DEVELOPMENT OF FARM STRUCTURE IMPACTED BY THE AGRICULTURAL REFORM IN LATGALE REGION

Abstract

In theoretical reviews, a land reform and an agricultural reform might cause different consequences, creating various possibilities. The consequence of a reform is directly shaped and determined by its goal. The goal of the forth land reform in Latvia was the restitution of property rights on land, which were granted during the previous (third) land reform. During the third land reform, Latvia was mostly an agricultural country and the land was distributed in a way that every family could have a piece of land for their own subsistence. Small subsistence farms were especially characteristic of Latgale.
The paper presents research results on the development of agriculture impacted by the fourth agricultural reform in the most problematic region of Latvia, i.e. Latgale, as the rate of unemployment increased and incomes of the population substantially decreased in Latgale after the reform was implemented.
The research aim of the paper is to analyse the changes in the structure of farms in Latgale, which were caused and impacted by the agricultural reform, the commercial orientation and output capacity of farms, and to ascertain the dynamics of value added in farms of various economic sizes.
It was found in the research that the structure of small subsistence and semi-subsistence farms, which emerged as a result of the land and agricultural reform, constantly and significantly changes; the number of small and very small farms decreases, and the land resources are concentrated in large and largest agricultural enterprises. The research revealed that the largest part of farms in Latgale (85%) do not produce agricultural commodities for sale or sell a small part of them, but irrespective of it, the number and share of farms producing all their agricultural products for the market gradually increased over the researched period.
An analysis of total standard gross margin showed that half of it in Latgale is derived from small and very small farms, but the total standard gross margin per ha of utilised agricultural area constantly rises with an increase in the economic size of farms, and the efficiency of large farms is almost three times higher than it is for small and very small farms. Therefore, the dominance of small and very small farms in Latgale significantly hinders an increase in the productivity of farms. An analysis of output of the key agricultural industries (crop, livestock, and dairy farming) showed that the total output of agricultural produce after the fourth reform is several times behind the level it was in the beginning of the agricultural reform. The output of meat is dramatically low.
An analysis of value added showed that the amount of value added in Latgale region is directly related to the consolidation of farm land and the concentration of production: with an increase in the economic size of farms, a net value added per ha of actually utilised agricultural area, per lat of total output, and per annual work unit rises.