In a dramatic indication of just how far he wants his reforms to go, General Secretary of the Communist Party Mikhail Gorbachev calls for an end to the Soviet agricultural bureaucracy and the introduction of free market principles. Gorbachev's speech was an indication that his economic program in the Soviet Union was suffering serious troubles--problems that eventually led to the collapse of his government and the Soviet Union in December 1991.
By 1989, the Soviet economy was reeling, and one of the biggest problem areas was agriculture. The Soviet centralized farming system, in which farmers worked to fulfill quotas set by the government and sell their produce directly to the state, was a disaster. Despite billions of dollars in government subsidies, the majority of the nation's farms operated at a loss. Each year, the Soviet Union was forced to import tons of wheat, meat, and other products. Gorbachev reacted to this embarrassing Soviet dependence on foreign markets for essential foodstuffs with his March 15, 1989 proposal to decentralize the farming system and allow more free market policies to dictate the agricultural industry in Russia. In his request to the Soviet Central Committee, Gorbachev stated, "The essence of economic change in the countryside should be in granting farmers broad opportunities for displaying independence, enterprise, and initiative." Under his plan, many farmers would be able to sell their produce directly to farmer's markets or restaurants, for example.
The Central Committee issued its approval of the plan the following day. However, Gorbachev's proposal was too little, too late. The Soviet economy continued to falter and agricultural production never met demand. The economic problems contributed to the failure of Gorbachev's government and other reform plans, and in December 1991, Gorbachev formally resigned as president of the Soviet Union. Shortly thereafter the Soviet Union was dissolved.