Agricultural restructuring in central and eastern Europe: implications for competitiveness and rural development

Abstract

This paper considers whether the dual production structure now in place in central and eastern European countries (CEECs) is efficient and stable in the medium term. The large, recently emerged corporate and co-operative farm structures may not be stable because of conflicts inherent in co-operative production under current ownership structures. Such units use high levels of capital and purchased inputs, and relative price changes for production factors may threaten their survival without subsidies. The few large individual private operators that have emerged may soon face restructuring problems, as they have been relying on cheap capital at prices that do not reflect current replacement costs. New, younger, relatively small-scale farmers appear to have major and as yet unexploited production potential. Although representing only a small share of the many family farms, they are nevertheless numerous enough to create a viable 'middle class' of commercially oriented, private farmers. Although this group currently faces severe technological and financial constraints, the emergence of medium-sized, individually owned and operated farm units is the most viable option for the future in CEECs.

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