Agricultural Factor Markets in
Transition Economies

Budapest, Hungary
December 2-3, 2006

The BASIS Policy Conference "Agricultural Factor Markets in Transition Economies" brought together leading researchers, development professionals and policymakers in a format designed to result in a set of well-grounded policy and programming recommendations.

A decade after the initial reforms of the former Soviet economy, the results in agriculture remain disappointing. Despite food price liberalization, barriers to marketing agricultural output are still present in many regions, and access to modern inputs is very limited almost everywhere. Agricultural output remains about one-third below the pre-reform levels of 1989-91. Incomes of workers employed in agriculture remain depressed in Russia as in other transition economies. Yet significant changes have occurred. Output increases have been noted on household subsidiary plots, which have been enlarged and play an important role, especially where former collective farms are weakest.

In both Russia and other transition economies new arrangements are springing up in which input suppliers or other businesses related to agriculture are establishing vertically integrated or other contractual arrangements with agricultural producers. These arrangements are managing to supply much-needed inputs in ways more promising than the barter arrangements that have characterized the dealings of many former collective farms. Even without fully developed land ownership rights, it appears that rental transactions under which new operators may acquire the use of increased acreage are increasing and are beginning to be economically important.

Identifying which institutions and policies allow for the most positive growth in the agricultural sector is vital to identifying the road forward to competitive agricultural production in transition economies. The BASIS CRSP Policy Conference assessed policies and progress from Russia and other countries in four primary categories: organizational structure and performance of farms, land and property rights, rural labor, and financial institutions, credit and capital. For each theme, comparisons were drawn between the experience in Russia and other countries in the region, identifying lessons to inform future agricultural policy and presenting recommendations to ease the constraints that exist in each of these areas.