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Agricultural Policies and Performance in Central and Eastern Europe, 1989-92

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Agricultural Policies and Performance in Central and Eastern Europe, 1989-92 I ~_~~"'If:1"-1b('t't". .U.RAl....:::ii ~.RI"FR~K. AND EASTER.N-;o:'t7 .RU.Kl!;.U. EUROPELT •...U. K.R~98'-92... L.. ~.UL.. 1.1,;~.I~.:::iiIR".~ (FOREIGti PEKFU.K".AGRICULTURALA. ".CE I".ECONO": CE.. HT U1... I'0l. , .--.--__ .< lC REPT.) I'N.. , J. COCHRANE.ET Al. ECONOttIC RESEARCH SERVICE; ',' 'Ir _-.......-. NASHINGTON. ........... __ DC. AGRICULTURE........ ____ AND TRADE ANAlYSISDIV..__ FEB 93 _79P ~ alii Association for Informat"Ion and Imag M 1100 W e Olnagement Silver ;yn,e Avenue. SUite 11 00 pring. Maryland 20910 301/587·8202 Centimeter 1 2 3 4 1""1""1""'''1'1''1' I ,I 6 7 8 9 10 I I r , i i 'fl'PI'1 1'1\' I'I',"I"!'I 2f\"IIIi'IIIII"I!lilll'lilll'llll'II"\"III"IIIIIIIIU'II'II~I;'1'1"'~1~1"1'1'~1~11I1,"114 I ' I I" Iii ', .......... JIJIJu.1!1. Ie 1,5 mm In h 3 ' II i I'n I c es 4 5 1.0 :: /////2.8 1111/2.5 3 IIIII~~ I~ 11111 ,2 B63 = Ii:. mn3,6 Uill~ IIII 1.1 V~ I .0 111111.25 IIIII 1.4_ 111111.6 MI=lNUFI=lCTURED TO I=lIIM STnNM DI=lRDS BY I=lPPLIED IMRGE. INC. II PB93-167443 Agricultural Policies and Performance in Central and Eastern Europe, 1989-92 <u.s.) Economic Research Service, Washington, DC Feb 93 I ] . Form Approlied REPORT DOCUMENTATION PAGE OMS No. 0704·0188 Dublte rcpartlr.-; :.·;~n for tnis (olledlOn of inicrmJtlCJI"I t1 ~st':nated to AI"eragt' , hour per 'YDt:rae. Ir.ch':di::; t.,..e n=e fer re''''~I~ instructU::ni. st!)((!'w':; e-,·,:m; data s.:urc"'!1. ga:henr.g Jnc f""! "',:~ur"n9 the dati' needed. and corrpl~;tn9 and ,evlI~'t'Yln9 the collection al 1I~.O'IT'..atfcn. SlI!nd :Cmmen;, te-~a'~ln9 thi\. burd~n ~$::r..te c' tn. !otr-er ,U=Ctt of thiS cc!l~(tlcn Of inf:--!~:cn.lnclud:ng ~u9g-e1tlons for reducing thl' burden.. to 'Na~hln9tcn HeacoL:.3't~n 'iervlclI!\. Q:teaor,;,tr for Information Oce'''CIC:-:' .:'!d :a.~:!-:!"ts. 1215 Jefferscn Oav." •• ... ~ - ... _. "I". ".1:_____ \';'\ ,., ,"'*.'102. Jr.d to thl! Office tJ# M."'t39'!men, ar.o 3ud;et. P,JperNC:" ReclJctlOl'l Prcj~t(01C4..(J~8S). V'I;lS~lr=tCt'll QC 2:503. ~ . 1. PB93-161443 12• REPORT DATE 113• ~EPORT TYPE AND DATES CO.VER:D January 1993 : 4. TITLE AND SUBTITLE s. fU"JDING NUMBERS Agricultural Policies and Performance in Central and Eastern Europe, 1989-92 6. AUTHoR(S) Nancy Cochrane, Robert Koopman, Mark Lundell, Jason Lamb, Michelle de Souza, Danie;Ue Sremac 7. PE!lFORM!NG ORGANIZATION NAME(S) AND ADDRESS(ES) 8. PERFORMING Oi\GMlIZATION RE?ORT NU~:.aER Agricultural Trade Analysis Division Economic Research Service U.S. Department of Agriculture FAER-247 1301 New York Ave., NW Washington, DC 20005-4788 9. S?ONSOR:~G! MONITORING AGENCY NAME(S) AND ADDRE5S[E5f 10. SPCNSOi\l:iG I MONIiORI:'-iG AG::NCY REPORT NU~,'8Ei\ 11. SUPPLEMENTARY NOTES 12a. DISTRIBUTION I AVAILABILITY STATEMENT 121). DISTRIBUTION CCDE "-'.'~"''''' J.._-··---~"_l_· ,~ ..... ~'" .... '"'.... .. .. 13. ABSTRACT (Maximum 200 words) ------------- . Central and Eastern European agriculture underwent dramatic change during the last 3 years. The introduction l)l market pricing, open borders, and increased freedom of entry and exit for firms occurred witbout the instiwtional and legal structures necessary for a market economy. The effect of market reforms on agriculture exemplifies both the positive and negative effects of iliese changes. Many of the cOlllltries shifted from pre-reform tight agricultural supplies or outright shortages to post-reform surpluses. Farm financial performance has been poor, as the terms of trade have turned against agriculture. Land and asset ownership issues in the farm sector remain unresolved, leading to uncertainty for planting and production. Consumer demand for agricultural products is depressed due to the sudden rise in consumer prices, while nominal income growth has been restricted. \: 14. SUBJECT TERMS 15. NUM9ER OF PAGES Central and Eastern Europe, privatization~ unemployment, 76 PRICE CODE agricultura~ inputs, demonopolization 16. 17. SECURITY CLASSIFICATION 18. SECURITY CLASSIFICATION 19. SECURITY CLASSIFICATION 20. LlMITATIOII QFABSTRACT OF REPORT OF THIS PAGE OF ABSTRACT Unclass. .Uncl~ss. Unclass. ;:;:; : '.:!":;"':".~J"");:j.:.~;;~ '.\~~!.~'i' .~':~ ::--: ..,..,::".::.~..;:.:,; :i;,;:;~,,:,·:,"'.~<,;,"";·.l1.M.:k?·:;:.;;!~'t;:":tl"~~;::,.~:.::,;.:·;,~1jf.. ,,~gIl~~{::¢?:..\:n;1i'·.~~~2& United States Department of ~~li} Agriculture Agricultural Policies Economic Research Service and Performance in Foreign Agricultural Economic Centra.1 and Eastern Report No. 247 Europe, 1989-92 Nancy J. Cochrane Mark R. Lundell Robert B. Koopman Michele de Souza Jason M. Lamb Danielle Sremac RfPI10DtlCl'D 8Y us DEPARTMENT OF COMME:RCE NATIONAL TECHNICAL INFORMATION SERVIC < SPR.NGFIElD VA 22161 Agricultural Policies and Performance in Central and Eastern Europe. 1989·92. By Nancy J. Cochrane, Robert B. Koopman, Jason M. Lamb, Mark R. Lundell, Michele de Souza, and Danielle Sremac. Agriculture and Trade Analysis Division, Economic Research Servi..:e, U.S. Department of Agriculture. Foreign Agricultural Economic Report No. 247. Abstract Central and Eastern European agriculture underwent dramatic change during the last 3 years. The introduction of market pricing, open borders, and increased freedom of entry and exit for firms occurred without the institutional and legal structures necessary for a market economy. The effect of market reforms on agriculture exemplifies both the positive and negative effects of these changes. MallY of the countries shifted from pre­ reform tight agricultural supplies or outright shortages to post-reform surpluses. Farm financial performance has been poor, as the terms of trade have turned against agriCUlture. Land and asset ownership issues in the farm sector remain unresolved, leading to uncertainty for planting and production. Consumer demand for agricultural products is depressed due to the sudden rise in consumer prices, while nominal income growth has been restricted. Keywords: Piivatization, CEE, demonopolization, unemployment, agricultural inputs Washington, DC 20005-4788 February 1993 Contents Summary ••••.•..••.•.•.•.••••••.•.••.•••••.••.•.••.•..•••.. iii Gener-ctl Econ( ..nic Situation ....................................... 1 Policy Reform in Central and Eastern Europe, 1989-92 .................... 4 Bulgaria ................................................... 5 Czech and Slovak Federal Republic ............................... 10 Hungary .................................................. 15 Poland ................................................... 18 Romania .................................................. 22 Yugoslavia ................................................ 26 Central and Eastern European Trade Highligbts and Developments ........... 29 Shifting Trade Patterns ........................................ 29 Ee Association Agreements . .. 30 U.S. Trdde With CEE Countries . .. 30 Commodity Market Higblights .................................... 36 Grains .................................................... 36 Oilseeds .................................................. 37 Beef and Veal .............................................. 38 Pork ..................................................... 39 Poultry ................................................... 40 Eggs ........... " ........................................ 40 Dairy .................................................... 40 Sugar .................................................... 41 Cotton .................................................... 41 Tobacco .................................................. 42 Endnotes . .. 43 Appendix Tables .............................................. 45 ii Summary Central and Eastern European (CEE) agriculture underwent dramatic change during the last 3 years. The introduction of market pricing, open borders, and increased freedom of entry and exit for fums occurred without the instibluonal and legal structures necessary for a market economy. The effect of market reforms on agriculture exemplifies both the positive and negative effects of these changes. On the positive side, many of the CEE countries shifted from pre-reform tight agricultural supplies or outright shortages to post-reform surpluses. Food availability and diversity have increased appreciably. Food prices have risen in nominal terms, but generally have lagged behind the ovemll inflation rate, reducing the prices of many food items relative to other goods and services. On the negative side, farm financial performance has been poor, as the terms of trade have turned against agriculture. Food price increases have been slower than the rate of inflation, while farm input prices equal or exceed the inflation rate. Many issues regarding land and asset ownership in the farm sector remain unresolved, leading to uncertainty for planting and production. Consumer demand for agricultural products is depressed due to the sudden rise in consumer prices, while nominal income growth has been restricted through wage/pension caps. In addition, where the farm sector previously enjoyed unlimited demand for its products, it now faces stiff competition from a wider array of consumer products. The problems faced by the CEE agricultural sector, while fully evident in 1991, did not have as large an impact on production in 1991 as might have been expected. Gross agricultural production in the region declined by 4.9 percent compared with 1990. Production levels in 1991 for most grains exceeded their 1986-90 averages, while many livestock and oilseed products fell below their 1986-90 levels. The main problem for most of the countries, however, appeared to be overproduction
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