Why are agroholdings so pervasive in Russia's Belgorod<i>oblast</i>'? Evidence from case studies and farm-level data

Abstract

This article analyses the reasons for the prevalence of agroholdings in Russia's Belgorod oblast ', focusing on the forces driving their emergence and persistence. It draws on both case study evidence and a unique farm-level dataset for 2001--07. It argues that, despite notable evidence for government support, political economy factors alone cannot explain the emergence of agroholdings in this region. Instead a complex mix of political and pure economic factors favoured agroholding creation. Likewise, it is shown that the persistence of agroholdings in Belgorod cannot easily be reduced to rent seeking. Rather much evidence is found that it is caused by good economic performance of agroholding farms, in particular by improvements in total factor productivity resulting from large investments in modern technology. However, since these investments were mostly credit financed, agroholding farms are exposed to a higher risk of default than independent farms.