THE ECONOMICS OF AGRICULTURAL DECOLLECTIVIZATION IN CENTRAL AND EASTERN EUROPE

Abstract

The break-up of large-scale agricultural production units into individually operated farms differs considerably across Central and Eastern European countries. Family farming is not well developed in countries where large-scale successor organizations to the former state and collective farms still dominate, such as Slovakia, Hungary and the Czech Republic. However, family farms are important in Albania and Latvia, where a massive break-up of the collective farms resulted in a domination of small-scale production units. Also within countries there exist wide variations in the decollectivization of different regions and agricultural subsectors. We develop an economic model of decollectivization to explain these variations and derive a series of propositions regarding factors affecting the decollectivization process. Our empirical analysis presents remarkable correlations between decollectivization and our explanatory variables. Specifically, they suggest the importance of relative productivity, factor intensity and privatization procedures in explaining differences between countries in decollectivization. The authors acknowledge financial support by the Belgian National Foundation for Scientific Research (NFWO) and by the COST-program of the EU Commission. We thank Csaba Csaki, Zvi Lerman, Sophia Davidova, Willi Meyers, Natalija Kazlauskiene and participants at seminars in Utrecht, Sinaia and Edinburgh for comments on earlier versions of the paper. Policy Research Group, Department of Agricultural Economics, Katholieke Universiteit Leuven, Kardinaal Mercierlaan 92, 3001 Leuven, Belgium, Tel.: ++32 16 321618 Fax: ++ 32 16 31996 E-mail: erik.mathijs@agr.kuleuven.ac.be.