5.1 Pilot projects are essential to gain experience necessary for the design of a comprehensive programme but they will result in the benefits of land consolidation being applied to only a few communities in the initial phase. Rural residents living outside the project sites will continue to face the same problems during the project life unless the state provides a better environment for supporting private, voluntary initiatives to consolidate parcels and enlarge holdings. These initiatives will not bring benefits of the magnitude found in the pilot projects but they may significantly improve the lives of many people. Some examples of possible state support are described below. Most measures will require legislative changes. This chapter therefore looks at how appropriate expertise can be built into project design and implementation, and at what skills and experience are required by people to deal with these issues.
5.2 Providing information for the land market. A weakness in the emerging land markets is that information on available land and its quality is often difficult to obtain. The state could promote the role of an intermediary, either by acting as a clearing-house itself or by supporting private sector initiatives. Prospective buyers could go to the intermediary to request what parcels might be available in certain areas, and for information on those parcels. People who had their land listed with the intermediary could indicate where they would like to receive land in exchange.
5.3 Improving access to subsidies and loans. In most countries in the region mortgages are seldom used to purchase land because banks usually do not take agricultural land as collateral. State assistance for those wishing to purchase land for consolidation might be considered. One option is to encourage lending by providing state guarantees for mortgages on land that meets consolidation requirements. Another option is providing direct government loans for those who want to consolidate. Despite restitution and privatisation, marketable title does not exist for a number of parcels because the land is now held jointly by the heirs of original beneficiaries, or is divided informally among them. Loans could be provided to people who would like to buy out other heirs. Subsidies could also serve to make the sale of land more attractive. One option is subsidies to pensioners who sell their land to others for the purpose of consolidation.
5.4 Reducing fees and taxes. Transfers could be made more attractive by reducing fees and providing tax benefits. Registration fees and transfer taxes could be waived for transfers that are undertaken to consolidate parcels and holdings. Tax advantages could be granted to owners against expenses of consolidation and related improvement to the land. Tax advantages could also be provided to those who sell their land to others for consolidation purposes.
5.5 Using land reserves. Land funds and other reserves could be used to allow farmers to enlarge their holdings. Exchange of ownership rights could occur from one district to another, and land reserves could be used by owners to exchange their land for parcels closer to where they live.
5.6 Using leasing to consolidate operations. Leasing is the most commonly used approach to increasing the size of farming operations. The preparation of simple leasing agreements may help to protect owners and lessees. Where leasing is extensive because of absent or otherwise uninvolved owners, these agreements could allow subleasing or assignments to enable renting farmers to re-allocate lease obligations among themselves to create more rational operations. A protection clause could allow owners to invalidate sub-leases that were not in compliance with the original lease contracts.
5.7 Completing land reforms. Although great progress in restitution and privatisation has been made throughout the region, there are a number of cases in which the process is not yet complete. One impact of the delay in completion is that land reserves cannot be used effectively to support exchanges as they may have to be used for restitution purposes. In some areas it is not even clear what land belongs to the state. Many owners have not yet received their titles for various reasons. Ownership changes resulting from the land reforms should be clarified as soon as possible.
5.8 Encouraging inheritance by a single heir. How land is inherited upon the death of the owner is critical to the issue of fragmentation and consolidation. The problem of fragmentation upon inheritance is not as potentially severe a problem in Central and Eastern Europe as it is in those regions which have high population growth rates. The problem does exist, however, largely because beneficiaries of land restitution and privatisation were often elderly and their holdings are now held jointly by their heirs or subdivided among them. Some countries have introduced restrictions on the number of heirs who can inherit land but this has seldom proved effective as people generally find a way around the restriction. It may be possible to provide ways to make transfer to a single heir simpler. For example, parts of Germany allow a farmer to decide if the farm will be passed to one heir or whether succession will occur under the usual provisions of inheritance. The state provides a mechanism to allow inheritance by a single heir but the farmer decides whether to use it.
