Soviet Union 1991

Second update

While the EU was in chaos, Yanayev and Ryzhkov were discussing the second round of agricultural product reform plans. The previous use of agricultural cooperation policies to reduce external labor costs had achieved the expected results. Yanayev now plans to start agricultural reforms after the economy further recovers. Because this agricultural reform must have financial support from the central government, Yanayev did not start this far-reaching project until the end of 1996.

As Chairman of the Council of Ministers of the Soviet Union and former Finance Minister, Ryzhkov's opinions were particularly important. Moreover, as one of the framers of the reform plan, Ryzhkov has more say in the economy than others, so he was selected by Yanayev to become one of the important presiding members of the Agricultural Reform Committee.

This meeting gathered almost all the powerful figures in the agricultural sector of the Soviet Union.

Yanayev stretched out his hand to indicate that Ryzhkov, who was sitting next to him, could start expressing his opinion. "After experiencing the turmoil in 1991, our country's total agricultural GDP began to show a steady growth trend from 1993 to 1996. This partly reflects the effectiveness of the Soviet agricultural reform policy, but generally speaking, after the reform and stable development, it also exposed the There are deficiencies in certain aspects. For example, there is a large gap in the level of market price support we provide for different agricultural products. The negative price support faced by the grain sector has led to a series of problems such as uneven distribution of internal resources and relatively high protection. It can lead to distortion of international market price signals and thus easily become the focus and difficulty of international multilateral trade negotiations.”

After Ryzhkov finished speaking, Yanayev expressed his views on the overall reform that would follow. The Soviet Union became a net food importer from 1975, and food imports surged. In 1970, net exports were 3.5 million tons. In 1974, grain imports and exports were at the same level, and in 1975, tens of millions of tons were imported. In 1984, grain imports from the United States and Canada alone amounted to 26.8 million tons. In 1986-1988, the food shortage was approximately 21 billion rubles. And this is despite the total food production amounting to 136 billion rubles. In addition to large quantities of imported grain, for example, in 1989, it imported 600,000 tons of meat, 240,000 tons of butter, 1.2 million tons of vegetable oil, 5.5 million tons of sugar, and 500,000 tons of citrus.

Then from the early to mid-1980s, Soviet economists and political decision-making leaders failed to make a corresponding assessment of the consequences of the Soviet Union's involvement in world economic integration. Therefore, when the world economy experienced consecutive recessions from 1980 to 1982 and was accompanied by a drop in oil prices, no one in the Soviet Union could foresee the disastrous consequences this situation would bring to the Soviet foreign trade and foreign exchange financial systems. Economists have long discovered that the growth rate of the Soviet planned economy declined from 6% in the 1950s, 4% in the 1970s, to 3 to 3.5% in the 1980s. The Soviet economy continued to experience declining growth for 20-30 years, or even stagnant growth.

The collapse of the Soviet Union in 1991 was caused by distorted industrial development, US strategic policies, the Soviet Union's own deformed agricultural development, and mistakes in its oil strategy. That's why Yanayev is so concerned about the agricultural development of the Soviet Union itself, and strives to adjust the agricultural structure to a situation where the country is not dependent on foreign imports and is self-sufficient.

From the beginning to the present, the Soviet Union's agricultural output problem has never been solved, and the situation of needing to rely on large amounts of imported grain has never changed. Even in 2015, 40% of Russia's agricultural products still need to be imported.

"The first is credit and tax preferential policies: the Soviet Union has always provided roughly two-thirds of the budget for producer support to directly support facility input and investment, most of which are realized in the form of credit with low interest rates. The preferential credit situation is in the form of bank loans. The interest rate is subsidized. And the scope and scale are continuously expanding in the short term. The loan is expanded to medium and long-term loans, and the beneficiaries are expanded to cover all producers, including rural households and production cooperatives. The preferential loan support method is to transfer the loan directly to the borrower, and its subsidized interest rate depends on the refinancing interest rate of the government financial sector. The preferential policies mainly include agricultural unified tax preferential policies and agricultural product value-added tax preferential policies.”

"Unified agricultural tax?" Ryzhkov asked in confusion.

"Yes, there is a unified agricultural tax. Regarding the reform of agricultural tax, I will give detailed answers later." Yanayev signaled Ryzhkov to be patient and wait for him to explain the new tax.

The agricultural unified tax was introduced in Russia in 2003. Agricultural enterprises can choose to adopt the agricultural unified tax or maintain the original tax system. Enterprises that adopt the agricultural unified tax can receive exemptions from income tax, property tax, social tax bill, value-added tax and other benefits.

"The limitation of maximum and minimum prices, the regulation of the agricultural product circulation market through grain market price intervention policies, and the regulation and stabilization of domestic agricultural product prices by limiting the minimum and maximum prices and adopting state procurement intervention and national commodity intervention. State intervention When food prices fell in the market, the government tried to reduce supply by reducing supply. When there is a demand gap, the government restricts grain imports and allocates funds from the budget to purchase excess grain on the market. National commodity intervention is when grain prices rise in the market, the government restricts grain exports and places grain reserves on the market. Measures to alleviate supply shortages and establish corresponding intervention price ranges for different grains.”

"The most important point is the high border protection policy. The Soviet Union is an importer of agricultural products and implements a high border protection policy through market access, tariffs and animal and plant quarantine protection. Soviet producers support the realization of transfer payments through domestic consumption by purchasing products at prices higher than international prices."

Yanayev's agricultural reform policy can be seen as a fusion of Russian agricultural reform and Chinese market reform. On the one hand, trade barriers are implemented according to its own national conditions, and on the other hand, the "wool" cut from trade barriers is used to support the development of domestic agriculture to form the market competitiveness of domestic agricultural products.

It has to be said that the last move was indeed vicious.

But this is a policy of all kinds of preservation. Trade barriers raise the prices of imported goods, and high tariffs are used to subsidize the development of domestic agricultural enterprises. Then, in the face of expensive imported food and cheap domestically produced food, the Soviet people will make the right choice with their eyes closed. The only drawback is that the other party may protest in the future when trade negotiations are held, and restrict the entry of the Economic Cooperation Organization.

"Okay, is there anything else to add?" Yanaev looked around the quiet surroundings and asked slowly. (To be continued.)