Restructuring of Eastern European agriculture

Abstract

Agricultural restructuring in Eastern Europe is a part of the restructuring of the economy as a whole. After democratic changes, Eastern European countries have fallen into a deep crisis. There are several reasons for this, including the large debt burden, decreased export opportunities, and monetary restrictions. The major reasons, however, are the lack of a clear economic policy at the governmental level and lack of confidence in the future of enterprises. In the industry and service sectors, ownership conditions are uncertain, and this hinders investing from both private investors and managers of state owned enterprises.

An unambiguous situation can be created only by rapid privatization. Privatization is slow and difficult, however, and there is no agreement even on its form.

In agriculture, problems arise differently. Privatization there would mean giving up economies of scale. For widespread small farming, both capital and producer motivations are lacking as well. Working on state and cooperative farms with additional part-time farming has been a lifestyle of the people for decades. Apart from that, new smallholders, left on their own, could not survive falling domestic demand for agricultural products and decreasing export opportunities. Therefore, measures need to be implemented in order to reduce agricultural supply, labor, and land area.

A feasible solution would be for socialist producer cooperatives to be transformed into real cooperatives, with cooperative and individual farming allowed to develop side by side.