Substantial reduction of production potential of Russian agro-industrial co
mplex (ATC) is one of the most negative consequences of the new agrarian po
licy in 1991-98. The main reason for that is the lack of investments, both
foreign and domestic. Russian enterprises are not attractive for investors
due to their low solvency and profitability, but it is impossible to gain p
rofitability without modernisation of production. This vicious cycle is aff
ected greatly by macroeconomic destabilisation with its high inflation and
prohibitive interest rates, and the absence of land turnover. A set of meas
ures should be implemented to overcome all these obstacles. Among them (1)
to create the principles of investment policy in AIC at the governmental le
vel; (2) to restructure the debts of agricultural producers thus making the
m solvent; (3) to facilitate the introduction of a land market; (4) to allo
w agricultural producers to invest their profits into the modernisation of
production via profit Tax exemption; (5) to provide a guarantee system agai
nst political and other risks; (6) to stimulate Russian banks to invest; (7
) to reduce import barriers for agricultural machinery and equipment. The c
reation of such favourable conditions will promote the process of investmen
t to Russian AIC.