With Decree no. 686 "On the organization of the supply of products to the agroindustrial complex through long-term rent (leasing)" of 16 July 1994, the Russian government introduced the principle of leasing, and established a state leasing system under the auspices of Rosagrosnab. In 1994-1996, agricultural producers spent 3489.1 billion roubles in acquiring agricultural and processing equipment through payments in instalments. However the state leasing system has significant shortcomings. For example, the main supplier of agricultural technology through leasing arrangements, Rostsel'mash, often supplies machinery that is of a poor quality and which requires substantial servicing before it can be used. Rostsel'mash received 49.7% of the total leasing budget (1735 billion roubles) in 1994-1996. The commercial leasing system offered by SBS-Lizing (part of the SBS-Agro banking group) is considered to provide a better option. SBS-Lizing's system involves 6 stages: (1) Formulation of an application bya prospective lessee; (2) Tenders by machinery and equipment manufacturers; (3) Purchase of machinery by SBS-Lizing; (4) Conclusion of a leasing agreement between SBS-Lizing and the lessee; (5) Use of the equipment under leasing conditions; and (6) Transfer of ownership of the technology to the agricultural producer once all payments to SBS-Lizing have been made. SBS-Lizing does not work with Russian machinery manufacturers. A leasing agreement with SBS-Lizing will typically have a term of 3-5 years, with a deposit of 15-30% and payment in instalments beginning up to 6 months after the machinery is put into use on farms. Costs associated with insurance and technical servicing are covered.
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