Assessing land reallocation decisions during transition in Romania

Abstract

The post-socialist countries underwent dramatic changes in agricultural land ownership and production system. Former socialist collective farms have been dismantled, rural land has been privatized, and land markets have been formalized. Nevertheless, more than a decade later farming associations still persist in the choices that landowners make in terms of land reallocation despite collective action problems and the availability of leasing-out land as a close substitute. While the decision of farming the land individually has been well understood, there is less research on why landowners join farming associations rather than participate in land transactions. The paper examines this question using household survey data from the two largest agro-regions in Romania. I find that farming associations constitute a good land reallocation option for landowners that are resource constrained but are still willing and able to be engaged in farming. Associations provide security of tenure and capital access, allowing landowners to draw on the benefits of scale economies. Leasing-out is a viable alternative for younger landowners who can engage in non-farming activities and for older landowners with limited farming abilities.