Book Description

In this paper an attempt has been made to identify dominant forms and factors for land supply in Bulgarian farms. The New Institutional and Transaction Costs Economics framework is adapted to transitional agrarian economy. Institutional, behavioral, and transaction costs factors for evolution and sustainability of different forms of subsistent, cooperative, and commercial land supply in Bulgaria have been analyzed. Comparative efficiency of various forms for land supply in market-oriented farms of different type (unregistered, cooperatives, agro-firms) and sizes (small, middle, large) has been estimated. The study is based on original microeconomics data collected through interviews with managers of 0.5% of commercial farms in the country. First of all, a general characteristics and development of different kind of farms in Bulgaria has been presented. That analysis comprises: the kind of new commercial farms; the type of transactions under their management; the pace of evolution of market oriented farms; and factors for emergence of large-scale subsistent farming. Institutional and transaction costs origin of existing forms of farming has been underlined. Secondly, an analysis is made on major modes for land supply in commercial farms. It includes: the type of land supply (e.g. own land, leased land, cultivation in groups); modes of acquisition of land ownership (restitution, privatization, purchase); extend of lease-in contracts; forms for reduction of land "supply" (sell off and lease-out land). Dominating modes of land supply are found to relate to critical dimensions and costs of transacting. Thirdly, an analysis of the transaction costs in land supply has been made. In encompasses: the specific features of land supply contracts; the type of rent; extend of a third-party involvement in land transactions; and problems in land supply deals. Preferred contract forms depend on attributes of transactions and aim at protecting and minimizing costs of land deals. Finally, factors for enlargement of Bulgarian farms have been specified. It is proved that the reduction of land supply and the expansion of size of commercial farms, both have been determined by the transaction costs reasons. Presently, the high marketing, credit supply, and contract enforcement costs are the major factors restricting farms enlargement. A good part of cooperatives and middle-size farms also spend significant "time and efforts for finding partners selling or leasing-out land" On the other hand, the most important factors for farm development in the future relates to improvement of the institutional environment, and managerial experience of farm entrepreneurs. According to the farm managers there are no specific factors related to land supply which could impede farm development in the country.