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Agrarian Reforms in Turkmenistan

2006, Policy Reforms and Agriculture Development in Central Asia (eds. S. C. Babu and S. Djalalov)

Turkmenistan has implemented significant reforms in agriculture, increasing the size of the household plot sector, enabling the emergence of independent private farms, and most importantly individualizing to a certain extent the production arrangements in former collective farms through the introduction of leasehold contracts. Yet the policies underlying these reforms are not entirely consistent: state orders are retained for the main cash commodities (cotton and wheat), the producers are generally bound to monopolistic state marketers and input suppliers, and the independent private farmers who are relatively free from these constraints receive land of very poor quality that requires major investment in reclamation. It is not surprising that the performance of the new leasehold sector is far short of its potential and the new independent farmers are struggling to survive. However, despite these political constraints, the reforms are finally beginning to have some positive impact, with agriculture slowly starting to recover from the initial transition-induced decline.

Agrarian Reforms in Turkmenistan Zvi Lerman and Ivan Stanchin 1 Regional Context and General Reform Efforts Turkmenistan is a huge Central Asian country of 491,200 km2, nearly 50 million hectares – the fourth largest by area in the former Soviet Union (FSU) after Russia, Kazakhstan, and Ukraine. Yet it has a small (albeit rapidly growing) population of about 6 million people, which puts it in one group with the FSU midgets – Armenia, Georgia, Azerbaijan, the Baltic states. More than half the population (55%) lives in rural areas, compared to one-third in FSU, but only 4% of the country’s agricultural land (1.8 million hectares) is cultivable, compared to 40% in FSU. The remaining 96% of agricultural land in Turkmenistan is desert pastures – 39 million hectares fit only for flocks of karakul sheep and camels, not for human beings (Goskomstat SNG, 2003). Thus, despite the huge expanses and the small number of people, the effective population density in Turkmenistan is very high: there is less than 0.6 hectares of arable land per rural resident compared to 2.1 hectares in FSU. Land and water are the two scarcest and most precious resources in this country. Turkmenistan is an agrarian country, as is evident from its high share of rural population, high share of agricultural labor in total labor force, and high share of agriculture in GDP (Table 1). Yet by these characteristics Turkmenistan is generally comparable to its Central Asian neighbors: it can be characterized as highly agrarian only in comparison with Russia and Ukraine (as well as the FSU average). Turkmenistan’s share of arable land in total agricultural land is very small compared with the other Central Asian countries, but all its arable land is irrigated (so is the arable land in Uzbekistan). Turkmenistan’s population is the smallest but fastest growing in Central Asia. If the population continues to grow at 3% annually, Turkmenistan will very soon overtake Kyrgyzstan and Tajikistan. Turkmenistan was part of the Soviet Union for 67 years to the day, from October 27, 1924 until October 27, 1991. Independent Neutral Turkmenistan was declared in October 1991 by Saparmurat Niyazov, who had been the First Secretary of the Communist Party of Turkmen Soviet Socialist Republic since 1985 and was elected the first president of Turkmenistan in 1990 with 98.3% of the vote. According to the post-Soviet constitution adopted in May 1992, the President is both the head of state and the head of government. Turkmenistan has a single-party system of government, and the President, in addition to his role as Prime Minister, is also Chairman of the Democratic Party of Turkmenistan. Saparmurat Niyazov’s term was extended beyond the five-year constitutional limit in two referendums (1992 and 1994), and in December 1999 he became President for Life by popular acclaim (legally formalized by a vote of Parliament). He is universally referred to as Turkmenbashi—the Father of the Turkmen. This honorific has evolved into a surrogate surname, and the President of Turkmenistan is generally called Saparmurat Turkmenbashi in the local press and elsewhere. Recently he began to be 1 Department of Agricultural Economics and Management, The Hebrew University of Jerusalem, Israel, and National Institute of Statistics and Information, Ashgabat, Turkmenistan, respectively. E-mail: lerman@agri.huji.ac.il (for Zvi Lerman) and stanchin@online.tm (for Ivan Stanchin). This paper is part of a research project supported under Grant No. TA-MOU-98-CA17-011 by the U.S.-Israel Cooperative Development Research Program, Economic Growth, U.S. Agency for International Development. The data in the paper derive from official statistical sources (as assembled in Stanchin and Lerman, 2003), a 2001 survey of private farmers, and a 2002 survey of leaseholders in peasant associations. 1 addressed as Serdar—the Leader, and the adjective “Great” is being added with increasing frequency to his name. His birthday, February 19, is a national holiday coinciding with the Day of the National Flag. Table 1. Selected Characteristics of Turkmenistan and Some FSU Countries Country area, Ag land, Population, Population thousand km2 million ha million density, per km2 Turkmenistan 491 40.5 4.8 9.8 Uzbekistan 449 20.0 24.9 54.6 Kyrgyzstan 200 4.8 4.9 24.6 Tajikistan 143 4.1 6.2 42.8 Kazakhstan 2,725 86.4 14.8 5.5 Russia 17,075 197.0 144.8 8.5 Ukraine 604 38.4 49.0 81.2 Arable land, % of ag land Population growth rate, % per annum 3.1 2.2 1.5 2.3 -0.0 0.2 -0.2 Irrigated, % of arablea Rural Share of Arable land Share of population, agriculture in per rural agriculture in % labor, % resident, ha GDP, % Turkmenistan 4 106 55 48c 0.6 21d Uzbekistan 20 100 63b 36b 0.3 32d Kyrgyzstan 29 79 65 53 0.4 38b c Tajikistan 18 81 73 64 0.2 29 Kazakhstan 22 7 44 23 3.0 9 Russia 61 5 27 13 3.1 7 Ukraine 82 8 32 23 2.0 14b Source: Goskomstat SNG (2003). The data are generally for 2000, except where indicated otherwise. a 1990; b1999; c1998; d1997. Independent Turkmenistan embraced a model of “gradual, step-by-step transition from an administrative command system to a market economy” (MinEcon, 1999, p. 70). According to the official view, “Saparmurat Turkmenbashi … chose a socially oriented model of a market economy,” whereby market relations are regarded as a “means to increase the living standard of the people” (ibid.). Despite its reform efforts, Turkmenistan is classified by Freedom House, an international research organization specializing in the analysis of reform processes in transition countries, as a “consolidated autocracy” and a “consolidated statist economy” (Freedom House, 2002). This category is the diametric opposite of “consolidated democracy” and “consolidated market economy” and, alongside Turkmenistan, it includes only two other countries: Uzbekistan and Belarus. Turkmenistan consistently gets very low marks for political and economic reforms. Thus, on a scale of 1 to 7 (where 1 is “best” and 7 is “worst), Turkmenistan scores 6.94 for democratization and 6.50 for economic liberalization – the worst scores by both measures among all 27 transition countries ranked by Freedom House. Turkmenistan receives a similarly poor evaluation from the World Bank on the agricultural reform scorecard, where Turkmenistan gets a score of 6.60 out of 7 (Csaki and Zuschlag, 2004). The poor scores that Turkmenistan is awarded for its reform efforts by international organizations probably explain the dim view of this country as expressed in the following statement by Johannes Linn, the World Bank Vice President for Europe and Central Asia Region (made at the Central Asia Donors’ Consultation Meeting in Berlin on March 1, 2002): Turkmenistan is an outlier even within the region in its near-total isolation and lack of reforms. There is no indication that its position will change in the 2 foreseeable future and it represents a significant obstacle to any effort to increase regional cooperation in key areas (especially water). This statement seems to be fairly representative of the prevailing view of Turkmenistan among Western experts. One of the objectives of this article is to temper this universally negative judgment by providing evidence of developments in agriculture that give some hope for more positive change in the future. Changing Farm Structure Prior to 1991, agriculture in Turkmenistan was organized according to the standard Soviet model: some 600 large collective and state farms controlled the bulk of agricultural land while the rural population cultivated in its spare time tens of thousands of small household plots on 55,000 hectares, or about 3% of irrigated land (Lerman and Brooks, 2001). The structure of the farm sector has changed dramatically since then as independent Turkmenistan began to implement various agrarian reforms consistent with its interpretation of a market-oriented economy. The main change can be characterized as a shift from collective farming to a more individualized agriculture. The first step (1990-92) involved distribution of irrigated land to rural families, which more than doubled the total size of the household-plot sector to 133,000 hectares. The second step (1993-96) involved a national program for allocation of land to independent private farmers who were allowed to engage in commercial agriculture outside collectivist frameworks. In 2002 there were more than 5,000 such private farms in Turkmenistan (the numbers are very fuzzy) operating on 81,000 hectares. The third, and perhaps the most daring and radical step (1996-97) involved the transformation of former collective and state farms into associations of leaseholders. So-called “peasant associations” (daikhan berleshik) were organized by presidential decree in place of the traditional collective and state farms, and each association was instructed to parcel out its large fields to individual leaseholders (typically heads of families). Throughout these changes, however, agricultural land remained predominantly state-owned. For a more detailed discussion of the legal framework for these changes see Lerman and Brooks (2001) and Stanchin and Lerman (2003). Table 2. Structure of the Farm Sector in Turkmenistan: 2002 Number Land, ha Associations 587 33,900,000 (incl. pastures) Leaseholders 357,000 1,500,000 (arable) Peasant farms 5,200 81,000 Household plots 616,000 133,000 Source: Official statistics as summarized in Stanchin and Lerman (2003). Average size, ha 4 16 0.2 We view the creation of leaseholder-based associations as the most radical step of the land reform program because of its scope. The reforms aimed at household plots and private farms, however important, were marginal by the amount of land that they encompassed. The transition to leasehold contracts, on the other hand, involved more than 350,000 rural family units and 1.5 million hectares of arable land, i.e., practically the entire rural population and 90% of arable land in Turkmenistan. The current structure of the farm sector in Turkmenistan is presented schematically in Table 2. 3 The Role of Peasant Associations and Institutional Arrangements for Leaseholders Following the establishment of the peasant associations, the situation in Turkmenistan seems to have developed toward a genuine structural change since 1996-97. Although there are still 600 associations and they still legally control most of the agricultural land resources, they have become mere organizational shells, or umbrellas, for the farming operations of individual leaseholders, without significant commercial activity of their own. As of 1997, associations have virtually no “collective” sales: all sales reported to statistical organs through associations derive from the individual activity of their leaseholders. The associations have lost much of their fixed asset base (machinery, equipment, livestock), while inventories, receivables, and payables— standard signs of commercial activity—have shrunk almost to zero (Table 3). Table 3. Characterization of Associations as a Shell for Leaseholders 2000 Percentage of sales generated by the association, % of total reported sales 4.6 Fixed assets, change since 1997 in % −40 Inventories, change since 1997 in % −86 Accounts receivable, change since 1997 in % −72 Accounts payable and loans, change since 1997 in % −90 Source: Aggregate financial statements of farm associations 1997-2000, Ministry of Agriculture of Turkmenistan. The percentage change 1997-2000 is calculated from the series of balance-sheet data in constant prices (after adjusting the reported nominal figures for inflation). For more details see Zaslaver (2004). What is the role of the associations today? First, they are the “guardians” or “administrators” of state-owned agricultural land that is distributed to leaseholders for cultivation. All leaseholders interviewed in a large farm-level survey in 2002 report that they have a landlease contract with the association. Second, they are the municipal authority responsible for maintaining rural infrastructure in the villages—and they receive a certain payment from the leaseholders (in percent of production revenue) for these services. Third, and most problematic of all, they are the conduit for transmitting state orders to the leaseholders and enforcing compliance. The continuing existence of state orders in Turkmenistan is a legacy of the Soviet centrally planned system. Turkmenistan has liberalized much of its agricultural production and food trade, but the main strategic commodities—cotton and wheat (as well as the much less important rice)—remain subject to state orders. As in the past, production targets for wheat and cotton are assigned to large farming units—peasant associations in this case; and the association manager divides the overall quantities among the leaseholders so that the full target is met (or exceeded). The associations do not sell this wheat and cotton for their leaseholders, as a marketing cooperative would normally do in the West: the sale contract is directly between the leaseholder and the state marketing organization, which sends trucks to collect the harvested crop and sometimes even tractors and combines to help with harvesting. The associations do not act as supply cooperatives either: leaseholders get all the inputs they need from state suppliers on the basis of individual contracts signed according to production targets. Finally, since the associations are neither marketers nor input suppliers, they cannot act as credit cooperatives for their leaseholders. All financial transactions in this system are handled by a state-owned agricultural bank – Daikhan Bank – which has a branch in every association, serving all the local leaseholders. The system is organized on the basis of “passbooks”, so that very little cash changes hands. Each leaseholder’s production quota is recorded in the “passbook”. The “passbook” shows the total credit for revenue that the leaseholder will eventually receive for deliveries of wheat and cotton and the total debit for inputs that he is 4 entitled to get from the state. The revenue is calculated on the basis of fixed state prices, which are adjusted every year but are always far below the world market prices. The cost of inputs is also based on fixed state prices net of a hefty 50% subsidy for all inputs used in the production of state orders. The input debits, plus statutory management charges that go to the association, are offset against the revenue and the leaseholder keeps only the “profit”. This highly bureaucraticized system applies only to state orders, i.e., wheat, cotton, and rice, but it is designed in such a way that the leaseholder must deliver the entire output to state marketers: otherwise there will be no credit entry in the bank account to offset the debits for inputs. Commodities not subject to state orders, such as vegetables, milk, or eggs, are generally produced under different institutional arrangements on the family’s household plot (not on the leasehold) and are sold in the nearby market or through occasional private traders: there are no state marketers to deal with these commodities and the association is not geared to provide cooperative marketing services. Fig. 1. Contracts with State Marketers/Suppliers Association (land) Daikhan Bank Farm services Fertilizer supply W ater Users Ass Cotton Board Grain Board 0 20 40 60 80 100 percent of leaseholders The complex system of relationships between leaseholders and various state organizations is reflected in Figure 1, which shows the percent of respondents in the 2002 survey who signed contracts with input suppliers, product marketers, and the bank. Over 80% of respondents are bound to the state by credit and input supply arrangements. The percentages for marketing contracts are deceptively low. As leaseholders generally specialize either in grain or in cotton, the combined frequency of contracts with the Cotton Board and the Grain Board is around 100% (actually slightly more than 100% reflecting the existence of some mixed grain/cotton farming). Thus, all leaseholders are bound by marketing agreements to the state, with no independent commercial activity in the two strategic commodities. The Role of the Household Plot Leaseholders operate in a two-tier farming system. In one tier, they have 5-6 hectares of irrigated land leased from the peasant associations, where they grow mainly wheat or cotton for delivery to the state. In the second tier, they have a small household plot of about 0.25 hectares on which they grow vegetables and keep some private livestock. The output from the household is in part consumed by the family and in part sold in the open market, without any intervention from the state. The income of most rural families thus includes cash income from the leasehold 5 operation plus cash and in-kind income from the household plot. In the 2002 survey, these two components were evenly balanced and jointly accounted for 75% of family income (Figure 2). The remaining 30% represent cash income from off-farm salaries of family members working outside the household, pensions, social transfers, etc. The household plot is thus a very important source of income for rural families, accounting for more than one-third of total income in value of own farm products consumed by the family and in cash from product sales. The enlargement of household plots in 1990-92 made a very important contribution to the well-being of the rural population. Fig. 2. Structure of Leaseholder Family Income Leasehold 38% HH plot 36% Other 13% Off-farm wages 13% Total income 13.5 million manat Private Farmers and Their Land In addition to leaseholders and their household plots, Turkmen agriculture has another relatively new component that began to emerge only in 1993. These are independent private or peasant farms (called daikhan farms in Turkmen) that operate outside associations on land grants received directly from the state, and not in the form of a lease from the association. The land in these private farms increased from zero in 1992 to more than 115,000 hectares in 1998-2000, when it approached the total land in household plots (130,000 hectares). In those years, the private sector (household plots and peasant farms combined) controlled almost 10% of all cultivable land in Turkmenistan. There were about 7,000 private farmers in Turkmenistan, so that an average private farm had 16 hectares – four times as much as the average leasehold in associations (4 hectares; see Table 2). Yet there is a serious problem with the quality of land in private farms. The declared government policy is to give private farms unirrigated, uncultivable land and thus force them to reclaim desert land at their own expense (see, e.g., Lerman and Brooks (2001)). In effect, the government has relinquished the responsibility for what was traditionally regarded as a public good in the Soviet era and today relies on private individuals to invest in land reclamation. The poor land quality in private farms is clearly illustrated by Figure 3, which shows that in 1993-95 cultivable land was only 30%-40% of the holdings – compared to 80% in household plots. Yet it seems that the private farmers are doing exactly what the government intended them to do: they are actively reclaiming desert land on their farms and the share of cultivable land has steadily 6 increased from the initial 30%-40% to 60% today (Stanchin and Lerman, 2003). The picture that emerges from the 2001 survey of private farms is consistent with these national figures: among the respondent farms, 31% of the land was irrigation-ready from the start, another 37% was reclaimed by the farmers during their new tenure, and 32% is still unused and remains to be “opened” for cultivation in the future. It is largely through the efforts of private farmers that Turkmenistan added 64,000 hectares to its stock of irrigated land, which increased from 1,744,100 hectares in 1994 to 1,808,400 hectares in 2001. Fig. 3. Share of Cultivable Land in Individual Sector 100 percent of holdings HH plots: 0.25 ha 80 60 Farms: 20 ha 40 20 0 1990 1992 1994 1996 1998 2000 Another difficult issue is the peculiar notion of “private landownership” in Turkmenistan. First, land granted to private farmers allegedly in “private ownership” is totally nontransferable: it is received from the state without the right to sell, give as a gift, or exchange. Another unusual twist is that private ownership in Turkmenistan is granted conditionally, and the state reserves the right to confiscate private land if the farmer’s performance does not meet the expectations of the regional authorities (Decree, 1993). During the early phases of reform (up to 2000), the confiscation option was not enforced, so that both the number of private farms and their land holdings were steadily increasing. In January 2000, there were 7,066 private farms in Turkmenistan with 115,000 hectares in private ownership or long-term lease, up from 750 farms with 28,400 hectares in 1993. Between 2000 and 2002, however, the number of private farms decreased to 5,176 and the land holdings dropped to 81,100 hectares. The downward trend continued and by the beginning of 2003 private farms retained only 64,200 hectares. Within just three years private farms lost a staggering 45% of their land: the state began to enforce the confiscation provision, taking back private land from farmers who had not farmed actively (or satisfactorily) in the past two years. This, of course, is an unthinkable policy in a market economy, yet in Turkmenistan policymakers justify its enforcement by the acute scarcity of cultivable land and the need to ensure that no cultivable land is left idle. Some Comparisons of Leaseholders and Private Farmers The most striking difference between leaseholders and private farmers is not in farm size (5-6 hectares in leaseholds, 20 hectares in private farms): it is in the fact that leaseholders are 7 subject to state orders while private farmers are allowed to grow whatever they wish. This is clearly reflected in the specialization of farms in the two groups (Table 4, based on 2001-2002 surveys): leaseholders produce either cotton or wheat, with less than 10% of farms producing both cotton and wheat and only 5% diversifying into other commodities. Among private farmers, on the other hand, 15% produce both cotton and wheat while fully 34% produce commodities other than cotton and wheat. These other commodities are largely livestock products, which are very seldom reported by leaseholders. Nationally, the product mix of leaseholders in associations is 85% crops and only 15% livestock. Livestock production is concentrated mainly in the individual sector – private farms and household plots, where the product mix is diametrically opposite: 25% crops and 75% livestock. Table 4. Specialization at the Farm Level (percent of respondents) Leaseholders Cotton only 36 Wheat only 50 Cotton+wheat 9 Other 5 Source: 2001-2002 surveys. Private farms 8 43 15 34 (livestock) Table 5. Sale Channels for Farm Products: Leaseholders and Private Farmers (percent of respondents) Channel Leaseholders Commodity Channel Private farmers State 100 State 88 Cotton State 71 Association 9 Wheat Market 21 Market 3 Market Market Vegetables Meat, milk 80-100 80-90 Source: 2001-2002 surveys. The difference in institutional arrangements for leaseholders and private farmers is also reflected in different access to marketing channels (Table 5). Leaseholders sell primarily to the state, which is consistent with their obligation to deliver wheat and cotton under state orders. Private farmers use different channels for different products. Vegetables, meat, and milk – the products for which no state procurement exists – are sold in the open market. Cotton is sold to the state: in principle, private farmers have no obligation to sell to the state, but there are apparently no alternative sale channels for cotton – direct exports are prohibited – and they are obliged to sell to the state cotton board. Wheat is again in a different category: the state takes 70% of the harvest, but a respectable 20% is sold through alternative channels. There is a very clear lesson behind these numbers: if producers are given an opportunity to choose between marketing channels, they will indeed exercise their right of choice, presumably optimizing sales income. Despite the state orders and the constraints on individual choice, leaseholders appear to be quite happy with the new arrangements (Table 6; unfortunately no such data are available for private farmers). Most of the respondents in the 2002 survey report an increase in their motivation to work (compared with the situation in the former collective) and an improvement in their standard of living. Practically everybody is optimistic about the future prospects under the new system. The enthusiasm reflected in the first column of Table 6 may be exaggerated due to the specific socio-economic environment and local cultural traditions, but given the large size of the sample positive views cannot be dismissed as spurious. In terms of popular attitude the agricultural reforms are a success. 8 Table 6. Leaseholders’ evaluation of the situation under the new leasehold arrangements compared to the collective past (percent of respondents) Better than before the No change Worse than before the reforms reforms Motivation to work 85 11 4 Standard of living 72 23 5 Future prospects 90 6 4 Source: 2002 survey. Outcomes of Agricultural Reform Proper assessment of the impacts of agricultural reforms requires detailed comparisons of the performance of the three institutionally different components of Turkmen agriculture: leasehold farms, household plots, and private farms. Unfortunately, neither national statistics nor our surveys provide the full information necessary for this kind of analysis. National statistical data only enable us to make a crude performance comparison between the “association sector” (i.e., leasehold farms) and the “individual sector” (mainly household plots, but also private farms). The results of this comparison are presented in Figure 4, where two features are worth noting. First, the share of the individual sector in agricultural output increases over time, while the share of the associations decreases despite the transition to leasehold arrangements after 1996. In 1997, the first year of the main farm-structure reforms, each sector accounted for one-half of gross agricultural output. Five years later, in 2001, the individual sector produces 75% of agricultural output, while the association sector is down to 25%. Fig. 4. Associations and Individual Farms: Output and Land 80 percent of output/land 70 60 50 IndivOutput AssOutput IndivLand 40 30 20 10 0 1997 1998 1999 2000 2001 Another noteworthy feature is the ratio of output to land in the two sectors. The individual sector (household plots and private farms combined) control about 10% of cultivable land, on which they produce 75% of total output. Association leaseholds account for 90% of cultivable land, and yet they produce only 25% of total output. The relative productivity of land in the individual sector appears to be 27 times higher than in the association sector. Neither feature is unique to Turkmenistan. Similar trends are consistently observed in all former Soviet republics, where in line with accepted theoretical considerations we generally attribute the performance differences to different incentives for individual farmers and workers of former collectives. Yet the institutional setting in Turkmenistan is unique in that the former 9 collectives have shifted to individual leasehold arrangements. As a result, leaseholders presumably face incentives that are much closer to the incentives of individual producers than the incentives of workers in former collective farms in the rest of the FSU. We would have expected the leaseholders to achieve productivity levels that are much closer to the individual sector and thus give a strong boos to Turkmen agriculture. This obviously has not happened so far. The only possible explanation, in our view, lies in the sharp differences in the institutional production and marketing arrangements between the individual sector and the leasehold sector. Individuals are free to decide what to produce and how to sell, and individual farming is flourishing thanks to private initiative. Leaseholders are strictly bound by state orders on the relatively large areas that they receive from the association, and there is not much room for private initiative. It is particularly important to note that the second tier of leasehold farming – the household plots – is not subject to these restrictions and household plot production seems to be flourishing (as part of the individual sector statistics) while the association sector is struggling. Switching to a still broader national view, we see in Figure 5 that both agricultural output and GDP declined sharply after 1990. Some signs of recovery appeared in 1997-98 – coincidentally with the introduction of significant reforms in agriculture. We would like to hope that the incipient recovery is indeed linked with the impact of agricultural reforms, but only the future will show if this is so. Figure 5 incidentally reveals another important feature of rural Turkmenistan: the labor employed in agriculture is steadily increasing over time, both because of high natural increase of the rural population and because of lack of alternative employment opportunities outside agriculture. The combined effect of increasing labor and decreasing agricultural output of course has had a negative effect on labor productivity of Turkmen agriculture. Conclusion Turkmenistan has implemented significant reforms in agriculture, increasing the size of the household plot sector, enabling the emergence of independent private farms, and most importantly individualizing to a certain extent the production arrangements in former collective farms through the introduction of leasehold contracts. Yet the policies underlying these reforms are not entirely consistent: state orders are retained for the main cash commodities (cotton and 10 wheat), the producers are generally bound to monopolistic state marketers and input suppliers, and the independent private farmers who are relatively free from these constraints receive land of very poor quality that requires major investment in reclamation. It is not surprising that the performance of the new leasehold sector is far short of its potential and the new independent farmers are struggling to survive. However, despite these political constraints, the reforms are finally beginning to have some positive impact, with agriculture slowly starting to recover from the initial transition-induced decline. References Csaki, C. and A. Zuschlag (2004), The Agrarian Economies of Central-Eastern Europe and the Commonwealth of Independent States: An Update on Status and Progress in 2003, ECSSD Working paper No. 38, World Bank, Washington, DC. Decree (1993), Presidential Decree on Right of Possession and Use of Land in Turkmenistan, February 2. Freedom House (2002), Nations in Transit 2002: Democratization in East Central Europe and Eurasia, www.freedomhouse.org Goskomstat SNG (2003), Official Statistics of the Countries of the Commonwealth of Independent States, CD-ROM 2003-8, Moscow: Interstate Statistical Committee of the CIS. Lerman, Z. and K. Brooks (2001), Turkmenistan: An Assessment of Leasehold-Based Farm Restructuring, Washington, DC: The World Bank, World Bank Technical Paper 500. MinEcon (1999), Turkmenistan: Eight Years of Independent Development, Ashgabat: Ministry of Economy and Finance, National Institute of Statistics and Forecasting. Stanchin, I. and Z. Lerman (2003), Agrarnaya reforma v Turkmenistane (Agrarian Reform in Turkmenistan) [in Russian], Rehovot, Israel: Center for Agricultural Economic Research. Zaslaver, D. (2004), Agrarian Reform in Turkmenistan: Financial Analysis of Peasant Associations and Leaseholders [in Hebrew with English Abstract], MSc Thesis, Department of Agricultural Economics and Management, The Hebrew University, Rehovot, Israel. 11