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If sugar, alcohol, milk, and mineral water can be considered staples in the diets of Primorye residents, there is something to celebrate at the beginning of the 1998 agricultural season.

The silver lining on the otherwise gray cloud of post-Soviet Primorsky Krai agriculture is that overall food production was up 35 percent in 1997, with those few items leading the food production increases. Unfortunately for the agricultural sector as a whole, the forecast remains somber, with mounting debts, declining private investment, and the virtual elimination of federal subsidies, statistics show.

According to the Primorsky State Statistics Committee, the 1997 krai budget allocation to the region’s agricultural and food processing industries was 2.7 billion old rubles ($450,000), up 35 percent from the previous year, while private investment decreased by nearly 12 billion rubles ($2 million). For the third straight year, there was virtually no capital investment from Moscow in 1997.

Also of concern is the fact that sector-wide debts rose to a record level of 340 billion rubles ($56 million), more than twice the level of the previous year. With mounting debts and rising input costs, such as utilities and fertilizer, it is estimated that only one in five food and food processing enterprises in Primorye is financially stable. Nationwide, more than 95 percent of the 26,700 collective farms that survive have not done any substantive restructuring, according to the University of Washington Rural Development Institute, which monitors agricultural reform in former Communist countries.

“We need to pull down the old hut, and build a new house,” says Victor Serov, director of the Primorye Collective Farm – an 18-hectare compound with 550 employees that grew 23 billion rubles ($3.9 million) worth of cucumbers, tomatoes, and greens last year. Located due east of the downtown, the farm’s assets were distributed among employees seven years ago, based on seniority and tenure. The farm is now a limited commercial structure, closed to outside investors.

Despite all this, the farm operated at a loss for the second year in a row in 1997. Serov attributes this to three factors: rising costs of heating the greenhouses, increased costs of shipping fertilizer and seed by railroad from Moscow, and competition from cheap, imported Chinese produce.

The means for supporting and developing this “new house” lie with the government, Serov says, in the form of subsidies, tariffs on imported food items, and basic support for idled farms in the region. Like many farm directors who have inherited the embers of the Soviet agriculture policy, Serov’s enthusiasm for private support of agriculture is mixed, at best.

“To begin retrofitting our equipment now, knowing that I won’t be able to get a bank loan, is adventurism,” he says. “It’s the same as sailing in a boat, cutting a hole in the bottom and then going out and buying a new boat.”

Boris Yemets, chairman of the krai Committee on Food and Food Processing Industry, said declining federal agricultural subsidies and the gradual shift toward more local funding is a harbinger of things to come. “Local authorities need to decide where their spending priorities are,” Yemets says. “They need to find out for themselves what they need to build and support what they don’t. Manufacturing companies, companies working with raw materials, mines, railways, larger industries will be funded from the federal budget.”

At a recent press conference, Vice Gov. Valentin Dubinin, whose office oversees agricultural policy in Primorye, cited declining morale among agricultural workers and a collapse in livestock numbers as the most urgent causes in Primorsky agriculture. Dubinin also noted that attrition in the entire industry is inevitable.

“Let 50 or 60 percent of the farms remain to fulfill the needs of Primorye and other areas,” he said, “rather than supporting those who are holding back the more serious farms, where there is good potential and good possibilities.” He also cited concern for the country’s national security.

“Economic security, food security, if this is not resolved in Russia, this is most frightening,” Dubinin said, “If we should become wholly dependent on foreigners, we won’t need a military, an army. With all their strength, everyone should unite to solve this problem.”