4

EASTERN EUROPE AND CENTRAL ASIA

The region and its farming systems

The region⁹ encompasses 28 countries (see Map), most of which have experienced major economic reforms during the recent past. There are two sub-regions with significant differences in the progress and outcome of these reforms: (i) Central and Southeastern Europe (CSEE); and (ii) the Commonwealth of Independent States (CIS). The first includes the Baltic States, Poland, Central and Southern European countries and Turkey and covers an area of 210m ha with a rural population of 67m, of whom 38m are active in agriculture. The most productive area lies in the moist subhumid agro-ecological zone. Mountain and hilly areas with more than 30 percent slope are widespread in the southern part of the sub-region. The CIS includes all former Soviet Union countries except the Baltic States, and covers a total area of 2180m ha with a population of 284m, of whom 33 percent are rural. Huge areas, covering more than half of the region, lie in the arid or dry subhumid north where permafrost and lack of moisture render them unsuitable for crop production, and where population density is less than three inhabitants/km². The sub-region's most productive farming systems lie in the moist subhumid agro-ecological zone, in the west. The major part of the sub-region lies in the arid and semiarid zone and has only limited production potential, unless irrigated. Both sub-regions have experienced dramatic falls in output, a rise in inequality and an increase in the number of people in poverty.

Altogether eleven major farming systems have been identified and are summarized in Table 4.1. The three most important of these from the perspective of population, extent of poverty and potential for growth and poverty reduction are briefly described below.

Mixed Farming System. This system has an area of 85m ha, lying within intermontane lowland plains in a moist subhumid zone and the cultivated area of 35m ha is largely dedicated to wheat, maize, oil crops and barley, combined with smaller areas of fruit and vegetables. Agricultural population is 16m. Livestock production is dominated by dairy and beef, plus pork. Associated hill and mountain areas are used for grazing and forestry. It is characterized by two dominant subsystems: small- to medium-scale private family farms and medium to large corporate or co-operative farms. Poverty is moderate and concentrated among the most vulnerable groups; such as ethnic minorities, unemployed and unskilled workers, and those farming in marginal areas.

Large-scale Cereal-Vegetable Farming System. This system, typical of Ukraine, the Southwest part of the Russian Federation and the Republic of Moldova, covers 100m ha with 38m ha cultivated, principally in the moist subhumid agro-ecological zone. The agricultural population is 15m, and the main crops are wheat, barley, maize, sunflower, sugar beets and vegetables. Most of the farms are still large - ranging from 500 to 4 000 ha - and the dominant ownership is co-operative or corporate. They generate little or no cash income and co-operative members or farm labourers depend on production from their household plot to sustain their families. Poverty is moderate to extensive.

Source: FAO data and expert knowledge.

Extensive Cereal-Livestock Farming System. This system is found throughout the semiarid agro-ecological zone of the Russian Federation and Northern Kazakhstan, but also covers substantial areas in Southern Kazakhstan, Turkmenistan and Uzbekistan. It occupies a total of 425m ha, of which about 106m ha are cultivated, and has an agricultural population of 14m. This is the domain of the steppe, traditionally used by transhumant herders, until converted to cropping over the last few decades. The major outputs are wheat, hay and other fodder crops, combined with cattle and sheep. In the drier parts, with an annual rainfall of only 200 to 300 mm, the land is fallowed every two years. Ownership patterns are in transition, from collective and state farms to co-operative or corporate ownership, with an increasing number of smaller family farms. Poverty is increasing among old people, young families and former co-operative members, as well as in urban areas.

Key region-wide trends

Unlike other low and middle-income regions, total populations are stagnant at present, and agricultural populations are ageing in many countries. In part, this lack of population growth may reflect the steep decline in living standards experienced within the region since the collapse of the centrally planned economic system in the late 1980s. Per capita calorie consumption, which in the mid-1980s was higher than in the industrialized countries, had fallen by nearly 15 percent a decade later. Poverty levels have increased even faster than hunger - with the estimated number of people in poverty (as defined nationally) rising from 14m in 1987-1988 to 147m in 1993-1995.

Past trends indicate a decrease in cultivated land use during the 1990s, following decades of large-scale expansion of ploughed land to the detriment of marshes, forests and steppes - often in areas unsuitable for sustainable agriculture. It is likely that cropping in some of the more marginal areas will be abandoned. Cropping patterns have changed to accommodate an increased share of food crops at the expense of forage and industrial crops. Crop yields have fallen and one reason for decreased productivity has been lower fertilizer use. Yields are expected to increase in future, but only very slowly, catalyzed by farm recapitalization, availability of improved technologies, and increasing experience in crop management in a non-subsidized low external input setting. Market-led changes in cropping pattern are expected, with a trend away from staple cereals towards higher value crops. During the last 10 years, livestock production has also been decreasing. Forecasts up to 2030 indicate slow recovery and growth of animal numbers at annual rates below one percent.

Strategic priorities for Eastern Europe and Central Asia

Future development will be driven by further privatization, structural adjustments and market liberalization, plus the gradual spread of farming systems characterized by small size and private or family ownership. After almost ten years of reforms and the adoption of more comprehensive transition policies, the transformation of agriculture is most advanced in CSEE countries where agricultural production has started to rise and labour productivity is increasing. In contrast, CIS countries still need to transform their large-scale farm units and eliminate distortions in production, pricing and marketing of `strategic' products. Two main ways could be envisaged; one leading to small private farms serviced by a medium-sized corporate farm, leasing its land from ex-members and providing contractual services. The alternative would lead to fully independent small farms; services being provided by individuals among them (e.g. tractor owners for machinery services) or by various co-operation mechanisms. Land tenure arrangements would preferably ensure freehold and free transferability of titles, at least for the cultivated land.

In most CIS countries, economic reform has meant the collapse of the previous system - based on state-controlled allocation of raw and processed products - and the subsequent specialization of certain regions or republics in the production of agricultural products. Price and trade policies need rapid improvement, while addressing legal impediments to market development and eliminating informal barriers to trade are equally important. Improving quality by promotion of standards, and fostering the emergence of new types of private small-scale processing industries are also essential. Strengthening local institutions will also be of the utmost importance in trying to encourage and support the development of new marketing structures.

There is substantial scope for both agricultural growth and poverty reduction in the region. With regard to the strategies of poor households for escaping poverty, production intensification holds the greatest promise on a regional scale, followed by enterprise diversification. The overall challenge of reducing hunger and poverty demands three major strategic initiatives. These are all concerned with building the capacities of local institutions - both in the public and private sectors - in order to take advantage of farm restructuring and economic liberalization. In the public sector, this implies acquiring the capacity to switch from a planning role in a command economy system to a supporting and guiding role. In the private sector, it means acquiring the knowledge and skills to operate within an open economy. The proposed inter-linked initiatives are:

Improved resource access. Improved land tenure systems are needed in order to encourage the efficient use of land and the emergence of viable private farm units. Components include: completing land distribution processes; continuing support and broader development of land administration systems; encouraging formal transfer of land, through renting, leasing or sale and through appropriate valuation; and developing real estate management skills.

Expanded market development. Functional markets for agricultural products, inputs and labour are essential. Components include: supporting efficient organizations of producers, traders and processors; investing in market infrastructure (including market and price information systems); improving the quality of food products in order to comply with international norms; and addressing legal impediments to efficient marketing.

Re-oriented and strengthened agricultural services. Viable farming systems require new types of post-privatization services. Components include: the provision of mixed public/private sector advisory services; training; and the dissemination of information in order to improve technical, managerial and marketing skills of privatized farms.

Other measures, such as the rehabilitation of viable irrigation schemes and the establishment of rural finance mechanisms, also merit regional priority. However, they will not operate effectively unless local capacities are first enhanced.

^{9 See Annex for a list of countries included in the region, which for the purpose of this analysis includes Turkey.}