Russia’s agro-food sector has changed significantly during the reform period. Firstly, the agricultural production were transformed and the downstream sector has been privatized. The industry has become more sensitive to market signals.

Secondly, the state role in food distribution was diminished sharply and a new market infrastructure of the food chain has emerged. Thirdly, the food deficit typical for the centrally-planned economy was almost eliminated. These changes were achieved at the expense of a notable fall in agro-food output and the food consumption of citizens. At the same time, from 1997 to the first half of 1998, there have been a number of signs for a recovery of the agro-food economy, though the recovery was slow and even reversed by the impact of the financial crisis that hit Russia in the second half of 1998.