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3.4. The municipal reform - FARMER COOPERATIVES VERSUS COLLECTIVE FARMS American Studies on Ukrainian Problems Vitaly V. Zinovchuk

It may seem strange but in Ukraine the attitude of rural people to any restructuring is very careful and often openly ill-disposed. The traditional peasant conservatism is not able to perceive fundamental changes in the way of living, sources of income, and general organization of rural life. This type of conservatism has existed at all times and in all countries. The risk of fundamental changes in agriculture is usually great because economic and natural processes are very intertwined; results come not at once but after a certain period of strenuous work (sometimes even years); and the disturbance of a formed system of relations, both technological and economic, requires a prolonged period of rehabilitation. It also should taken into account that rural people, generally, have a lower level of education and information. The tenseness of the production cycle leaves for them too little time to eliminate this shortcoming.

The conservatism of Ukrainian peasants has also certain political origins. Three fundamental agrarian reforms in the first 30 years of this century (Stolypin's reform, the October Revolution, and collectivization) had shaken the Ukrainian agriculture to the ground. The particularity of the current moment is that there are practically no people who remember how Stolypin's reform was made and what were its positive results', and at the same time a lot of people still remember collectivization and its fatal consequences. The forced character of that ideological transformation discourages Ukraine peasants from any restructuring for long time. The overwhelming majority of those who cultivate land in Ukraine do not realize even how far they were hurled back from possible results of agrarian potential of Ukraine and modern living standard of rural people in developed countries. They irresponsibly continue to maintain the system of collective farming only for one reason — they simply do not know a better way to replace it.

The deep roots of the support of collective farms have a broader background than only economic. Collective farming is an entire social system which put all rural people into dependance on it. It could be argued that the support of collective farms by the majority of their members is a support of the social system of collective farming rather than its economic organization. Without this system, life in the countryside would be more difficult and in some cases (for pensioners, peoples with disabilities and with lower level of incomes) even impossible. That is why the formation of the alternative organizational structure will be unthinkable if the rural population is not given a strong guarantee for defense of their social interests. For the existing situation in Ukraine it can be done only through transformation of non-economic functions of collective farms to elected local authorities (village boards) and their executive committees. This process may be called a municipal reform.

Development of non-economic functions in collective farms was caused by inability of the state to provide normal social services for the rural population. This is why the state transferred these functions to collective farms, and not only addressed and also required collective farms to plan and report on work which was done. Variety in collective farms' incomes led to the differences in the quality of social infrastructure in Ukrainian villages. Collective farms which are located close to cities, with more beneficial specialization, and ruled by more influential leaders, generally, had more advanced social infrastructure. Informally, there even exist such notions as "rich" and "poor" villages.

Chairmen of collectives farms (who in fact controlled resources and had a real power in villages) had to solve social problems to the detriment of production development. To build a new school, club-house (place for cultural events), cottages for collective farm members, shop, kindergarten, obstetrical center and dispensary, natural gas network, roads, etc.1 was and is a matter of honor for each collective farm chairman. Namely these activities were the most important criteria in estimation of a chairman's performance by members of the collective farm. One the hardest chairman's task was to balance between the pressure of the higher authority to develop production and the obligation to improve living standard of the people who elected him. Now, under conditions of economic stagnation the difficulties of finding and allocating resources to social sphere becomes even more problematic for collective farms.

An important social function of collective farms is to take care of pensioners and disabled people. This category of people is especially dependent on collective farms. To help in cultivation of family plot (as a rule, pensioners continue individual farming), to provide fuel for winter, to pay for recreation and health resorts, to give transportation when it is necessary, to sell food products at reduced prices — all these and many other services are conducted by collective farms. For this category of people, the disappearance of collective farms means impossibility to enjoy all these privileges. That is why they are the strongest supporters of collective farming as well as people who have some benefits from collective farming due to their official positions. True, not all collective farms take care of their older and disabled members in equal degree. But the cases of unsatisfactory attitude to this function violate the existing practice rather than a general rule. Anyway this function must exist, and somebody must be responsible for its performance.

The municipal reform has also an important organizational reason. When there was only one collective farm in the village, or even some villages were included in one collective farm, there was no question who was responsible for the development of social infrastructure in these villages. But now the situation has been changed. There can be a collective farm, joint stock company separated from this farm, several private (family) farms, and other enterprises in one village. Who will be responsible to build a school, dispensary, roads, etc.? If it remains the function of the collective farm, other organizations should compensate a part of its expenses according to their use of the social infrastructure, or to pay periodically for this use, or to invest in its construction and to be an owner. All three variants hardly can be accepted: a) it will be very complicated or even impossible to determine and control the use of social infrastructure; b) other enterprises (excluding the collective farm) may not agree with the expenses made by the collective farm (taking into consideration of low level of labor organization and inefficient use of resources); c) because constructed objects will be in common use and will need a special control and care, other organizations may not accept ownership for them.

It becomes logical to address functions for social development in a certain area to those who are legally responsible for that -- village boards which are local state authorities which are elected for each four years. This institution of state power has existed since 1920s, even before collectivization. But gradually they came into dependence on collective farms because of an absence of any real economic power. During the Soviet period collective farms fully controlled the activities of village boards and their executive committees. It was made through Communist party organization which was common for the collective farm and the village board. Leaders of collective farms were also members of village boards. The decisions of Communist party organization were obligatory for village board to fulfil in spite of the fact that the board was a legal representative of the state power. Village boards were also actively engaged in collection of product duties (milk, eggs) from individual subsidiary economies of collective farm members, and distribution of land for individual (family) plots.

Recently village boards have begun to play a more essential role due to participation in decision making process on land privatization. Liquidation of Communist party organizations in collective farms and democratization of rural life also increased the authority of village boards. However, they have received only political freedom but not an economic independence. Financial allotments from the state budget are very scanty, and even having them village boards are powerless because of inflation and deficit of other resources. That is why village boards have constantly applied from assistance of collective farms.

The situation would be changed if village boards have more essential funds and other own resources for performance of their municipal functions. In order to achieve this the existing practice of taxation for agricultural enterprises and other businesses in rural area should be changed for another system. First, certain tax privileges of collective farms must be canceled. Low productivity and inefficient use of disposable resources as well as other installed imperfections of collective farming must not be a justification for such privileges. In the past, the existence of a certain tax privileges for collective farms could be explained by necessity to conduct social functions themselves. But if these functions can be transmitted to municipalities, taxation also must be changed. Second, taking into consideration the especially low living standard of rural population, the state should reestablish proportions for the tax distribution between local (village), district, region and federal level in favor of local level. Third, local tax must be addressed directly to village boards. Today, local tax is directed to higher (district) state authority and than is redistribute within the district. The municipal reform will open new perspectives for rural development (Figure 36). Activization of different municipal activities will require new employees which can be found in agriculture where increasing labor productivity creates surplus of labor force. It can weaken the threat of unemployment caused by market transformation. The strengthening of the economic position of village boards can allow them to introduce a new departmentalization. It seems reasonable to have three basic department in each rural municipality:

1. Social development service. This department can be responsible for preparation of social development projects and their implementation. It will conclude contracts with different organizations (building companies, repair firms, etc. and even collective farms) to fulfill work at the social objects within the community. The organization of municipal trade, child care, educational, medical, cultural and sport establishments will be under control of this depatment. There should be close contacts with different state centralized services such as the employment service, different state-run technical services, and police. The department will account the financial assets of the municipality.

2. Environmental management. The necessity of this function became urgent a long time ago. In densely populated Ukraine (224 people per sq.mile), where there is relatively intensive industrial and agricultural production, the state environmental control, as a rule, exist only in urban zones. Meanwhile in the countryside, the ecological problems have reached a dangerous level. Collective farms in addition to their economic imperfections became dangerous pollutants of the natural environment. Their use of natural resources and ecological cleanness of their produce is out of any effective state control. A way out from occurring situation is to delegate environmental management to local authorities which will conduct this function systematically and persistently. The main purpose of the environmental management department will be to organize the community life in harmony with natural environment. To provide that municipalities will need professional experts, equipment, transportation, etc. and a certain empowerment. Such innovation will make all enterprises and other organizations equilly responsible for careful attitude to environment. Besides of the control function this department can be engaged in water and food quality management, forest protection, wastes and recycling management. Land privatization and tenure also can be under control of this department.

3. Social support of pensioners and people with disabilities. This department must first of all control how collective farms and other organizations take care of their pensioners, expose common and individual needs of people served, and find methods of their satisfaction. This service already exists in the cities and towns (district centers). If this social aim to older and disabled people be put under effective state control in the villages it can decrease interests of these people in existence of collective farms in their present form. So one more obstacle on the way to market oriented agriculture can be overcome.

The municipal reform is the final link in the model of the alternative organizational structure of Ukrainian agriculture. The solution of economic and social problem in common context will make ordinary people more receptive to the idea of a market transformation. They also should understand that the restructuring has the final purpose of increasing their living standard, certitude as for the future, and achievement of social justice. The new organizational structure of agriculture, which will be a self-regulating and self-governing system existing independently from will and wants of separate persons, will be the best guarantee for that.