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Farming Systems Based Strategies for Improved Rural Livelihoods in Eastern Europe and
Central Asia
Stjepan Tanic and John Dixon
Farming Systems Development Officer in the FAO Subregional Office for Central and
Eastern Europe and Senior Officer (Farming Systems) in the Farm Management and
Production Economics Service, FAO HQ, Rome, Italy.
ABSTRACT
In Eastern Europe and Central Asia, major policy and institutional changes are transforming
both small and large farms, and this process of change is expected to continue for the
foreseeable future. Small farmers in particular, exposed to the added pressures of market
liberalisation and globalisation, have new opportunities but also face immense threats. This
paper1 presents the results of a farming systems approach to the analysis of agricultural
trends, emerging constraints and strategic priorities for agricultural and rural development in
Eastern Europe and Central Asia. Both the approach and the findings for the Region are
unique. The analysis highlights the importance of intensification and diversification
(especially for family farms) in development strategies for raising farm incomes, as well as
competitiveness in order to tap export markets.
INTRODUCTION
Agriculture in Eastern Europe and Central Asia (ECA)2 has been caught up in the complex
transformations of political and economic systems. Initially, all countries faced similar
underlying challenges; however, because of substantial differences in the degree of prior
market development and the level of political commitment, the progress in adopting and
developing market-based agriculture in each country has differed substantially during the
1990s. Many farming systems, which were characterised by large-scale centralized collective
or state management and ownership, are now dominated by privately or corporately owned
and managed farms. Initially, production fell, economies contracted and urban and rural
poverty increased substantially. The process also implies re-creating and re-shaping of
agricultural production and management in most countries, for which the re-engineering of
market and support institutions is essential. The major difficulty has been to create the basic
enabling conditions for successful private family farming.
Widespread policy and institutional failures are clear evidence of a lack of proper
understanding of farmers’ circumstances and the types of policy and institutional adjustments
required to increase small farm incomes and competitiveness. In this context, Doppler (1994)
noted the suitability of the Farming Systems Approach (FSA) to support the agricultural
transition in Eastern European countries. Recently, the role of farming systems analysis in
environment impact assessment has been recognized in the Central and Eastern European
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2
The paper is based on the analysis conducted for the FAO/World Bank Global Farming Study and reported in
Tanic and Dauphin (2001) and Dixon, Gulliver and Gibbon (2001). Comments and contributions on the
paper from Walter deOliviera, Consultant, Farm management and Production Economics Service, are
gratefully acknowledged. Remaining errors are the responsibility of the authors.
For the purposes of this paper, the Eastern Europe and Central Asia Region is defined as the Baltic States,
Central European and Balkan counties, Turkey and the Commonwealth of Independent States (see Map).
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Sustainable Agriculture (CEESA) Project (Gatzweiler 2001). Modern FSA adopts a
participatory, multi-disciplinary and holistic approach towards improved food seccurity and
livelihoods, in which family structure, gender, social networks, local institutions and markets
all play a role3. The approach has been applied in a global FAO/World Bank study of farming
systems4 (see Tanic and Dauphin 2001 and Dixon, Gulliver and Gibbon 2001). Both the
approach and the findings have significance for the Region.
This paper sketches the major farming systems of the Region following a method described
in Dixon (paper submitted to this Conference) and, in the context of differing farm size and
organisation across these systems, examines strategic pathways for farm development.
EVOLUTION OF FARMING SYSTEMS
The Region supports a total population of 478 million and an agricultural population of 93
million. Of the 2.4 billion hectares (ha) of land in the Region, much is arid and semi-arid with
only limited production potential, unless irrigated. More than half of the Region lies in the
permafrost zone north of latitude 78º. Forest cover is extensive, especially in the taiga in
Russia. Thus, annual or permanent crops cover only 293 million ha, of which about 29
million ha is equipped for irrigation. The most productive farming systems lie in the moist
sub-humid areas in the west. Mountain and hilly areas with more than 30 percent slope are
widespread in the southern part.
Although the Region as a whole is at an intermediate stage of economic development, the
level varies widely across the Region. During the past decade, most economies have
contracted and poverty has increased substantially. The relative importance of agriculture
varies across the Region. Between 10 and 50 percent of national populations are dependent
on agriculture. Region-wide, the sector contributed 12 percent of GDP in value added terms
in 1998, but individual country figures range from 4 to 54 percent. The average contribution
of agriculture to exports was 11 percent (World Bank 2000a).
While poverty levels have risen only moderately in the Baltic countries and Central Europe,
they are significant in Poland and the Balkans. Poverty in Ukraine, Moldova and Belarus has
risen dramatically. Per capita calorie consumption, which in the mid-1980s was higher than
in the industrialised countries, had fallen by nearly 15 percent a decade later. Projections
suggest a slow recovery over the next 30 years that will be facilitated by low population
growth, but will still leave average consumption levels marginally below those of the mid1980s.
Agro-ecological diversity and socio-economic developments, including those mentioned
above, have resulted in the evolution of different farming systems. The afore-mentioned
study identified eleven major farming systems in the Region, whose principal characteristics
are set forth in Table 15. The systems are also delineated on the Map (Figure 1) (except for
the widely dispersed Urban Based System). To the extent possible, each of the farming
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4
5
Thus, FSA and the Sustainable Livelihoods Approach (SLA) share many common features.
In the context of updating the World Bank Rural Development Strategy.
For a more detailed description and analysis of identified major farming systems in the Region see
http://www.fao.org/farmingsystems.
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systems has been associated with the specific region where it is the dominant in agricultural
structure.
Figure 1 Major farming systems in ECA
Source: Tanic S. & Dauphin F. (2001).
Decollectivization and privatisation have been major components of the economic reform
packages promoted during the transition. Except in Poland and the countries of former
Yugoslavia, where small family farms were common, large collective and state farms have
dominated ECA agriculture during the past half-century. Due to the variety of policy and
institutional conditions, the formal legal setting varies from country to country (Figure 2), as
does the average farm size. The pace and procedures of restructuring varied considerably
from one country to another. However, a common feature is the unforeseen complexity of
this transformation process, and the associated difficulty of “re-inventing” farming systems
based on individual property and management. One important reason for these difficulties
relates to the fear of many rural households of the switch from a protected environment to a
competitive world of uncertainty and risk, in which many institutions and support services
are yet to be established. As a consequence, even though land is officially privatised in many
countries, the new farming systems are far from being established on the ground.
One of the consequences of the land distribution process in the Region has been the
fragmentation of farmland. Farmers were restituted or assigned land in the form of numerous
small plots, often with various soil qualities as well as various perennial crops. In most
countries, land titling is lagging behind schedule and property rights remain unclear (World
Bank 2000b). As a consequence, farmers are not able to use land as collateral.
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The deteriorating economic situation during the transition period, the restructuring of state
and collective farms which included the discharge of surplus labour and the absence of
employment opportunities in rural areas, resulted in substantial rural-urban migration,
especially of younger and skilled people. As a consequence, the average age of rural
populations has increased and there is considerable hidden unemployment.
State farms
Collective farms
Private farms and
household plots
Privatization and De-collectivization
State farms
Corporate
Farms
New Cooperatives
Family
farms
Household
plots
Restructuring and Reorganization
Figure 2: Transformation of agricultural production structures
Source: Adapted from Thiele 2000.
The evolution of the farming systems, which results from these changing socio-economic,
institutional and policy factors, is summarised in Table 1. Initially those systems were
characterised by a large-scale production units with high external input use. However, labour
productivity was low largely due to the over-employment caused by strained social functions
of those large conglomerates. Due to the substantial reduction of subsidies in the beginning
of transition period, production intensity sharply decreased, further contributing to decline of
agricultural productivity. In many parts of the Region, the family farms, characterised by
household-oriented subsistence production and low external input use, have emerged as a
response to the threat of rural poverty and lack of employment opportunities in rural as well
as urban areas. With the start of economic recovery in most of the countries in the mid-1990s
and improved institutional support to agriculture, particularly in Central European countries,
productivity started to increase. Further evolution of most of the farming systems in the
Region is expected to include specialisation, commercialisation and an increase in the
importance of alternative off farm activities and employment.
AGRICULTURAL DEVELOPMENT PATHWAYS
There is substantial scope for both agricultural growth and poverty reduction, although the
two are not necessarily completely inter-dependent because of, inter alia, the distribution of
land. With regard to the strategies of poor households for escaping poverty, intensification
holds the greatest promise on a regional scale. This section highlights some of the major
challenges in the Region and suggests possible approaches and farm/household strategies
(Figure 2) with regard to improved efficiency and poverty reduction.
The potential for production intensification and overall productivity improvement through
better technologies, provided that support services are adequate, is generally relatively high
and thus the intensification of family farms can contribute to increased competitiveness and
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poverty reduction. However, this should proceed with caution as many farmers in Western
Europe, after 40 years of intensification and specialisation, are facing surpluses,
environmental damage and the breakdown of rural communities. The maintenance of
productivity gains requires attention to sustainable resource management. Solutions to
contain further degradation and develop sustainable systems, particularly on-farm, through
the establishment of participatory management systems are being successfully developed in
several countries. The farming systems approach needs to be incorporated into agricultural
research systems. Admittedly, there are still only few examples of successful participatory
technology development in the Region, and the current evidence is that participatory research
takes time and significant technical assistance in order to be successful. Improved
infrastructure, equipment and training are essential.
Intensi
fication
Irrigated
Mixed
Forest Based
Livestock
Horticulture
Mixed
Exit from
agriculture
Diversi
fication
Large-scale
Cereal
Small-scale
Cereal-Livestock
Extensive CerealLivestock
Pastoral
Sparse (cold)
Sparse (arid)
Urban Based
Increase
off-farm
income
Increase
farm size
Average for
region
Figure 3 Relative importance of household strategies for poverty reduction
Source:Dixon et al 20016
Because of its importance for long term competitiveness, as well as for poverty reduction,
farm restructuring needs to be completed in order to enable the increase of farm size. Where
restructuring has been slow, governments may need to give more emphasis to market based
land reforms, as well as the provision of both agricultural and social services. Even where
operated farm size has increased, the land tenure system often needs to be improved,
including: land administration functions that are generally provided by the public sector in
developed market economies; including registration, plus valuation and planning – together
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Assessments were based on the expert judgement refer to poor farmers only. Average for Region
weighted by agricultural populations of systems. Decollectivisation is assumed to lead to increased
family farm size.
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with support for their associated institutions. It also includes capacity building related to the
appropriate professional skills and professional institutions that are associated with these and
other activities related to land markets in the private sector.
Another source of poverty reduction is enterprise diversification, for which lack of
appropriate farm-level information, human resource capacity and marketing are one of the
major bottlenecks. At policy level, while price and trade policies will need further attention
and improvement, understanding the workings of informal barriers to trade – and how these
could be lowered – is equally important. Policies should also consider addressing legal
impediments to market development, the need to improve quality by inter alia promotion of
standards, and favouring the emergence of new types of private smaller scale processing
industries. Barriers to entry and growth of new enterprises frequently exist in contravention
of national legislation and policy declarations, and are linked to established power groups
unwilling to see the evolution of systems outside their control. Farmers lack knowledge of
market opportunities, prices and standards and production technologies. Strengthening local
institutions, including the development of producers’ and professional organisations that
could improve the flow of information, will also be of the utmost importance in trying to
encourage and support the development of new marketing structures.
CONCLUSIONS
There is substantial scope for both agricultural growth and poverty reduction in the Region.
With regard to agricultural development pathways for escaping poverty, production
intensification holds the greatest promise on a regional scale, followed by increase in
operated farm or herd size. Although transition is at different stages across the Region,
substantial headway in the creation of small family farms has been made in some countries of
Central Europe, notably those with the prospect of EU accession. The Farming System
Approach can support the revitalisation of the strategic farming systems including the
development of market-oriented management and contribute to agricultural sector reform.
The challenge is to provide an enabling environment involving public-private partnerships,
building of local linkages and institutions supporting innovation and investment in
agricultural knowledge-based technologies to support diverse livelihoods, as well as
improved management skills for market-oriented agriculture.
The paper has also argued that in the development of agricultural production structures is
hampered by institutional weaknesses including the shortage of information, the lack of
implementation of policy measures to improve farm performance (including credit, farm
diversification and intensification) and above all, the lack of structural adjustments, advisory
services and proper training. A Farming System Approach - which should recognise the role
and importance of urban and peri-urban based farming systems for the national economy would assist in focusing interventions that would contribute to agricultural growth and
poverty reduction in the Region.
In much of the Region there is still a critical gap between senior decision makers’
understanding of, and the real situation regarding, the relation between policies, institutions
and farm-household systems in the context of farm restructuring. On one hand this is due to
the lack of adequate data and information, particularly at the farm-level, that could be
remedied through a series of farming systems analyses. On the other hand, there is still
significant lack of capacity for the effective analysis, design, implementation and monitoring
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of the effects of policy measures on farm performance, for which a critical mass of
professionals trained in multidisciplinary and participatory methods is urgently needed.
Finally, improved exchange of existing information about local realities, especially between
policy makers, is required.
References
Dixon, J. and A. Gulliver with D. Gibbon. 2001. Farming Systems and Poverty: Improving
livelihoods in a changing world, FAO and World Bank, Rome, Italy and Washington, DC,
USA.
Doppler, W. 1994. ‘Farming Systems Approach and Its Relevance for Agricultural
Development in Central and Eastern Europe’, in J. B. Dent and M. J. McGregor (eds), Rural
and Farming Systems Analysis: European Perspectives, CAB International, Wallingford,
Oxon, UK, pp. 65-77.
FAO. 2000. Agriculture Towards 2015/2030, Technical Interim Report, Rome, Italy.
Frohberg, K., J. Fritzsch & C. Schreiber. 2001. Issues and Trends in Agricultural
Development in Transition Countries, IAMO Comments on FAO’s AT2015/2030 Projections,
Institute of Agricultural Development in Central and Eastern Europe, Halle (Saale),
Germany.
Gatzweiler, F., Sipiläinen, T., Bäckman, S. & Zellei, A. 2001. Analysing Institutions,
Policies, and Farming Systems for Sustainable Agriculture in Central and Eastern European
Countries in Transition, CEESA Discussion Paper No. 2/5/2001, Central and Eastern
European Sustainable Agriculture Project, Berlin.
Tanic, S. & F. Dauphin. 2001. Global Farming Systems Study: Challenges and Priorities to
2030 - Regional Analysis Eastern Europe and Central Asia, Rome, FAO.
Tanic, S. 2001. Individual Farms in CEE: From Structural Adjustment to Family Farm
Livelihoods, FAO Workshop on Individual Farms in Central and Eastern Europe: Issues and
policies – Proceedings, September 28-29, Budapest, Hungary.
Thiele, H. 2000. Synthesis Study on the Impact of Structural Adjustment on Family Farms in
Central and Eastern Europe, Draft manuscript.
World Bank. 2000a. World Development Indicators 2000, Washington, DC, USA.
World Bank. 2000b, Structural Change in the Farming Sectors in Central and Eastern
Europe, Lessons for EU Accession - Second World Bank/FAO Workshop, June 27-29, 1999,
Technical Paper 465, World Bank, Washington, DC, USA.
Corresponding author:
Stjepan Tanic, Farming Systems Development Officer, FAO Sub-regional Office for Central
and Eastern Europe, [email protected] , Tel.: + 36 1 461 20 11, Fax: + 36 1 351 70 29
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Table 1: Principal characteristics and trends of the major farming systems in ECA
AgroCrop
Cattle per
Farming system ecologica area per
family
l zone(s) family
(head)
Large Irrigation semi-arid 3-20
3-8
Schemes
and arid
wet sub- 5-120
2-6
Mixed
humid
wet sub- 15-150
3-20
Forest Based
humid
Livestock
mostly
2-20
dry subhumid
Large-scale
mostly
5-30
Cereal
wet subVegetable
humid
Small-scale
arid,
3-20
Cereal-Livestock semi-arid
mostly 15-100
Extensive
arid semi
Cereal-Livestock
arid
arid,
4-12
Pastoral
semi-arid
Horticulture
Mixed
Sparse (Cold)
Sparse (Arid)
Urban Based
3-8
3-12
2-6
3-15
2-20
arid
30-70
2-10
arid
2-10
1-15
various
na
1-3
Key features
Principal livelihoods
Farming systems trends
large-scale irrigation
schemes
increasing productivity and
specialisation
cotton, rice, other cereals, tobacco,
fruit, vegetables, off-farm
wheat, maize, oil crops, livestock,
off- /non-farm employment.
Conversion of nonviable/ marginal
areas into rain fed systems.
Increased size, productivity specialisation, off- /non-farm income.
Increased size and productivity,
livestock production off- /non-farm
and forestry income.
Increased productivity
specialisation and
commercialisation.
Decreasing in size; increased
importance of livestock production.
scattered medium-large
fodder, hay, cereals, industrial
farms in extensive forestry crops, potatoes
diversified production,
marketable surpluses
decreasing in size,
increasing importance of
livestock production
potential to improve poor
resources by irrigation
lack of equipment, capital
and adequate technologies
medium to large size
grazing range lands, coops/
corps.
poor resources and limited
cultivation possibilities
large-scale with limited
production potential
intensive small-scale plots
wheat, maize, oil crops, fruit,
intensive vegetables, livestock,
off-farm income
wheat, barley, maize, sunflower,
sugarbeet, vegetables
Changed land tenure, increased soil
fertility, off- /non-farm income.
Large scale mechanised farming,
wheat, hay, fodder, cattle, sheep
diversification, extensive livestock
in marginal areas.
Continuation of large-scale ranch
sheep, cattle, cereals, rice, cotton,
grazing, increased diversification
fishing, fodder crops, potatoes
of breeds.
rye, oats, reindeer, potatoes, pigs, Very limited potential for
forestry
development.
barley, rice, cotton, fishing,
Limited potential, in some cases
tobacco, sheep
reverting to pastoralism.
Increased in numbers, especially in
vegetables, poultry, pigs
marginal areas.
wheat, barley, sheep and goats
Prevalence of
poverty
M/E
L/M
M
M/E
M/E
M
M/E
M/E
E
E
M
Source: FAO expert knowledge (see Tanic and Dauphin 2001).
Note: Crop area refers to total area of annual and permanent cropland divided by the number of families, regardless of farm structure or organisation. In many
systems small ruminants are more numerous than cattle. Prevalence of poverty refers to number in poverty, not depth of poverty, and is a relative
assessment for this region.