Why Large Farms Dominate and Rural Areas Struggle in Slovakia

Abstract

After 1989, Slovak agricultural sector was transformed from centrally planned economy to the market economy. Before 1989 farms in Slovakia were large cooperatives and state farms with large acreage, without existence of private companies. Agriculture in Slovakia has also currently different structure compared to agriculture in old EU member states. The majority of UAA (75%) is cultivated by large farms – agricultural holdings – with 1200 ha per farm on average. Therefore, although subsidies in form of direct payments per hectare are lower than in old EU member states, the payment per farm is one of the biggest in EU. In the paper, we analyse the effect of large farms on rural employment, wages, agricultural production and profitability of large farms. The analysis is based on individual farm data in the period 1994 to 2014 in Slovakia. The results show from that steep decrease in employment, low wages and low level of agricultural production of large farms is one of the reasons for disparities in development of rural areas and urban areas in Slovakia.