2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin, 2009
The paper examines agricultural production and productivity growth in two Central Asian countries... more The paper examines agricultural production and productivity growth in two Central Asian countries-Tajikistan and Uzbekistan. Both countries are characterized by a significant shift of resources from the traditional Soviet model of collective agriculture to more marketcompliant individual and family farming. In both countries, the beginning of the policy-driven switch to family farming around 1997 coincided with the beginning of recovery in agriculture, namely resumption of agricultural growth after a phase of transition decline since 1991. In addition to growth in total agricultural production, we also observe significant increases in productivity of both land and labor since 1997. These observations suggest that productivity growth may be attributable to the changes in farming structure in Central Asia. To check this conjecture we assess the sources of growth by applying the standard Solow growth accounting methodology. Using time series of country statistics for farms of different organizational forms, we decompose the growth in output into growth in the resource base (extensive growth) and growth in productivity (intensive growth). Solow growth accounting clearly shows that, first, much of the growth at the country level is attributable to increases in productivity rather than increases in resources and, second, the increases in productivity in family farms (especially household plots) outstrip the increases in productivity in former collective and state farms. These findings confirm that the recovery of agricultural production in Central Asia has been driven largely by productivity increases, and it is the individual farms that are the main source of agricultural productivity increases.
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Papers by Zvi Lerman
economies. Chapter two examines the impacts of land reform on economic indicators such as productivity for different farm types. Chapter three analyze the development of land markets to date based on new information gathered for this
work from the Cadastre Agency, a survey of farms carried out for this study, and other sources. Finally, chapter four provide recommendations based on international best practice for increasing the efficiency of land use by improving the functioning of land markets, including practical advice for implementing pilot land re-parceling projects.
While initially the agricultural reforms in Moldova stagnated because of internal fractiousness and political indecision, there has been a definite acceleration of pace since 1995. The number of exits from collective enterprises increased, and the land holdings of private farms established outside the collectivist framework more than trebled during the last two years, reaching 8% of agricultural land.
The study reveals a definite relationship between the economic conditions of collective farms and the willingness of individuals to risk independent private farming. The reorganization of collectives was merely “a change of the sign on the door,” and their failure to adjust to the new reality has resulted in rapidly deteriorating profitability. This in turn stimulated vigorous establishment of private farms by former members of collectives, who now report improved profitability and higher incomes. Land reform in Moldova has produced a highly positive impact on the families of private farmers: they are much better off and more optimistic than the families of rural residents who decided to remain in collectives.
The transition from collective to individual agriculture in Moldova has not resulted in a reversal to subsistence farming. The individual farm sector has developed a distinct commercial orientation. Fully 80% of private farmers surveyed report some revenue from sales of farm products, and on average they sell nearly 30% of their output. The growth of private farming is accompanied by emergence of various market services, which primarily include commercial private channels for sales of farm products and supply of farm inputs. Even the collectives and various large corporatized farms are moving away from exclusive use of state procurement and processing, and are beginning to rely to an increasing extent on private traders.
The case of Moldova before and after 1995 indicates that political indecision is lethal for reform. Yet, once the government decides to remove the basic obstacles to change, pressure from below, from the grassroots, can be counted on to produce rapid and accelerating movement toward private farming and market-oriented services. While the government certainly has a role in providing public goods and services in a market environment, the experience of Moldova since 1995 shows that the process of transition to the market does not require tinkering by government bureaucrats.
The special attention to the grain sector led to rapid expansion of wheat production. Traditionally a wheat importer, Turkmenistan started exporting wheat in 2010. Forecasts by local experts show that, despite a population increase of about 30% during the next 15 years, Turkmenistan will be able to maintain wheat exports at the current level of 400,000 tons annually.
Water allocation from Amudarya is governed by regional agreements between all Central Asian states. Turkmenistan’s share is 22 cu.km per year, or 36% of the river’s total runoff. Agriculture is the main water user in Turkmenistan, consuming 95% of the available resources. The emphasis on the expansion of cotton production in the Soviet era and the strategy of food self-sufficiency aggressively implemented since 1992 have led to accelerated growth of irrigated areas, which increased by nearly 4 times in the last 40 years, reaching 2.3 million hectares. Almost half this area – 1 million hectares – has been added during the 15 years since independence.
Irrigation is expanded without proper engineering attention to efficient conveyance of water, using mostly unlined canals and ditches with loss rates exceeding 30%. Effective water use per hectare of irrigated land has steadily declined, and it is now one-half of its level in 1970. Inadequate water availability is one of the reasons for low crop yields in Turkmenistan. The expansion of the collector-drainage network lags far behind the expansion of irrigation: between 2000-2004 the collector-drainage network grew by 7%, while the irrigated area increased by 26%. This has led to accelerated rise of the groundwater table, deterioration of soil quality, and increased salinity. More that 1.6 million hectares, or 73% of irrigated land in Turkmenistan, is salinated.
Increased use of concrete or plastic lined ditches, adoption of new efficient technologies – sprinkling, drip-irrigation, subsoil irrigation, and careful attention to water consumption for crop irrigation will significantly reduce water losses and seepage into the ground, and alleviate the problems associated with rising groundwater table. Adoption of water-saving technologies is costly, but it is essential for improved efficiency of water use. This technological approach will make it possible to increase the irrigated area in Turkmenistan to 4-5 million hectares while actually raising crop yields. It will thus help the country’s agriculture achieve its economic potential.
At the same time, a general recovery of agriculture will also depend upon the implementation of basic policy measures aimed at: relaxation of inflexible bureaucratic procedures; introduction of hard budget constraints and imposition of strict financial discipline on farm enterprises; recovery of the agro processing industry; development of competitive factor markets; liberalisation of external trade; and effective restructuring of farm enterprises.