ECONOMICS

RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF

Staņislavs Šķesters Latvia University of Agriculture E-mail: [email protected]

Abstract The paper includes economic research results on the second stage of land reform over the 10-year period (1996 – 2006) in the districts of Latgale region. The results explicitly stress the region’s variability, therefore, the results are diff erent, but common trends can be also observed. The number of land users has decreased, whereas that of land owners and the area of privatised land have increased. The total area of used and owned land has increased by 33.4% and exceeded a million hectares. Key words: land reform, Latgale region, property, agriculture, land.

Introduction on the processes and results of the second stage In the scientifi c literature, popular periodicals of the land reform in Latgale Planning Region. The and other sources one may come across general importance of the topic is reinforced by the fact that, descriptions, evaluations, considerations or as the second stage – privatization – process of the assertions on the land reform and agrarian reform land reform continued, in the last 5-6 years Latgale in Latvia (Stradiņš, 2002; Boruks, 1997; Bresis, experienced a rapid formation and development of 2007; Kaktiņš, 1991; Goba, 2002; Špoģis, 2002; the secondary land market, lease relations and the Beļavnieks, 2001, 2003). However, one may not fi nd beginning of the polarization process regarding any publications on the results of a special, targeted property. By buying and offi cially registering lands research investigating processes of the current – “without owners” (legatees’ lands), two groups fourth – land reform and its results in the regions of of owners and land managers emerged: small- Latvia. The fi rst special publication on the processes scale semi-subsistence farms and big agricultural and results of this reform’s fi rst stage in Latgale companies and enterprises were characteristic of Planning Region appeared only in April, 2008 Latgale. (Šķesters and Špoģis, 2008). It provides the analysis Latgale Region has been chosen as the object and scientifi c evaluation of the processes and results of the research because of its current situation. of the forth land reform’s fi rst stage, including the For many years it has been investigated why it is characterization and evaluation of the pre-reform the poorest region of Latvia. Analysing the land situation, as well as the evaluation of the processes resources and the results of its reform, on the basis and results of this reform’s starting period. of these materials it will be possible to carry out the Latgale is a special part of the country both further research on the results of the land reform, socially and economically. Historically a special since it has also indirectly infl uenced other processes small-scale farm structure had formed in rural areas in the region. of this region, but as the forth land reform began, the Hypothesis: The fourth land reform carried out situation was diff erent. Among the local inhabitants, in Latvia was directed towards the restitution of only a small fraction of former landowners had the structure of small-scale subsistence farms in remained. Therefore, many legatees, who in terms Latgale. of their education and activities had completely The aim of the research is to analyse the withdrawn away from rural areas and agriculture of processes of the second stage of the fourth land Latgale, had to engage in the land reform processes. reform currently carried out in Latgale Region for a An especially large part was also those Latgalian period of 10 years, and to evaluate the results. families who in the course of the reform obtained The enabling objectives to reach the aim of the only a small plot of land without production research: resources. • to analyze the quantitative changes in agri- The evaluation of the situation convincingly cultural land use and the structural process of presented a necessity to carry out a scientifi c research the agricultural-purpose land area;

62 RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF LATGALE Staņislavs Šķesters

• to examine the quantitative progression and carrying out calculations of chain changes and their structure of the composition of agricultural groups, as well as calculations of base changes. The land (K-01) properties; graphical method is applied to display the results. • to examine the use of the agricultural-pur- pose land and the dynamics and tendencies Results and Discussion of the number and structure of land proper- ties. The process of current land reform, which took place along with the general economic reform, reprivatisation and privatisation of agricultural Materials and Methods companies, was legally divided into two periods The object of the research are the districts of (stages): Latgale Planning Region, the subject – agricultural- 1. in the starting period of the reform, from purpose lands, and the subject matter of the 1990 to 1995, the claimed land was assigned research – practical socio-economic results of the for use; land reform. Statistical data of the State Land Service 2. in the 10 years’ period of the reform, from (SLS) and Central Statistical Bureau (CSB) are used 1996 to 2006, the ownership rights were be- for the research. ing registered. To process the data materials and to perform The present paper comprises the fi ndings of the quantitative evaluation of the processes, the the research only in respect of the reform’s second dynamic time-array analysis method is applied, stage results.

Table 1 Quantitative Changes in the Number of Agricultural Land Users in Latgale Districts from 1996 to 2006 Number of land users Total used area, ha Average area per user, ha Districts 1996 2001 2006 1996 2001 2006 1996 2001 2006 Rezekne 16,868 12,862 9,821 123,783 99,684 67,089 7.34 7.75 6.83 11,966 5,563 4,912 110,153 69,227 34,308 9.21 12.44 6.98 Daugavpils 18,561 11,690 9,456 96,594 80,381 69,437 5.20 6.88 7.34 Kraslava 11,527 6,973 5,286 105,112 76,898 54,717 9.12 11.03 10.35 Preili 9,343 5,260 3,788 101,925 57,466 38,471 10.91 10.93 10.16 7,679 3,044 3,783 86,506 54,738 42,498 11.27 17.98 11.23 Total in 75,944 45,392 37,046 624,073 438,394 306,520 8.21 9.65 8.27 Latgale Source: SLS land balances’ data and the author’s calculations. The number of agricultural land users in the During the second period – from 2001 to 2006 analysed 10 years’ period has logically decreased – the situations in the districts were also diff erent, in all Latgale’s districts as during this period the but on the whole during the 10 years’ period the second stage of the land reform is already taking number of users in Preili District and place – registration of land ownership rights. had decreased by 60 – 59%, but in Rezekne District However, if evaluating the attitude of land users, – only by 42%. one may observe a very diff erent behaviour. During The land areas registered as a property have the fi rst half of the analysed period – from 1996 to increased mostly in Eastern Latgale districts, but 2001 – the number of land users in had Preili District in Southern Latgale has been especially decreased by 60%, in Ludza District – by 54%, but in successful. A comparatively neglectful attitude Rezekne District – only by 24%. towards the registration of land ownership rights can be observed in .

63 RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF LATGALE Staņislavs Šķesters

Table 2 Agricultural-Purpose Land (K-01) by Type of Use in Latgale Districts in 1996 and 2006 during the 10-Year Period, ha Forests, shrubs and Under Agricultural land Districts swamps water 1996 2006 1996 2006 2006 Rezekne 84,843 47,660 26,976 14,772 679 Ludza 72,203 23,016 30,147 8,032 661 Daugavpils 72,219 50,679 17,991 14,784 958 Kraslava 64,861 34,477 27,365 16,350 1,418 Preili 66,456 25,691 27,281 10,263 675 Balvi 50,810 28,614 28,845 11,969 657 Total in Latgale 274,312 124,981 113,249 45,036 2,672 Source: SLS land balances’ data and the author’s calculations. Agricultural-purpose lands in private property bush and swamp areas in Kraslava District and Balvi and eff orts for registering ownership rights in District exceeds 29%, but in Daugavpils District, Latgale’s districts are very diff erent. In Ludza District, Ludza District and Rezekne District the proportion during the 10 years land properties have been of such areas constitutes only 22 – 23%. Kraslava registered for two thirds of the agricultural land, but District is the richest in lakes, followed by Daugavpils in Daugavpils District this work has been carried out District. only for 29% of the agricultural land areas. The situation is opposite in respect of the changes As the processes of ownership rights registration in the number of land properties and the land areas develop, the proportion of the agricultural land has which have become a property, as displayed in increased, which can be inferred from the results of Table 3. the Table 2 data analysis. The proportion of forest, Table 3 Quantitative Changes in Agricultural Land (K-01) Properties in Latgale Districts from 1996 to 2006 Average area per Number of land properties Total owned area, ha Indices owner, ha 1996 2001 2006 1996 2001 2006 1996 2001 2006 Rezekne District 1,927 7,737 11,372 19,860 92,511 138,499 10.3 12.0 12.2 Chain increase - 16.5 1.7 - 302 47 - 366 50 rate, % Ludza District 2,591 5,252 7,002 30,924 83,328 127,094 11.9 15.9 18.2 Chain increase - 33.6 14.5 - 103 33 - 170 53 rate, % Daugavpils District 2,805 8,054 10,396 27,253 80,245 109,777 9.7 10.0 10.6 Chain increase - 2.9 5.6 - 187 29 - 194 37 rate, % Kraslava District 1,814 6,667 8,731 22,200 90,206 123,950 12.2 13.5 14.2 Chain increase - 10.6 4.9 - 268 31 - 306 37 rate, % Preiļi District 2,567 6,675 8,476 32,861 94,892 119,663 12.8 14.2 14.1 Chain increase - 11.1 -0.7 - 160 27 - 189 26 rate,% Balvi District 1,863 7,155 8,290 27,770 101,408 121,900 14.9 14.2 14.7 Chain increase - -4.9 3.7 - 284 16 - 265 20 rate, %

64 RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF LATGALE Staņislavs Šķesters

Average area per Number of land properties Total owned area, ha Indices owner, ha 1996 2001 2006 1996 2001 2006 1996 2001 2006 Total in Latgale 13,567 41,540 54,267 160,868 542,590 740,883 11.9 13.1 13.7 Base increase in - 27,973 40,700 - 381,722 580,015 - 1.2 1.8 lustrums, ha Base increase rate, 100 306 400 100 337 460 100 110 115 % Chain increase 100 306 31 100 337 136 100 110 105 rate, % Source: SLS land balances’ data and the author’s calculations. Evaluating the data of Table 3, the following increased by 50% from 2001 to 2006, but in conclusions can be drawn. Balvi District and Preili District – only by 20 • The number of land properties has increased – 26%. especially rapidly during the fi rst half of the • On the whole, the privatisation activities in analysed period in Rezekne District, Kraslava Latgale during the second lustrum (from 2001 District and Balvi District. to 2006) have radically fallen. While during the • The development of processes has been even fi rst fi ve years the ownership rights were reg- more rapid with the growth of the areas of istered for 25 thousand users, during the rest these agricultural land properties: they have fi ve years – half as much. It can be explained increased seven times in Rezekne District, six by the variety of privatisation methods. Dur- times – in Kraslava District, but in other dis- ing the fi rst lustrum a rapid reprivatisation tricts – four times. process – regaining of the nationalised land • During the second lustrum of the analysed properties (denationalization) – could take period, from 2001 to 2006, the activities of place, in which the owners take part, but later Latgale’s municipalities and farmers have the registration of legatees’ rights started, radically changed – in Balvi District the num- which could take more time, involve larger ber of owners has increased only by 16% in expenses and less interest on the part of the fi ve years, which is three times slower than in legatees themselves. Rezekne District. The eff orts of the potential owners of Latgale’s • The privatised agricultural land areas have land in other aspects are displayed in Table 4. Table 4 Agricultural-Purpose Land (K-01) by Type of Use in the Owners’ Areas in Latgale Districts from 1996 to 2006 Agricultural land, ha Forests, shrubs, swamps, ha Land under water, ha Districts 1996 2001 2006 1996 2001 2006 1996 2001 2006 Rezekne 11,946 54,492 82,295 63,427 35,458 48,402 146 1,198 2,516 Ludza 19,257 49,995 78,602 10,012 29,018 42,025 386 1,551 2,485 Daugavpils 18,362 51,403 68,845 6,971 23,975 34,640 168 950 1,629 Kraslava 12,102 47,153 64,866 8,602 36,814 51,467 588 1,782 3,234 Preili 20,857 58,767 73,316 10,184 30,880 39,302 560 1,864 2,439 Balvi 15,203 50,755 61,771 11,255 45,776 54,408 577 1,405 1,939 Total in 97,727 312,565 429,695 110,451 201,921 270,244 1837 8,750 14,242 Latgale Source: SLS land balances’ data and the author’s calculations. The data of Table 4 clearly demonstrate that water areas – lakes in their property; • the AUL proportion in the privatised total area • the decrease in the agricultural land propor- slightly decreases in all districts of the region, tion may also be caused by the fact that the which indicates the eff orts of land legatees or ownership rights were fi rst – at the beginning owners to obtain larger forest areas, as well as of the analysed period – attempted to be reg-

65 RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF LATGALE Staņislavs Šķesters

istered for better cultivated land areas, but the land reform’s fi rst stage – use registration, and later one had to privatise also the shrub and the second stage – registering land ownership swamp areas. rights. The detailed analysis of the land reform processes Now it is possible to elicit an integrated total revealed interesting regularities and established a result of both processes. Data and calculations are basis for important conclusions in relation to both laid out in Table 5 for this purpose.

Table 5 Agricultural-Purpose Land Use and the Total Number and Proportion of Land Properties in Latgale Region from 1996 to 2006 Number of users/owners Total area, ha Indices 1996 2001 2006 1996 2001 2006 Land use 75,944 45,392 37,046 624,073 438,394 306,520 Land ownership 13,567 41,540 54,267 160,870 542,590 740,883 Land use and ownership in total 89,511 86,932 91,313 784,943 980,984 1,047,403 Percentage of changes 100 97 102 100 125 133 Proportion of land ownership, % 15 48 59 21 55 71 Source: SLS land balances’ data and the author’s calculations. The number of agricultural-purpose land users assessment by A. Boruks – a great part of unclaimed decreased more than twice in 10 years, the number land is concentrated in the east of the Republic of owners increased almost four times, and the total of Latvia where there were relatively few land number of both of them increased. claimants. The quantitative ratio of these processes has Doctor in economics R. Zīle (1997), after radically changed: while at the beginning of the compiling data on the consequences, conceptual analysed period – in 1996 – the property share and methodological solutions of privatization in constituted only 15%, in 10 years it already exceeded Latvia, assesses the situation as follows: “an increase 59%. Even more dynamic changes have taken place in social tension has to be negatively viewed as it in relation to the used and owned areas: was not suffi ciently assessed (predicted) in the • the total area of used land has decreased privatization conception”. twice, but the total area of owned land has R. Zīle (1997) analyzed the concepts and increased fi ve times; consequences of agricultural reforms in other • the total area of used and owned land has East and Central European countries as well and increased by 33.4% and exceeded 1 million discovered large diff erences there, too, the economic hectares; impact of which is large and progressive. • the proportion of the total area of owned land As to the assessments of agricultural reform, the increased from 20% in 1996 almost four times research results gained by the author conform to a and to more than 70% in 2006. conclusion made by doctor in economics A. Miglavs (1997) that “the large number of small farms, To draw conclusions, not only empirical research which emerged as a result of agricultural reform, results are important, but also their comparative determines a need for developing agricultural analysis. The assessments made by scientists who cooperation in some future reform in order to use were directly and actively engaged in the process of the most productive resources and technologies in land reform are especially important. a more effi cient way”. Dr.habil.agr. A. Boruks, when assessing the In searching for problem solutions to the consequences caused by the Land Privatization consequences of agricultural reform, the Latvian Law, wrote: “It promoted the fragmentation of land Ministry of Agriculture formed a group of scientists holdings, the creation of unviable farms and was and practical specialists which consists of 21 in contradiction to the principles of rational use of doctors of sciences. These specialists elaborated land” (2001). a development program for agriculture and its The research results on the reform consequences industries in Latvia (1998). According to the situation in Latgale, presented in the paper, conforms to the description, “the potential of agricultural land

66 RESULTS OF THE SECOND STAGE OF LAND REFORM IN THE LATVIAN REGION OF LATGALE Staņislavs Šķesters resources has sharply decreased over the recent 8 5. The number of agricultural land properties in years”. Latgale districts has increased 3 – 6 times, but Such general assessments, to a great extent, in total in the region – four times. The total conform to the new and specifi c research results on area of owned land has increased even more Latgale region presented by the author. rapidly – 4 – 7 times, but the average area has increased from 11.9 ha in 1996 to 13.6 ha in 2006. Conclusions 6. The AUL proportion has decreased in the area 1. The research of the second phase of land re- of owned agricultural-purpose land, but the form and structural changes in areas of used areas of forests, shrubs and swamps have in- and owned agricultural land over a ten year creased 4 – 6 times, which may indicate the period in Latgale was conducted according to owners’ eff orts to obtain larger or newer for- a unique program and its results are innova- est areas. tive. 7. The number of agricultural-purpose land us- 2. The second stage of the land reform involved ers in the 10 years of the land reform’s second two processes: the number of land users in stage has decreased twice, but the number the fi rst stage of the reform decreased, but of land owners has increased four times, as a the number of land owners increased. result of which the integrated total result of 3. In ten years the number of agricultural land both processes has increased. The proportion users had decreased by 50% – 60%, but the of the number of land owners increased from total area of used land – twice as much. 15% in 1996 to 59% in 2006, but the propor- 4. The proportion of agricultural land in the pri- tion of owned land area – from 20% to 71%, vate sector increased and in 2006 reached and in absolute numbers the area has in- 69% on the whole in the region. The propor- creased by a third exceeding 1 million hect- tion of forest, shrub and swamp areas respec- ares. tively decreased.

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