Total Factor Productivity of Farm Structures in Central and Eastern Europe

GABRIEL HUGHES*

University of London, Wye College, Wye, Ashford, Kent, United Kingdom

Abstract

HUGHES, G., 1999. Total factor productivity of farm structures in Central and Eastern Europe. Bulg. J. Agric. Sci., 5:298-311

There is a general perception that independent private farms are more productive than the collective type of farming, particularly co-operative farms. However this has been based more on belief and ideology than on any empirical study of Central and Eastern European Countries (CEECs). This paper is an empirical attempt to measure the relative economic performance of different farm structures in one CEEC which has suitable data : the Czech Republic. Farm structure in this study is treated in two aspects, management organization (legal form) and farm size. Using data sets of farm account and cost of production surveys, Total Factor Productivity (TFP) was calculated for the Czech Republic. This methodology is well established for time series analysis of productivity and here adapted for a cross sectional analysis, and used to establish whether certain categories of farm structure have a higher or lower productivity than other types of farm structure, using factorial analysis. The results presented show the average TFP of subgroups of farms from the original samples and show that size is the most important factor in crop production, that Individual Private Farms have the highest TFP for livestock production and that the co-operative farms have a higher than expected TFP overall. These results are explained within a framework of economic theory, other evidence and reports from the region. In particular it is argued that the economic reform process has reduced the tendency for low labour effort in co-operative farms through the reduction of worker bargaining power and increased incentives for management and members to resist free riding. Finally, the issue of how the economic performance of farms may affect future developments in the sector is explored.

Key words: farm structures, Czech Republic, total factor productivity


* Gabriel Hughes, MSc, Wye College, University of London, Wye, Ashford, TN25 5AH, UK The autor is grateful for the assistance of the Information Departement of the Research Institute of Agricultural Economics in Prague (VUZE)