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The privatization in post-socialist countries and its results

The privatization in post-socialist countries and its results. PhD Adam Sadowski Faculty of Economic and Management University of Bialystok Poland.

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The privatization in post-socialist countries and its results

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  1. The privatization in post-socialist countries and its results PhD Adam Sadowski Faculty of Economic and Management University of Bialystok Poland

  2. The nineties in the twentieth century were times of violent transformations in the post socialist countries. We can talk about restitution of the private agriculture

  3. These transformations were incredible challenge due to the fact that the former owners or their successors working in socialized units, practically lost their ability to run a farm on their own

  4. Due to the introduction of agricultural policy in different countries, accepting various institutional solutions as well as different internal factors, privatization proceeded in various pace and had different effects

  5. Transformations in Poland

  6. Transformations in Poland A leading motive of changes, began in 1992, was the creation of the efficient market economies in agriculture. The result will have to be new ownership relations, and also a new structure of farm economy

  7. Transformations in Poland In 1990 in the eve of agricultural reforms in Poland the private sector (individual farmers) possesses 78,6% area of arable land, so there was not pressure on rapid structural changes in agriculture

  8. Transformations in Poland The process of owners’ transformation in agriculture was entrusted to the Agency of Farm Property of the Ministry of Treasury (AFPMT), which was created from 19th October 1991.

  9. Transformations in Poland During its action the Agency took over into Agricultural Property Stock the properties of 1666 state farms of total area 3753 thousand hectares and 607 thousand hectares of the National Land Fund

  10. Transformations in Poland Total, from the beginning to the end of December 2006 the Agency took over 4717,9 thousand ha

  11. Transformations in Poland After taking over and restructualization state farms, the Agency distributed these possessions mainly through selling and leasing and in slight relation to another way

  12. Transformations in Poland Reaching over than 305,1 thousand contracts to the end of 2006 the Agency leased 4526,5 thousand hectares. Some of them were passed and in the end of 2006 there were 134,2 thousand active leasing contracts for 1892,1 thousand hectares.

  13. Transformations in Poland From the beginning to the end of 2006 the Agency sold 1694,0 thousand ha (35,9% of all lands) for about 190 thousand buyers. It contributed to form larger individual farms (average was about 4 hectares for a contract) and create about 5 thousand farms and enterprises.

  14. Transformations in Poland State land buyers were individual persons and legal persons. The land sold to physical persons accounts for over 78% of the total area. The legal person accounts less then 3% of total buyers, however the land participation bought by them was 22%

  15. Transformations in Poland In the structure of sold land dominate properties of small area. Nearly 48% of contracts concerned plots to 1 hectare, almost 39% from 1 to 10 hectares, 12% contracts of land from 10 to 100 hectares and a little over 1% about area over 100 hectares.

  16. Transformations in Poland In Poland, in the first period of transformation, state didn’t get the intervention.Land market was completely liberalized. The owner of lands could become each Polish citizen. There was not any limitations of area of buying lands, or buying person (with the exception of foreigner).

  17. In 2003 it was created the legal successor of the AFPMT - Agricultural Property Agency. It operates in the name of the State and will still control the market of agricultural properties and in specific situations it intervenes through the state pre-emption and repurchase rights to the agricultural land.

  18. Transformations in Poland The rise of land prices appeared from 2003 and still exists and it is connected to the integration processes

  19. Table 5. Prices of lands in 1992-2007 Transformations in Poland

  20. Transformations in Poland In Poland still exists the process of polarization of farms’ structure, because it follows the getting bigger number of extreme groups and getting smaller central groups. The average size of farms in Poland in 2005 was 9,60 hectares and it shows considerable regional variety The biggest distribution of individual farms appears in the southern provinces (the average area about 2 hectares) particularly the biggest average area characterized farms in the northern provinces (over 14 hectares).

  21. Transformations in Poland Table 6. Numbers of farms by area groups and users

  22. Specification 1990 1995 1996 2002 Farms: in thousand 2138 2048 2047 1955 with agricultural land area of: 1,01— 1,99 ha 17,7 20,9 52,5 58,7 2,00— 4,99 35,1 33,7 5,00— 6,99 14,9 13,4 25,5 21,8 7,00— 9,99 14,9 13,3 10,00—14,99 11,3 10,7 10,6 9,3 15,00 ha and more 6,1 8,0 8,7 10,2 Average total farm area in ha 7,1 7,6 7,8 9,6 Transformations in Poland Table 8. Private farms by area groups in Poland

  23. Transformations in Estonia Transformations in Estonia

  24. Transformations in Estonia The beginning of agrarian transformations in Estonia had taken place in 1989 before regaining the independence, when the bill of farms was passed. On the base of this bill farmers (every citizen of this country could have become a farmer) could receive some arable land.

  25. Transformations in Estonia Due to the fact that the land was used as a state farm, there were some difficulties with the realisation of the transformation.

  26. Transformations in Estonia Chances of restoring complete private ownership relations appeared in Estonia at the point of regaining independence in August 1991. The result of this efforts to reconstruct private ownership was the bill of agrarian reform (17th October 1991).

  27. Transformations in Estonia The works with the reprivatization proceeded slowly because the returning rules which gave priority to former owners were not defined before 1993. On that account, not all lands could be returned to the former owners and thus supplementary acts were passed.

  28. Transformations in Estonia In spite of the fact that people unwillingly agreed to compensation payment, in 1995 the government began process of agrarian reforms. Owing to this situation since 1996 the real land privatization stage started

  29. Transformations in Estonia Chaotic nature and lack of organisation of privatization actions confirms also the fact that until 1999 the precise rules of cadastral measurements werenot settled

  30. Transformations in Estonia Peasants’ farms in Estonia can be enlarged to 300 hectares of arable land, 100 hectares of forests and 3 hectares of urban areas.

  31. Farm size in ha 1939 1997 1998 1999 2000 Transformations in Estonia do-5,0 x 12,8 14,3 15,1 17,2 5,1-10,0 x 16,1 16,9 17,2 17,6 10,1-20,0 x 28,0 27,5 27,6 26,9 20,1-30,0 x 18,9 17,9 17,5 16,6 30,1-50,0 x 16,7 15,9 15,4 14,8 50,1-100,0 x 6,9 6,8 6,5 6,2 over 100,0 x 0,6 0,7 0,7 0,7 Average size in ha 22,7 22,0 21,7 21,2 20,8 Table 9. Structural changes in Estonian agriculture(in%)

  32. Specification 1939 2000 Transformations in Estonia Arable land 8,4 7,9 Meadows and pastures 11,2 1,8 Forests 1,4 9,0 Others 1,7 2,1 Average size in ha 22,7 20,8 Table 10. Structure of the private farms in Estonia in ha

  33. Transformations in Estonia The privatization actions in Estonia caused increase of number of private farms. While on 1st January 1997 there were 22,722 registered private farms, this number increased to 51,081 till 1st January 2000. Data from 2001 states that there were about 85,300 arable farms and approximately 176,400 family farms – mainly in rural areas, which should be understood as a household because most of them did not have any agrarian production.

  34. Transformations in Estonia But from that moment the numbers of farms were decreasing and in 2005 there was only 27.7 thousand of farms (over one ha). This process leads to increase the average size of the farms and in 2005, about 13.4 thousand of farms had an economic size over one ESU. They use about 764 thousand ha of agricultural area and it gives about 57 ha per farm, the remaining 14.4 thousand family farms produce only for self consumption.

  35. Transformations in Estonia Significant fact characteristic for Estonia is functioning a considerable number of legal person farms (collective and national). In 2005 there were 879 such farms and they used 44.3% of agricultural land, with average size about 418 ha. Small farm in Estonia use mainly owns lands but in the biggest ones 68.6% of lands were leased. An average in all Estonia agriculture in 2005 about 58% of agricultural area was leased.

  36. Transformations in Estonia The slowness of privatization processes in Estonia presents that till 1999 only 39.3% of agrarian areas were privatized and about 11.9% remained were in management of individual farms’ owners.

  37. Transformations in Lithuania

  38. Transformations in Lithuania The process of privatization in Lithuania began similarly to Estonia in time of so called “perestroika”. The act of peasants’ farms from 4th July 1989, specified that state-owned land can be allotted free and formed this way size of a farm should be within range of 10 – 50 hectares.

  39. Transformations in Lithuania To stimulate village people, the Lithuanian authorities took action and on 26th July 1990 a resolution was passed. According to this resolution workers of agrarian enterprise and retired people could enlarge their plots to 3 hectares, whereas other people working and living in the countryside could obtain plots to 2 hectares.

  40. Transformations in Lithuania The interest of such way of enlarging management state was so big that size of land occupied by plots reached in some regions even 30% or all arable areas.

  41. Transformations in Lithuania Actions presented above were an introduction to the agrarian reform which started in the end of 1991. Specificity of accepted solutions in Lithuania was an obligatory privatization of land and productive possessions in agriculture.

  42. Transformations in Lithuania The regulations enacting matters of agrarian reform determined the maximum limit of a family farm area to: 50 hectares of arable area, 10 hectares of forests (later raised to 25 hectares) and 5 hectares of water body.

  43. Transformations in Lithuania The legislator appointed a short period of time to make an application to regain the property but itwas a few times changed and thus, till 1stJanuary 2004, 741 thous. applications to prove property were submitted and they referred to 4,2 mln hectares of arable areas. The former owners or their heirs wanted to recover materially 80% of areas (3,303,000 hectares). In spite of many years of reprivatization actions, till the end of 2004, 2500 thousand hectares were returned (about 63% of arable land).

  44. Years Land ownership restoration Lands registered in cadastre Transformations in Lithuania Decisions Area Total area Agricultural land and forests 1992-1994 97,8 791,8 433,2 405,9 1995-1996 158,9 967,3 753,5 738,1 1997-1998 76,6 441,5 477,4 467,8 1999-2000 143,0 749,0 644,1 635,3 Aggregated to 01.01.2000 r. 476,3 2949,6 2298,2 2247,1 Aggregated to 01.01.2003 r. - - 2729,9 Table 12. Dynamics of the reforms in Lithuania in 1992-2003 (in thousand ha)

  45. Farm size in ha 1997 1998 1999 2000 2001 Transformations in Lithuania below 3,0 ha 32,2 35,5 34,6 33,5 33,2 3,1 –10,0 hа 43,9 42,0 41,9 42,5 42,5 10,1-20,0 hа 17,0 16,0 16,5 16,9 17,0 20,1-30,0 hа 4,5 4,2 4,4 4,4 4,5 30,0 hа and more 2,4 2,3 2,6 2,7 2,8 Average size in ha 8,72 7,57 7,29 7,54 7,65 Table 13. Land use in Lithuania in 1997-2001

  46. Transformations in Lithuania The structural reforms in Lithuania do not optimistic. Practically 75% of lands became a part of small and very small farms.

  47. Transformations in Lithuania On 1st January 2003 there were functioning 610,543 arable farms in Lithuania. In this group, a significant part were owners of farms smaller than 1 hectare (331,980). The next large group were family farms – 232,911 units.

  48. Transformations in Lithuania The average size of farms stabilized on the level of 7.5 hectares. But the average size of family farms reached only4.7 ha. In 2005 there were 128.6 thousand farms (over than 1 ESU), the average farm size was 18.2 ha.

  49. Land owners and users Agricultural land Table 14. Agricultural land used for agricultural activities by owners and users in Lithuania in 2002 Thousand ha % Private land used for agricultural activities 1996,4 59,3 Land used by members of horticulturist associations 13,4 0,4 Land used for agricultural activities 1983,0 58,9 State-owned or state-managed land 1372,9 40,7 State-owned land used by horticulturist associations and their members 3,1 0,1 Land of household farms 493,3 14,6 Land used by state enterprises, educational establishments 14,8 0,4 Land leased by agricultural partnerships 71,6 2,1 Land leased by other natural and legal entities 366,9 10,9 Land non-granted for usage and non-leased 423,2 12,6 Total 3369,3 100 Transformations in Lithuania

  50. Transformations in Latvia

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