The Political Economy of Russian Agricultural Subsidies

Agricultural policy s support to farmers, measured in real terms, differs considerably across Russian regions. What explains these large differences in regional agricultural support? We argue that traditional approaches of agricultural economics cannot fully explain this variation and we draw upon the political eocnomy literature. In particular, we explain allocation and distribution of agricultural subsidies studying the incentives of federal and regional politicians. Electoral pressures arising from competing with other political parties may push federal politicians to target either loyal or easily swayed voters and regional ones to strategically target special interst groups. Vertical organization of the Russian dominant party may generate perverse accountability links between local governors and regional agricultural interest groups. We utlize a unique dataset on the agricultural subsidies in 2008-2015 in order to test the hypotheses. The evidence suggests that federal government targets swing regions in distributing agricultural subsidies and local governments are more likely to allocate larger co-funding shares facing higher political competition in the region. In addition, regions with better organized large-scale agricultural producers and elected governors are more successful in maximizing obtained agricultural subsidies from the federal level. Acknowledgement