Farm debt in transition countries: Lessons for Tajikistan

Farms in Tajikistan currently face a severe debt crisis that has been caused by a combination of two factors typical of such situations in many countries: (a) the inability of the farms to make a profit under current conditions and (b) continued lending by the banks to cotton producers regardless of reduced payment capacity and lack of credit-worthiness. The paper traces the accumulation of farm debt in Tajikistan to pervasive government intervention in both financing and production decisions, which has led to soft budget constraints and moral hazard behavior. The purpose of the paper is to inform the debate around the issue of cotton farm debt in Tajikistan by studying the experience of other countries that had to contend with farm debt overhangs in the 1980s and the 1990s. Five CIS transition countries (Belarus, Kazakhstan, Moldova, Russia, and Ukraine) and one market economy (Israel) are studied using time series of aggregate financial reports of the farm sectors. The comparative analysis shows that the farm debt issue is not strictly a transition economy phenomenon. The problem can occur in market economies (e.g., Israel) if the state pursues policies directed toward the expansion of farm production without heed to creditworthiness of the farms and if the farm structure is incompatible with profitability and efficiency criteria. The basic reasons that led to debt accumulation in CIS and in Israel remain valid to this day, and the policy solutions implemented in these countries are relevant for Tajikistan.Farm debt, transition economies, Tajikistan, CIS, Israel, farm restructuring, agricultural reforms, Agricultural Finance, Institutional and Behavioral Economics, Q140, P210, P320, G300,

Sources of Agricultural Productivity Growth in Central Asia

The paper examines agricultural production and productivity growth in two Central Asian countries – Tajikistan and Uzbekistan. Both countries are characterized by a significant shift of resources from the traditional Soviet model of collective agriculture to more market-compliant individual and family farming. In both countries, the beginning of the policy-driven switch to family farming around 1997 coincided with the beginning of recovery in agriculture, namely resumption of agricultural growth after a phase of transition decline since 1991. In addition to growth in total agricultural production, we also observe significant increases in productivity of both land and labor since 1997. These observations suggest that productivity growth may be attributable to the changes in farming structure in Central Asia. To check this conjecture we assess the sources of growth by applying the standard Solow growth accounting methodology. Using time series of country statistics for farms of different organizational forms, we decompose the growth in output into growth in the resource base (extensive growth) and growth in productivity (intensive growth). Solow growth accounting clearly shows that, first, much of the growth at the country level is attributable to increases in productivity rather than increases in resources and, second, the increases in productivity in family farms (especially household plots) outstrip the increases in productivity in former collective and state farms. These findings confirm that the recovery of agricultural production in Central Asia has been driven largely by productivity increases, and it is the individual farms that are the main source of agricultural productivity increases.agricultural productivity, agricultural growth, family farms, corporate farms, comparative performance, agrarian reforms, transition countries, Central Asia, Tajikistan, Uzbekistan, Agricultural and Food Policy, Institutional and Behavioral Economics, Land Economics/Use, Productivity Analysis, P27, P31, P32, Q15, R14,

Productivity and Efficiency of Corporate and Individual Farms in Ukraine

The paper presents a comparative analysis of the productivity of corporate and individual farms in Ukraine based primarily on cross-section data from a farm survey conducted by FAO in 2005. We calculate partial land and labor productivity, total factor productivity, and technical efficiency scores (using Stochastic Frontier Analysis) for farms of different organizational forms. Our results demonstrate with considerable confidence that, contrary to established convictions among the Ukrainian decision makers, the large corporate farms are not more productive than the smaller family farms. This finding is not restricted to Ukraine, as a similar result has been obtained by in Moldova, Russia, and the U.S. Policies encouraging a shift from large corporate farms to smaller individual farms, rather than the reverse, can be expected to produce beneficial results for Ukrainian agriculture and the economy in general. The government of Ukraine should abandon its inherited preference for large-scale corporate farms and concentrate on policies to improve the operating conditions for small individual farms. At the very least, the government should ensure a level playing field for farms of all sizes and organizational forms, and desist from biasing its policies in favor of large farms.family farms, corporate farms, comparative performance, technical efficiency, total factor productivity, agrarian reforms, transition countries, Farm Management, Productivity Analysis, D24, J24, P27, P31, P32, Q12, Q15, R14,

Rethinking agricultural reform in Ukraine

Land reform and farm restructuring have always been a major component of the transition from plan to market in all formerly socialist countries, and especially in the 12 former Soviet republics forming the Commonwealth of Independent States (CIS). Ukraine, the second most populous country in CIS (after Russia) and the third largest by area (after Russia and Kazakhstan), began the process of agrarian reform in March 1991, six months before the declaration of independence from the Soviet Union. However, all through the 1990s international organizations berated Ukraine for its slow and insufficient reforms. Derogatory phrases like "one step forward, two steps back", "changing the sign on the door", "disappointing performance", "lack of vigorous progress" were universally (and justifiably) used to describe the Ukrainian reforms during the presidency of Leonid Kravchuk (1991-1994) and then (perhaps with less justification) under Leonid Kuchma (1994-2004). Evaluating the outcomes of nine years of reforms through 1999, World Bank experts summarized the conclusions of their continuous monitoring efforts in the following uncomplimentary language (CSAKI, LERMAN, 2001): In Ukraine, land reform has been mostly limited to transforming state ownership into collective ownership⦠The weak reforms have failed to radically change the traditional collective organization of Ukrainian farms⦠Break-up and internal restructuring of large farms has been very limited. Hence it should not be a surprise that the transition process is not delivering in terms of increased profitability and efficiency. The "big bang" came in December 1999 in the form of Presidential Decree No. 1529/99 "On immediate measures to accelerate the reforms in the agricultural sector". By this decree Ukraine made the momentous decision to complete land privatization through conversion of the "land shares" â paper certificates of landownership previously distributed to the rural population â into demarcated and titled physical plots. This decision, long advocated by international donors, set Ukrainian land policies sharply apart from the policies of other large CIS countries (Russia, Kazakhstan, Belarus), and put Ukraine roughly on the same land reform path as the two smallest CIS members, Moldova and Azerbaijan. January 2005 marked the five-year anniversary of this landmark decree. FAO accordingly launched a monitoring study to assess the outcomes of reform since 2000 and to formulate a set of policy recommendations based on the post-2000 reality in the rural sector.1 The overall purpose of the study was to determine to what extent and in what ways there had been fundamental changes in land and farm policy after 2000. The methodology included a structured questionnairebased survey of three constituencies representing the Ukrainian farm structure: The managers of large corporate farms, individual peasant farmers, and operators of rural household plots (this survey is referred to as the 2005 FAO farm survey). Interviews were also conducted with regional agricultural officials to get a view of farm-level changes "from the outside". Official national statistics were used to construct a picture of sectoral changes. The survey was designed to conduct a comparative analysis of land rights, management structure, and economic performance in the two main sectors of Ukrainian agriculture â corporate farms and individual farms. We were also planning to collect information that would enable us to detect significant differences between the "new wave" corporate farms created on the basis of the new legislation in the post-2000 period and the "old wave" descendants of the traditional collective and state farms. The study is a collaborative effort of three institutions: The Policy Assistance Branch of FAOâs Regional Office for Europe and Central Asia (REUP) in Rome, the UNDP-sponsored Agricultural Policy for Human Development (APHD) project in Kiev, and the Institute of Sociology, also in Kiev. David Sedik as the Head of REUP was responsible for the overall design, management, and coordination of the study. Vladimir Artyushin and Nikolai Pugachev from the APHD project were in charge of the local implementation of the study in Ukraine, including collection and analysis of sectoral data. Yurii Privalov, Aleksandr Goncharuk, and Maria Olenina from the Institute of Sociology were responsible for the survey field work and oversaw the construction of the computer database with the survey data. Zvi Lerman from the Hebrew University of Jerusalem provided overall scientific guidance for the survey and, together with David Sedik, carried out the final analysis on which the study is based. This book is organized in two parts. Part I presents a brief overview of the agricultural policy environment in Ukraine before and after 2000, followed by a detailed discussion of the legal foundations of land and farm reform and an overall picture of the impacts of reform on the farm sector since 1990. Part II presents the findings of a survey of nearly 1,400 individual and corporate farms conducted in the spring of 2005 in eight oblasts. The survey has been designed to provide focused information highlighting the changes that occurred at the farm level since the 1999 Presidential Decree. The Executive Summary at the beginning of the volume contains the main findings of the study and some policy recommendations. The last chapter (Chapter 16) brings together our main conclusions in a more detailed format. The main literature and data sources used in the study are given in the list of references at the end. Tables and figures without references to a specific source are based on the 2005 FAO farm survey.Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Farm Management, Industrial Organization, Labor and Human Capital, Land Economics/Use,

Economic Reform in the Newly Independent States of the Former USSR: Effects on Agricultural Production and Trade to 2005

International Relations/Trade,

Agriculture in the Face of Changing Markets, Institutions and Policies: Challenges and Strategies

Since the late 1980s, agriculture in Central and Eastern European Countries (CEECs) has been under considerable adjustment pressure due to changing political, economic and institutional environments. These changes have been linked to the transition process, as well as the ongoing integration into the European Union and the world market. Reduced subsidies, increased environmental and food quality demands, as well as structural changes in the supply, processing and food retailing sector call for major structural adjustments and the improvement of farmersâ managerial abilities. Though such changes always carry significant threats to farms, they also offer new opportunities for the farms' entrepreneurial engagement. Upcoming changes in the agricultural environment and their possible consequences for farm structures across Europe are thus still timely subjects. The objective of the IAMO Forum 2006 is to contribute to the success of agriculture in the CEECs, as well as their neighboring countries, in todayâs increasingly competitive environment. Concrete questions the conference focuses on are: What are the most suitable farm organizations, cooperative arrangements and contractual forms? How to improve efficiency and productivity? Where do market niches lie and what are the new product demands? This book contains 33 invited and selected contributions. These papers will be presented at the IAMO Forum 2006 in order to offer a platform for scientists, practitioners and policy-makers to discuss challenges and potential strategies at the farm, value chain, rural society and policy levels in order to cope with the upcoming challenges. IAMO Forum 2006, as well as this book, would not have been possible without the engagement of many people and institutions. We thank the authors of the submitted abstracts and papers, as well as the referees, for their evaluation of the abstracts from which the papers were selected. In particular, we would like to express our thanks to OLIVER JUNGKLAUS, GABRIELE MEWES, KLAUS REINSBERG and ANGELA SCHOLZ, who significantly contributed to the organization of the Forum. Furthermore, our thanks goes to SILKE SCHARF for her work on the layout and editing support of this book, and to JIM CURTISS, JAMIE BULLOCH, and DÃNALL Ã MEARÃIN for their English proof-reading. As experience from previous years documents, the course of the IAMO Forum continues to profit from the support and engagement of the IAMO administration, which we gratefully acknowledge. Last but not least, we are very grateful to the Robert Bosch Foundation, the Federal Ministry of Nutrition, Agriculture and Consumer Protection (BMELV), the German Research Foundation (DFG), the Haniel Foundation and the Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) for their respective financial support.Agribusiness, Community/Rural/Urban Development, Farm Management, Industrial Organization, International Development, Labor and Human Capital, Land Economics/Use, Productivity Analysis,

Russian Price Reform Eliminates Shortages, Alters Meat Consumption

Setting the stage for the evolution toward a free-market economy from central planning has entailed both positive and difficult adjustments in Russiathe largest former Soviet republic. Food shortages in state stores, once universal, are now sporadic. Overall food consumption has dropped-particularly consumption of livestock products, which had been maintained at artificially high levels before the reforms. These changes resulted from partial price deregulation (which eliminated shortages and shifted relative prices) and restrictive wage policy (which eroded real incomes). These trends will likely continue in 1994, if prices remain deregulated and if the level of producer subsidies does not increase substantially

A Note on Soviet Per Capita Meat Consumption

An examination of per capita meat consumption in Eastern Europe and the republics of the former USSR in 1990 reveals a relatively high consumption of meat compared to market economies with similar per capita incomes. Thus, cutbacks in the livestock sector in Russia may be warranted. Downsizing the livestock sector is part of a larger restructuring of Russian agriculture where production adjusts to domestic costs and demand.