CESTRAD Conference on

Transition, Institutions, and the Rural Sector

The Hague, The Netherlands

December 10-11, 2001

A Decade of Transition in Europe and Central Asia:

Design and Impact of Land Reforms

Zvi Lerman

The Hebrew University of Jerusalem, Israel




Share of Land in Individual Use in CEE and CIS: 1990 and 1997

CEE / CIS / US / Canada
Land in individual use
1990 / 14% / 4%
1997 / 63% / 16% / 99.6% / 98%
Ave change 1990-97 / ×9 / ×13

Restructuring Modes for Collective and State Farms

Allocation strategy / Immediate outcome / Resulting farm structures /

Countries

Physical distribution of land and assets / Dismantling of collective structure / Individual farms / All CEE, Armenia, Georgia, Moldova
New corporate units: reconfiguration of individual holdings / CEE (not Albania), Moldova
Distribution of “paper shares” / Retention of former collective structure as new org form / Individual farms: withdrawal of shareowners / All other CIS
Corporate units: reconfiguration of shares inside former collective shell
“Stay as is”: Successor farm created by keeping shares in former collective

“East-West Divide”: Restructuring

CEE (10)CIS (12)

Individualization of land use63%16%

Reorganization of large farms

Size“Half size”10-15% smaller

Lifetime employmentAbandoned?Retained

Profit motivationStrong?Weak

ManagementProfit centers?Centralized

Shareholders’ Assessment of Changes After Farm Reorganization – Ukraine and Moldova (average percent of respondents)

Worse / Better / No change
General situation on farm / 35 / 11 / 45
Worker relations / 23 / 12 / 55
Motivation / 23 / 17 / 52
Average score / 27 / 14 / 53

Source: World Bank surveys.

Farm Objectives as Perceived by Farm Managers:

Pre-Reform and At Present

Moldova / Belarus
Before / Now / Before / Now
Fulfill production plan / 81 / 1 / 50 / 28
Maximize production volume / 12 / 23 / 30 / 32
Maximize profits / 3 / 59 / 37 / 60
Ensure full employment / 1 / 3 / 8 / 5
Supply population with food / 1 / 8 / 13 / 14

Source: World Bank surveys.

“East-West” Score Card

CEE (10)CIS (12)

Private ownership10070

Privatization strategy??

Allocation10050

Transferability8030

Individualization6733

Large farm reorganization5025

Average score7942


Low Share of Individual
Land / High Share of Individual
Land / Total
Growth in GAO / 1 / 6 / 7
Decline in GAO / 9 / 6 / 15
Total / 10 / 12 / 22

Chi-Square significant at 5%

Russia: 1997 (regional data)


Mean Technical Efficiency Scores: Individual and Corporate Farms

Individual farms / Corporate farms
Hungary / 0.58 / 0.44 (coops), 0.50 (new co.)
Czech Republic / 0.62 / 0.57
Bulgaria / 0.44 / 0.44
Belarus / 0.54 / 0.58
Ukraine / 0.55 / 0.59
Moldova / 0.54 / 0.56
Turkmenistan / 0.72 / 0.72

Notes:

Hungary, Czech Republic, and Bulgaria: crop farms, Mathijs and Swinnen (2000).

Belarus, 1999 World Bank survey, DEA; Ukraine, 1998 World Bank survey, DEA; Moldova, 1997 World Bank survey, SF; Turkmenistan: 1998 World Bank survey, SF

Perceived Material Situation of Households

Independent farmers / Farm employees

Change of family’s material situation in recent years

Improved

/ 42 / 8
Unchanged / 34 / 51
Deteriorated / 24 / 41

Adequacy of family income at present

Sufficient for subsistence (or worse) / 45 / 70
Adequate for basic necessities / 45 / 29
Comfortable – no material difficulties / 10 / 1

Perception of family’s economic future

Better / 43 / 14
Unchanged / 47 / 55
Worse / 9 / 31

Source: World Bank surveys for Russia, Ukraine, and Moldova 1994-98.



Policy Indices and Performance (percent change 1992-97)

Ag prod / GDP / Land Policy / ECA97 / Wgt Ave
“Growth” / +8 / +9 / 8.6 / 6.7 / 5.9
“No growth” / -27 / -29 / 6.1 / 5.1 / 4.2
CEE / -1 / +8 / 9.4 / 7.2 / 6.6
CIS / -17 / -25 / 5.7 / 4.8 / 3.8

What Did the “Leaders” Do Differently?

•Stronger commitment to reform:

executive/legislative/regional/local

•Clear acceptance of private land ownership and individualization of agriculture

•Facilitating farm size adjustment through land transactions (including leasing)

•Hard budget constraints forcing shift to market orientation

•Enabling the emergence of market support services