Potato Cooperation: Lessons of the History for Modern Development

Abstract

The article offers a discussion about finding solutions to uneven market power of potato producers and its processors. The high market power of persons not directly related to potato production has a direct impact on the income level of those who produce the product. The obvious injustice of this situation is not the know-how of the current stage of development of economic relations in Russia, but a well-forgotten old, unresolved issue from the past. This situation, when the manufacturer of the product found himself in a deliberately subordinate position with respect to the buyer, wholesale processor, breeder, is completely new. And the solution that previously yielded a positive result cannot be called new - this is production cooperation. There are institutional conditions for its implementation, and it seems that economic conditions have matured to strengthen agricultural producers. The aim of the paper is to compare the market power of the before Revolution situation in agriculture and post-Soviet situation of modern agroeconomic development. Results. The compare of the market power shows that in the market economy there is almost unaltered structure of the food market and unbalanced power distribution with tilt for the seller but not producer. Methods. There were methods of institutional analysis, historical, normative, comparative and some others used in frame of research. Results. Market power of sellers in the past and modern time plays negative role on reproduction process. As it is shown on potato production, only cooperatives can solve the problem of unbalanced market power distribution and will make producers more competitive in reproduction process. The methodology of institutional analysis and specially historical institutionalism help us to understand the market power distribution mechanism in reproduction process. It makes our research useful for agrarian policy makers on all levels of power.