Csaba Csaki – Csaba Forgacs – Dominika Milczarek-Andrzejewska – Jerz Wilkin : Restructuring Market Relations in Food and Agriculture of Central and Eastern Europe
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With regard to equity and poverty reduction small farm are preferred to large. Are small farms being marginalized on agricultural markets as new supply chains becoming dominant? This is the key question of Regoverning Markets Project (RM) which started in 2005. The Project initiated and sponsored a broad set of research activities and professional dialogues covering all the six continents of the world. Central and Eastern Europe /CEE/ was one of the regions covered by the Project. The RM activities in the CEE countries were coordinated by the Department of Agricultural Economics and Rural Development at Corvinus University of Budapest Hungary and were conducted in Poland, Hungary, Bulgaria and Russia. The regional outcomes of the project were presented and discussed at a regional seminar on November 7–8, Warsaw, Poland. This volume includes the materials presented at this seminar including an overview of the overall project objectives and initial findings.
The transition to market economies and changes in the political system have made significant impacts upon the various components of the food chain and related market relations in the region. Privatization in agriculture and food processing in the first half of the 1990s has been followed by a revolution in the retail sector created by the entry of multinational trading companies and opening of super and hyper markets in late 1990s and in recent years. Markets and market relations have been in constant change and the process is still continuing. Developments have not been uniform across the region. The new EU member states are far more advanced than Eastern Europe and the Balkan and especially some segments of the CIS. There is however, uniform concern on how these changes impact upon the small farmers and what kind of measures can be recommended to facilitate the adjustment of these farms to the evolving new market relations.
As the findings of the RM indicate the answer is not straight forward to the core question of the project. The situation is different in various regions but there is evidence that under the traditional operational patterns of small scale agriculture there is a growing evidence of exclusion. On the restructured markets small farms are quickly loosing their traditional efficiency advantages due to increased transaction costs to participate in the markets. In fast growing economies small farmers might find other opportunities for income earning than agriculture. In most of the transition countries however there are many reasons to be concerned about small farmers and the social implications of changing agricultural market patterns.
The Central and East European region similarly to the world is diverse. The threat toward small farmers is uniform but it is manifested in many different forms under different conditions. One of the major outcomes of Regoverning Markets is providing reach comparable empirical evidence of the small farmers adjustment to restructured markets instead of anecdotal stories. The project has confirmed the threats as well as brought up a large variety of approaches on the successful responses to the new situation. There are many examples of successful adaptations as presented in this volume. They are however hardly uniform and do not cover all the small farmers.
One essential factor of adjustment is the existence of conducive overall policy and institutional environment. First of all the macro economy has to be stable and public goods –rural roads, education, health care and agricultural extension are guaranteed on an acceptable level. The project findings /see Poland study/ underlines the importance of good governance, ensuring the rule of law in the countryside, the transparency of public interventions and dispute resolution. It is essential, however, that policy makers are aware of specific difficulties of the small farmers and understand that targeted actions are also needed to facilitate the adjustment of small farmers to changing markets. Successful intervention in the interest of small farms requires that governments have an interest mobilizing the support needed and the capacity to do so. The private sector generally has interest and resources to get involved. The public sector however has a crucial role to provide direction, coordination and specific funds to get started.
Many problems of small farmers are rooted in the small farmers themselves. Accordingly the small farmers understanding and willingness to change are also crucial components of the problem. Some of them are conservative and reject innovation and change, others just do not know what to do. The public sector, the private companies, NGOs and farmers associations together have to create the knowledge base and incentive for change. Key element of the change is the cooperation among small farmers. It seems to be a general conclusion that a higher degree of cooperation among the small farmers and other players in the product chains is essential for moving forward. There is long and cumbersome history of small scale agriculture development in most of the countries of the region. Markets, even much liberalized often fail in rural areas, the private sector behaves in a distorted fashion and, the traditional approach of the public sector leads to failures in a rural environment. RM project indicates that innovation, a major change in the traditional behaviour along the whole product chain is needed both in approaches and institutions to support small farmers in the changing market environment. The project resulted in a number of concrete examples of successful adjustment among different conditions and environment. A detailed country study from Poland and other cases from the region are presented in this volume. The main findings and directions of these cases and the related policy conclusions represent the major outcomes of Regoverning Markets Project in CEE.
Csaba Csaki Csaba Forgacs CEE Regional Coordinators Corvinus University of Budapest, Hungary