see Reed.32) Sef’khoz-1970 (p. 475) gives labour utilisation data (monthly by regions) for industrial enterprises of collective farms. It is striking that for the country as a whole, labour utilisation in industrial enterprises of Kolkhozy by months is very even throughout the year, suggesting little, if any, offset to the imbalance arising from agricultural activities per se. Indeed in a number of regions these enterprises demand greater labour inputs in the summer months, the period when demand by agriculture is itself at a peak.
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C. STUART
There is very little solid evidence on which to judge the importance of subsidiary enterprises in the sphere of labour utilisation. Participation rates in such enterprises in Kolkhozy have always been lower than in Sovkhozy. To the extent that Sovkhozy and related enterprises are growing in importance while there is an overall reduction of labour inputs to agriculture per se, then the magnitude of the problem will decline. (For a similar conclusion see Kahan’* (Appendix A, pp. 6-Q.) This is, however, a hazy conclusion and says little about the effectiveness of new forms of organisation in dovetailing seasonal labour needs. The long term goal of slowing down the outflow of rural labour by developing attractive rural career opportunities is even more questionable.
RURAL
INDUSTRY-PROBLEMS
AND
PROSPECTS
In terms of any reasonable time horizon the development of industrial and related forms of organisation in Soviet rural areas is in its infancy. If advanced Western economies can serve as an example, it is undoubtedly the mould in which Soviet agricultural production will be cast in the future. What sorts of problems have arisen thus far, and what sorts of solutions can we expect in the future? First, there is the very basic question as to the appropriate organisational form which rural industry is to assume, and the success criteria by. which it is to be judged. Soviet economists differ on the question of which organisational form is best, although most support the notion of regional differences (and hence local initiative) as being important. Some have argued, for example, that industrial type enterprises in rural areas must compete with and be judged by the criteria applied to similar enterprises located in urban areas. Thus many authors argue that rural enterprise should be profitable. (On the question of profitability see, for example, Proninz4 (page 47); for a more general discussion of criteria, see for example, Zamlainskiiz3 (pages 62-63)). On the other hand, others argue that such a,comparison is difficult since the suggested benefits of rural enterprise extend beyond any profitability calculus-fewer administrative personnel, better seasonal use of labour, reduction in the rapid outflow from rural areas of skilled labour, and so on. In the absence of agreement on these subjects, there have tended to be substantial regional differences not only in the extent and type of enterprise developed, but also in the performance levels achieved. (It is interesting to note that while many Soviet observers argue for better control and integration of the subsidiary enterprise into the state system (for example, material supplies), they stress the need for decisions to be taken locally. For a discussion of the need for local decision-making see, for example, Solov’ev26 (page 80), Medvedev” (page 30) and Semin. 34) A second important problem for the development of rural industry is the matter of planning and control. Although the control over economic activity in Soviet rural areas has always been inadequate, recent decrees suggest the continuing
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presence of serious inadequacies in subsidiary enterprises. (There have been a number of decrees pertaining to the operation of subsidiary enterprises. For the most recent criticism, see reference 35. For an earlier and remarkably outspoken criticism, see reference 36.) Thus it has been reported that farms have even built enterprises in urban areas. In addition, funds generated from the activities of subsidiary enterprises have been siphoned off and used for extra-legal purposes. Abuses have also been found in labour utilisation-urban dwellers have been hired at pay rates above legally adopted scales. It is difficult to say how widespread these abuses are. However, they undoubtedly arise in part from the traditional difficulties of planning in rural areas. In addition, accounting and control procedures have, historically, been very weak in rural areas. (For a discussion of this problem in relation to collective farms, see Stuart* (pp. 19ff). On the question of accounting and control in inter-Kolkhoz organisations, see Valovoi. 37) A third problem of rural industrial enterprise in the Soviet Union is the continuing irregularity of material supplies. Idle time is to be expected since, in many cases, the activities of rural enterprises are to be dovetailed with purely agricultural activities. However, idle time frequently results from inadequate material supplies as many enterprises are not integrated into the state supply system. Thus, in spite of decrees emphasizing the need to expand the role of soiuzsel’khoztekhnika (the state organisation responsible for the distribution of machinery and equipment in rural areas) material input supplies are simply not available in the form and frequency demanded by rural enterprises. (This problem is constantly emphasised in the Soviet literature. See, for example, Pavlenko. 3 *) In recent years an effort has been made to expand credit to rural enterprises, especially long term credit supplied by Gosbank. (For a discussion of credit provisions, see Valovoi3’ (page 41).) However, credit can be of only limited assistance if no material supplies and equipment are available for purchase. A fourth and related problem is that of guaranteeing appropriate labour inputs. In the short run, the effort will be directed towards fuller annual utilisation of labour, so that, as urbanisation continues, productivity increases in rural production can at least in part offset the shift of productive ,labour out of rural into urban areas. In the long run, it is anticipated that a restructured rural environment (working conditions and levels of living) will stop the outflow of productive labour from rural areas. A final problem is that of product distribution. Historically, the distribution of products produced in Soviet rural areas has been bad. Even though efforts have been made to better supply urban areas with rural produce, much remains to be done. (The matter of supplying urban areas with rural produce deserves separate attention. For a discussion of the Soviet techniques as applied in the case of the city of Moscow and environs, see Leversedge and Stuart. j9) In the literature pertaining to rural industry, there has been considerable emphasis upon meeting only local needs from locally available inputs. Recently, however, there has been
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emphasis upon the need to improve channels of distribution, and esptially focus upon the need to establish direct ties (priamye soiazi). (Direct ties began to develop in the late 195Os, and while of limited scope, they are important in some regions and for some products. In the Russian Republic, for example, in 1970 only 69 % of milk sales and 10% of potato-vegetable sales were by direct tie; in the Moscow region, direct ties are much more important, accounting for up to 70 % of potatovegetable sales. See Mineev and Sigov. 4 Their paper,does note, however, that in the Soviet case, direct ties have involved serious transport losses.) These ties are to be established between enterprises producing in rural areas and urban consumers such as restaurants and the evidence seems to suggest that the importance of direct ties in distribution has expanded in recent years. (As a case in point, in the Moscow region, in 1965, of 470 specialised stores in the capital, only 90 purchased potatoes and vegetables directly from farms. By 1970, this number had increased to 300 stores in addition to 100 restaurant outlets. See Karavaev.41) CONCLUSION
Although a reading of the Soviet press might suggest that the problems outlined above could significantly retard the development of industry in rural areas, advances can be expected, for a number of reasons. First, as we have noted, Soviet economists view the industrialisation of agriculture as the appropriate path of development. This path is seen to facilitate the growth of rural productivity both through better use of available inputs, notably capital from the state and seasonally idle labour, and also outputs, for example processing of ‘non-standard’ produce, much of which is presently wasted. Moreover, the injection of state capital and, along with it, industrial technology, is designed to alter the pattern of agricultural production, especially in line with the demands of an increasingly urbanised society. Thus the long neglected investment in processing and infrastructure for better distribution will alter the basic nature of a significant portion of Soviet agricultural production. (This case assumes, of course, that sufficient capital investment will, in fact, be forthcoming and that appropriate organisational mechanisms for its proper utilisation will be established.) Second, the injection of industry into Soviet rural areas is viewed, as we have noted, as a social transformation of the countryside. Rural work-and hence careers-is to be more attractive while rural levels of living are to be enhanced both through injections of income and especially through enhancement of ‘social consumption funds’. In this respect, one might note the significant improvement in rural levels of living over the past twenty years. REFERENCES 1.
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‘AVLOv, I. V. (Ed.), Pravovye voprosy sblizheniia kolkhoznoi i obshchenarddnoi sobstvennosti, vloskva Gosiurizdat, 1963. 3. ~MBARTSUMOV,A. A., Ekonomicheskie sviazi promyshlennosti i sel’skogo khoziaistva Pri :otsializme, Moskva: izd. muskovskoso universiteta, 1972? p. 35. 4. SRONSEN,D. W. and KRUEGER, C. B., The revolution m Soviet farm household income, 1953-1967. In: The Soviet rural Community, James R. Miller (Ed.), University of IlIinOts Press, Urbana, 1971, pp. 214-58. 5. MATTHEWS, M., Class and society in Soviet Russia, Walker and Company, New York, 1972, 2.
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Problemy sel’skoi promysmlennosti,. Ekonomika sel’skogo khoziaistva, 10 (1970), p. 61. FEDIAKIN, A., lz opyta stroitel’stva knpichnykh zavodov v sovkhozakh, Planovoe khoziaistvo, 9 (1972), pp. 128-32. SUCHILIN E. ATTMETOV, SH., SIGAREV, M., GUR’IANOV, K., Pervoe agropromyshlennoe ob’edinenie u’zbekistana, Ekonomika sel’skogo khoziaistua, 10 (1964). pp. 58-62. KOSTIN, L. A:, Povyshenie efiktivnosti truda v novykh usloviiakh khoziaistvovaniia, Moskva: Mysl’, 1971, p. 175. RYMARENKO,, V. and VASILENKO, G., Agrarno-promyshlennie ob’edineniia progressivnaia forma orgamzatsii proisvodstva, Ekonomika selskogo khoziaistva, 12 (1971), p. 72. REED, R. H., Estimates and Projections of the Labor Force and Civilian Employment in the USSR: 1950-1975, International Population Reports, Series p-91, No. 15, Washington, DC, 1967, p. 29. PASKHAVER, I. S., Balans trudoyvkh resursov kolkhozov Moskva: Statistika, 1972. . SEMIN, S., Agrarno-promyshlennye kompleksy i sotsial’nye preobrazovanua oerevm, Ekonomika sel’skogo khoziaistva, 5 (1972), pp. 945. 0 merakh po uporiadocheniiv deiatel’nasti podsobnykh predpriiatti i promyslov v sel’skom khoziaistve, Ekonomicheskaiu fareta, No. 31 (Augu_st, 1973). p. 22.
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36. 0 ser’eznykh nedostatkakh v .razvitii podsobnykh predpriiatti i promyslov v kolkhozakh i sovkhozakh, Resheniia Partii ipravitel’stvapo khoziaistvennym voprosam Moskva: Politizdat 8 (1972), pp. 56-9. 37. VALOVOI, D., Organizatsiia i deiatel’nost’, Ekonomika sel’skogo khoziaistva, 11 (1966). p. 39. 38. PAVLENKO, S., Organizatsiiv podsobnykh predpriiatti i promyslov v kolkhozakh i sovkhozakh. Ekonomika sel’skogo khoziaistva. 4 (1967), p. 43. 39. LEVERSEDGE,F. M. and STUART, R. C., Soviet agricultural restructure and urban markets, Canadian Geographer, 1975 (in press). 40. MINEEV, V. and SIGOV, I., Priamye sviazi po realizatsii produktsii prigorodnykh kolkhozov i sovkhozov, Voporosy ekonomiki, 4 (April, 1967), pp. 34-7. 41. KARAVAEV, V., Priamyesviazi i puti ikh dal’neishego razvitiia, Ekonomikasel’skogo khoziaistva, 12 (1971), pp. 73-80.