Does cooperation lead to private farmers' success? Findings from a survey in Kurgan Region, Russia

With the collapse of the socialist regimes the institutional environment for doing business had to be changed. With respect to agriculture, one of the major outcomes had been the (re-) establishment of private farming. In... [ view full abstract ]

With the collapse of the socialist regimes the institutional environment for doing business had to be changed. With respect to agriculture, one of the major outcomes had been the (re-) establishment of private farming. In Russia, this type of farming was politically promoted. Private farms were supposed to form the backbone of agricultural production. While there had been an increase during the 1990s, they did not develop as anticipated. They still play a minor role between the large-scale corporate farms, which are successors of the former socialist farms, on the one side and household plot producers on the other.
Nevertheless, private farming seems to become stronger over the last years. While the number of private farms has stagnated during the early 2010s at around 260,000 and seems to be gradually declining during the last years, its share to total food production increased to about 10 percent in 2014. Similarly, average farm size rose to more than 160 hectares.
Since private farmers start from scratch there is no denying that they are in need of a supporting infrastructure which similarly has to be set up from scratch. The set-up of viable agricultural service cooperatives might be such an option. However, in most post-socialist countries, no formalised collaboration among private farmers could be observed. It had been argued that due to “communist legacy” farmers had a lot of scepticism. Alternatively, informal networks might be helpful if the institutional environment is not supportive in establishing formal forms of collaboration.
Based on a structured questionnaire data was collected in a survey conducted through personal interviews. It took place in Spring 2015 within the Kurgan Region, Russia bordering Kazakhstan. 167 private farmers had been interviewed. The analysis will be done using descriptive analysis and econometric regression methods.
The empirical analysis tests whether the characteristics of farmers’ social network interactions may explain the farm success, as measured by self-reported farm incomes. It has been hypothesized that networks may connect farmers with each other. The findings show that agricultural productivity per hectare of land is higher for those who belong to formal institutions. This may indicate better access to farm inputs in cases where markets do not provide sufficient access to various farm inputs. The transaction costs might be reduced through social network collaborations.