Agricultural restructuring in central and eastern Europe: implications forcompetitiveness and rural development

This paper considers whether the dual production structure now in place in central and eastern European countries (CEECs) is efficient and stable in t he 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 indivi dual private operators that have emerged may soon face restructuring proble ms, as they have been relying on cheap capital at prices that do not reflec t current replacement costs. New, younger, relatively small-scale farmers a ppear to have major and as yet unexploited production potential. Although r epresenting only a small share of the many family farms, they are neverthel ess numerous enough to create a viable 'middle class' of commercially orien ted, private farmers. Although this group currently faces severe technologi cal and financial constraints, the emergence of medium-sized, individually owned and operated farm units is the most viable option for the future in C EECs.