The Transition
That Never HappenedAt Least Not The Way That Was Recommended


The main topics of the Report

Agriculture

One of the most common criticisms of the Rahn-Utt report was that it omitted a plan for the development of agriculture. This was not in fact entirely true. The authors devoted an entire section of the report to agriculture - to the opportunities around the export of food stuffs and the supply  of quality produce to its own population. Privatization was again at the base of this. But the kind of privatization required was one which would allow for efficient production. According to the report „Bulgarian agriculture has the potential to be an important source of foreign earnings and is able to produce a large quantity of quality food for the local population.“. Similarly, according to the report “privatization in agriculture should be done very quickly - by March next year (1991) to not fail the new season”.

The authors emphasized that privatization must be fair but effective. „With the privatization of the assets of the existing cooperatives must recognize the legitimacy of the claims of the original owners of the land. Together, however, must be considered the need to effective transition to modern forms of production”. Two types of possible privatization were discussed. The first one was restitution – returning land in real terms to the previous owners. This type was seen as fair but the report explicitly stated that it can take a long time and thus compromise the production process. Land fragmentation or the attempt to copy the proprietary picture from before collectivization qualified as a road to crisis in agricultural production. This kind of privatization was seen very briefly and for the authors it was only a theoretical possibility. In the other kind of privatization the sale was developed in some detail. The proposal of the authors stated that tenders should be announced and those who wished to participate could do so. 70% of the revenue would create a compensation fund for former owners. 30% would remain in the state. The financial plan provided that the state and the previous owners should get their money spread over a number of years to facilitate the purchase and to include more people in the process of privatization. Over the next five years the successful tenderer would be exempt from tax, so the 30% which goes to the state would, in reality, return to the producer. The authors realized that selling would present a certain degree of injustice but stressed that there is no other way to preserve the integrity and productivity of the land. To provide financial resources for privatization, the state must guarantee low-interest loans.

Unfortunately, nothing like this occurred in reality. In fact the opposite philosophy was applied In Bulgaria. So-called “liquidation councils” sold animals and equipment for pennies without any thought for the next season or the entire production. The land was divided in order to return to the borders before collectivization. This caused many lawsuits over land; many owners were unwilling or unable to cultivate the land. In the report it is clearly stated that the economic activity of the owners could be provoked and supported only if they have invested money in the property. The results of the privatization of the Bulgarian agriculture are thus quite pitiful. For many years there were many acres of uncultivated land, low productivity, and non-competitiveness on the external and domestic markets. From a major exporter of agricultural products Bulgaria became a net importer of almost everything produced in agriculture. The only successful productivity of late has come from one area - the production of grain - and that is where most of the EU funds have gone today. The consequences of the short-sighted policy for livestock, vegetable and fruit production are painfully felt to this day. Again fault did not lie with the report itself.

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