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. Last Updated: 07/27/2016

Slovakian Farms Hobbling Toward Capitalism

RUSOVCE, Slovakia -- For centuries, these verdant lowlands hugging the Danube have yielded some of central Europe's most bountiful harvests.

But since the fall of communism in 1989, Slovak agriculture has suffered insolvencies and property disputes which have delayed the swift restructuring needed to cope with new market demands.

At the Dunaj farm cooperative in Rusovce, west of Bratislava, general director Anton Markovic stares from his modest office at the newly-harvested wheat fields.

Here business practices have scarcely changed since the fall of communism.

"We can't afford new equipment, our buyers aren't paying us for months, subsidies have been cut," Markovic said. "This vicious circle has to be cut somewhere."

According to the Slovak Agriculture Ministry, some 90 percent of Slovakia's 957 farm cooperatives are in the red, mostly because of debts racked up by distributors and the failure of food processing companies to pay.

A ministry official said at least 20 percent of Slovak cooperatives will go bankrupt in the near future.

Slovakia's 140 state farms, which are faring even worse than the cooperatives, have also fallen behind on the road to a market economy.

"State farms have no chance to survive. We need large-scale production, increased productivity, and new technologies," Markovic continued.

Slovak state farms and cooperatives receive about seven billion crowns ($247.7 million) in subsidies, down from 15 billion in 1989.

Half of all direct subsidies, making up three percent of gross domestic product (GDP), were made to the farm sector last year, Slovak officials said in a report to the World Bank.

The Dunaj cooperative, which produces about 15,000 tons of wheat, rye, and barley annually, gets five percent of its production costs through state subsidies, just a third of what it used to receive under communism.

Some say Slovakia's farming crisis could be caused as much by the continuation of communist-style working practices as by the lack of subsidies.

"Under socialism, it was production at any cost. (Farmers) didn't care about hedgerows, soil erosion, over-fertilizing," said Donna Batcho, a U.S.-sponsored agriculture expert who advises Slovak authorities.

Batcho said pervasive over-staffing on farms only made the problem worse.

"One co-op had 25 tractor drivers and needed only three... Only a precious few (farmers) have a real overview on running a farm," she said.

She said entrenched insolvency and hard-to-get loans also posed problems.

Despite this apparent threat to their future, Slovak farms just keep on producing. In 1993 agriculture contributed 5.9 percent of Slovak GDP, up from 5.2 percent in 1992.

Restitution claims for Slovak farmland, which was nationalized after World War Two, now number more than 100,000. These claims have further muddled efforts to restructure farms into joint stock companies or family farms.

Markovic said that at Dunaj alone more than 1,000 plots of land owned by the cooperative were being sought by former owners.

Government officials hope foreign investors may help solve the debt problem blighting the farm sector. Jan Babinsky, privatization department head at the agriculture ministry, is leading a drive to privatize all of the state farms.

Only two have been successfully privatized so far. A pilot leasing project has attracted a British brewer who wants to lease land to grow barley.