Policies and institutions for commercialization of subsistence farms in transition countries

The growing share of individual farms in the agricultural output of transition countries requires measures to encourage a higher level of commercial sales. Evidence from numerous farm surveys suggests that larger size is the most important factor to achieve greater commercialization, while at the same time ensuring higher family incomes. Farm enlargement requires functioning land markets, which implies elimination of all restrictions on transferability of land, moral and legal support for contract enforcement, as well as land registration and titling systems. To be successful, farms need functioning market services, both upstream and downstream, which can be effectively provided by service cooperatives. Farm finances should be improved by emphasizing profitability and savings and encouraging various product - Credit interlinkage arrangements, rather than designing large programs for full-scale revamping or development of rural credit systems. Governments should resume their active role in provision of agricultural extension services, as extension and education - Both public goods - Are essential ingredients in the success of commercial agriculture in transition countries.