Hungary-Large-Scale Farming

Large-scale farming--made up of state and cooperative farms-- focused on such activities as grain and fodder production, which were capital-intensive and in which economies of scale were most significant. A 1985 law transformed state farms from state-administered organizations into self-governing enterprises under the supervision of the Ministry of Agriculture and Food. However, state farms were subject to more state control than cooperatives in such matters as appointment of managers and the use of profits, and state-farm employees were government employees who worked for fixed wages and bonuses.

A cooperative farm was owned and managed by its members, who elected a chairman to manage the farm according to its charter. Although cooperative farms could employ workers, cooperative members were technically not "employees." The cooperative paid employees a set wage; members received a base salary and a year-end dividend based on net profits. Cooperatives were also freer than state farms in deciding how to use their profits, and many cooperatives delegated certain operations to autonomous work teams or individuals who divided the operation's net profits. The cooperative farms owned only about half the land they worked; the state and individuals owned the rest.

In the late 1980s, the government still fixed prices for a large portion of agricultural production, including corn, wheat, and beef cattle. In addition, all state and cooperative farms received some form of state subsidy, and about 27 percent received fixed-rate subsidies for farming low-quality land. Hungary's large-scale farming sector has become increasingly concentrated as state and cooperative farms have merged. Between 1960 and 1986, the number of agricultural cooperatives dropped by 72 percent to 1,260. The amount of arable land per cooperative stood at 3,024 hectares in 1986.

Data as of September 1989