**F __Po1licy Research**

**Agricu1tural Po1licies__**

WPS 888 This papera joint product of the Agricultural Policies Division, Agriculture and Rural Development Department, and the Socialist Economies Reform Unit, Country Economics Department<sup>-</sup> is part of a largereffort in the Bank to analyze the transformationof agriculture in the fornersocialistcountries.<sup>Copies</sup> of the paper are available free from the World Bank, 1818 H Street<sup>NW, Washington, DC 20433. Please</sup> contact Cicely Spooner, room N8-039, extension 30464, or by electronic mail<sup>(April 1992, 32 pages).</sup> CsAki surveys agricultural reforrn to date, identifies key policy issues, and outlines potential scenarios for the transformation of agriculture in Bulgaria, Czechoslovakia, the forner GDR, Hungary, Poland, Romania, and - to a lesser extent - the former USSR.

After decades of socialism, these countries' agricultural sectors are characterized by large, inefficient farms with high production costs; heavier food consumption than in market economies of comparable prosperity, and excess demand for food, at subsidized food prices; macroeconomic imbalances, including inflation, budget deficits, and foreign debt; and a monopoly in food processing and distribution.

Central Eastem Europe is beginning to create a new agricultural structure based on private ownership, real cooperatives, and a market economy. The former USSR is also striving to overcome serious economic difficulty with comprehensive economic and political reform but is in a far earlier stage of agrarian reforn. To develop a rmarket-oriented, competitive agricultural structure, these countries need to:

* Create marketable landed property (Csaki discusses several ways to do this).

subsidies, and providing an extension service and network.

***** Create a government environment supportive of private ventures and the transformation of the cooperative sector. The govemrnment's role should be to create physical facilities for farmers' markets and a wholesaling network for private farning.

***** Create a real agricultural market that enceurages fair competition. This means fully eliminating food subsidies within a few years and eliminating the state monopoly on foreign trade.

- Develop agricultural policy that emphasizes efficient production and income parity among agricultural producers. This means developing a new legal framework, including, among other things, a land law that defines ownership and land use rights and defines the processes for distributing ownership titles, handling former owners' claims, and transferring land and other assets of cooperatives to private owncrship.

- Support environmentally sustainable agricultural production technologies and better environmental protection.

**o** Change agriculture's structure to emphasize medium-size private agricultural ventutres and various cooperatives (whose future is a heavily debated issue), together with state or communal farms.

* Change govemment's role, reassessing the agricultural sector as part of the macroeconomic framework. This involves liberalizing consumer and producer food prices, eliminating food

In analyzing future possibilities for, and influences on, the region's agricultural markets, Csaki focuses on these questions: What will the trend in food production be, particularly for grain and meat? Will food consumption increase, and how will that affect domestic markets? How will the intemational market change? How muchi will conditions of trade policy improve for agricultural exports, and how will relations among countries change?

Thc Policy Research Working Paper Serics disseminates thc findings of work under way<sup>in thc Bank. An objective of the scries I</sup> is to get these findings out quickly, even if presentatioPs arc less than fully<sup>polislhed. Thc findings, intcrprctations, andI</sup> conclusions in these papers do not necessarily reprcsent official Bank policy.

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