Agriculture of Bessarabia/Moldova:
Bitter Experience of Reforms

by Vissarion Ceşuev

Agricultural sector of the Republic of Moldova is at the crossroads now. On the one hand, the kolkhoz/sovkhoz system fell into oblivion. On the other, individual farming based on private property for land caused problems for both the new owners and the state. So, what can be done? Is it logical to persuade peasants to renounce land and return to collective farms? Experience of the past can provide an answer.   

Over the last century and a half, agriculture of Bessarabia/Moldova has gone through the four reforms of property for land, with concomitant changes in organization, technology and methods of agricultural management.  

The First Wave of Reforms 

Until the mid-XIX the region’s agriculture was natural, dominated by distant-pasture cattle-breeding. In 1860 plough-land made up only about 37% of the total area. Peasants were legally free, but owned no land, which belonged mainly to the landed gentry, cloisters and the state. Everything changed once the “Statute on Land Organization of Tsarani from Bessarabian Province” was issued on April 14, 1868, which introduced inherited ownership for land plots, with the right of redeeming. But the process was a drag. By 1888, 60% of peasants (56 thou households) managed to redeem their land plots. Therefore, same year, State Council of Russia approved order of mandatory redeeming of excessive land from landed gentry through the Peasants’ Bank at the expense of state interest-free loans. In total, over 16 years there was allotted circa 15 mil rubles for this goal. 

As a result, by 1906 the first land reform was practically accomplished. Average size of redeemed land plots varied from 19 ha in Akkerman district to 12 ha in Orhei district per homestead. At that, on the whole less than 10% of all homesteads owned small (from 1,5 to 3 ha) land plots and only 5 farms disposed of 300 - 400 ha in Bessarabian province.  

The poorest peasants (12% of the total) united in associations and agricultural societies to farm the land together. At the same time, despite administrative pressure after the Russian Land Reform of 1861 communal methods of land tenure typical for other regions of the Russian Empire did not settle down in Bessarabia. That is why, as it seems, the Statute of April 14, 1868 was issued – expressly for this region’s conditions. 

But what attracts attention is the financial aspect of the land reform. In 1904 the Law on Small Credit was issued. It stipulated for creation of small credit banks throughout the empire, through which state means were distributed among peasants in form of very lax credits, since, as well as it is now, credits of commercial banks were extremely expensive.  

As P. Lashkov in his “The Centenary of Bessarabia’s Joining Russia” (Kishinev, 1912) stated that state budget allotted 25 mil rubles for the province’s needs – on repayable, but very easy terms. Local authorities – zemstva – guaranteed return of the funds. One can assess the real importance of those funds considering that 1 gram of gold was worth 0.96-1.2 kopecks at that time, i.e. Bessarabian peasants received from the government about 22 ton of gold as initial working capital. But this can be hardly considered charity, because in 1911 Bessarabian province transferred to the national treasury about 80 mil rubles in form of taxes, duties, excises and other payments. It is clear that labor of the most part of the population – 1.8 mil peasants – was their source. 

Such impressive results were achieved without any state agricultural administration, with archaic infrastructure and equipment. But private property for land and individual (farmer) methods of organization of production dominated and the state ensured acceptable (as regards price) credits and unlimited marketing outlets.                                                                                                            

Table 1. Bessarabia: Production of Cereals

Production of cereals was the basis of Bessarabia's agriculture, but other sectors also recorded improvement of indicators over the post-reform period. Thus, production of wine increased from 6,2 mil decalitre in 1873 up to 18,5 mil decalitre in 1902. This level lasted for the next years as well: 22,5 mil decalitre of wine were produced in 1911. The same trends took place in cultivation of fruits, tobacco, sunflower and other crops. 

Average price for land in Bessarabia was among the highest in Russia in 1904, having reached 197 rubles for 1 dessiatina as compared to 105 in 1888. Such a rise in prices for land increased peasants’ interest in its tillage, and according to the Peasants’ Bank information peasants made up no more than 2% of land sellers. Unlike other provinces, during the years of the Stolypin reform, Bessarabian peasants rarely settled on new lands, because could not find better conditions nowhere else. 

During the 20–30’s of XX, after the land reform realized by the Romanian government in Bessarabia (1920-1922), land ownership relations endured no sharp changes. There was allotted 1492 thou ha, i.e. 65% of the total area for distribution among peasants, who were to buy land at the expense of banking credits. The difference from the Russian scenario of the land reform was that in large farms 500 ha were exempted from redeeming and every member of household with agricultural education could keep another 500 ha without redeeming. But, on the whole, production of farming, as it can be seen from the Table 1, decreased due to the loss of Russian marketing outlets and the economic crisis of the 30’s. 

The Soviet Type Reform 

The fundamental change of land property in the region was conducted by the Soviet regime in the 40–50’s: private property for land was abolished, the most well-off, peasants experienced in agricultural production (“kulaks”) were deported and transition towards the kolkhoz-sovkhoz land tenure system based on command-administrative methods was realized. Free pricing of agricultural products and land market were abrogated. Labor remuneration of peasants was done once a year and in-kind form (based on workday units) as far as the 60’s. Agriculture management has been constantly reorganized over decades: districts and farms were consolidated and, conversely, broken up into smaller parts; extension administrative bodies; counteraction to, and later, encouragement of homestead farms; creation of associations based on specialization and concentration, and conversely return to diversified farms; supplementing of the ministerial management system with councils of kolkhozes of all levels, etc. But however organization of the kolkhoz-sovkhoz agricultural sector might change, its production remained modest. 

Table 2. Annual Average Production of Cereals during Soviet Period

While evaluating the production, we confronted the problem that Soviet and post-Soviet statistics, as far as 2000, included maize into the gross volume of cereals during determination of such indicator as per capita production of cereals. That is why we had to calculate on our own indicators of both the gross production, as well as of the per capita production of cereals excluding maize, using the date on the yield of maize and areas under maize. 

As one can see, in the course of 35 years production of cereals and maize, as regards both gross and per capita terms, was stagnant. And this phenomenon cannot be explained neither by the nature’s caprices (alternation of productive and lean years did not considerably change over 130 years), nor by lack of attention to agriculture’s management, weak material and technical basis or insufficient financial and material resources. Provision with machinery, equipment and combine harvesters increased constantly and reached by 1991 the following numbers: tractors – 63,4 thou units, trucks – 34,4 thou units, combine harvesters – 5,5 thou units. 

Capital investments to agricultural sector increased from 599 mil rubles during 1955–60 up to 3769 mil rubles in 1980-85 and 4509 mil rubles in 1986–90. In addition to this, kolkhozes and sovkhozes received banking credits at 0,5–1,5% a year. Only during 1986-90 kokhozes were annually allotted 300 mil rubles of credits on these terms. If we evaluate these billions of rubles invested to the MSSR’s agricultural sector in the universal equivalent – gold, it becomes evident that the matter concerns hundreds of tons of gold. 

Our comparative analysis can be supplemented by data on cattle-breeding and viticulture at the beginning and at the end of the XX century. 

Table 3. Cattle Stock, thou head

 Table 4. Viticulture and Winemaking

Comparing indicators of the previous tables, one could only perforce begin to think about the destiny of enormous resources invested in development of the region’s agriculture during the 50-80’s. We would not be able to find an answer for this question, even if we had presented additional comparative data on other sectors. Truth to tell, we should not forget about enormous expenditures of the state for social sphere in rural areas, free education, healthcare, anti-hail service, plant protection and veterinary service, anti-landslide actions and many other important changes. 

The Transition Period Reform 

The Parliament of the Republic of Moldova approved of the Agricultural Reform Concept (February 1992) and thereby unconditionally recognized necessity to introduce private property for land, pointing out that its lack is the main cause of the extremely low – as compared to world indicators – production of Moldova’s agriculture. At that, though, it was mentioned that existing technological processes should be preserved and division, in-kind privatization of agricultural enterprises’ property should be prevented.  

A scenario to transform kolkhozes and sovkhozes into joint-stock companies was proposed: to endow collective farmers with property in form of securities – stock. It was expected that their liquidity would be very high. As of the end of 1991, 600 kolkhozes and 389 sovkhozes disposed at their balance of 7,56 bil rubles of basic production assets and 2,5 bil rubles of nonproductive assets (at prices of 1984). Value of the land was not taken into account.  

Besides, in 1994-1996 farms were endowed with 50% stock of about 400 processing enterprises in meat, dairy, packing, food, winemaking, feed mill and sugar industries. Thus, each of 526 thou collective farmers accounted for almost 20 thou rubles (at prices of 1984) of real property, excluding land. Creation of joint-stock companies cleared the way for attraction of funds through stock issue for extended reproduction, allowed to establish control “from below”, by stockholders over movement of financial and material assets of farms, and to ensure large share of property for collective farms’ pensioners, etc. 

But in practice the pursuit did not go beyond change of signboards. Neither constituent assemblies of stockholders, nor initial issue and state registration of stock were not fulfilled. Any control “from below” has become impossible, while the control over collective farms “from above” (by state bodies) was prohibited by the Parliament in 1992. Degradation and bankruptcy of kolkhozes and sovkhozes were the result. 

In 1998, the Parliament cancelled kolkhozes and sovkhozes as a legal form of agricultural enterprises. But it did not name their legal successors – those who should account for unreturned credits and pillaged property. Legal implementation of the peasants’ right of property for land shares was urgently started within the framework of the “Pamant” (“Land”) programme. Not everyone got in-kind property shares, since there was little property left. Thus, peasants obtained neither financial/material possibilities, nor working capital to farm their land. The state did not take care of preferential crediting. In addition, land shares turned out to be small – less than 2 ha per farm. Let us remember that at the border between XIX and XX centuries each farmstead in Bessarabia accounted for 12-19 ha and after the reform of 1921-1922 the major part of peasants (75%) disposed of areas up to 10 ha, while 24% of them – from 10 up to 100 ha. 

Thus, in the course of the transformation period, in our opinion, there were created conditions that discredited private property for land and market methods of farming and undermined opportunities of peasants to find a way out of poverty on their own. 

The course for consolidation of peasant holdings that has been being encouraged over the last years seems to pursue good intentions: to ensure acceptable security for obtaining banking credits and proceed to extended reproduction. But no matter how big or small a land share to be mortgaged could be, it is simply wasteful to try to use credits of commercial banks at annual interest of 15-21%, as profitability of most agricultural products does not exceed 3-5%. And it is impossible to sow all plough land with such paying cultures as tobacco, walnuts or volatile-oil-bearing plants. It is suggested today as a salutary action to establish state Peasants’ Bank, which would supposedly be able to grant credits to farmers at 5% annual interest. But there at once arise several questions in this regard: why 5% and not 0,5-1,0%; and where will the state obtain tens of millions leis to “freeze” in form of authorized capital stock, capital reserves, organization expenses and maintain branch offices? Or will it be an institution inveigling into corruption both officials and peasants who are in a strong need of credits from budgetary funds? 

The Law on Small Credit of 1904 was based on different principles. Secundum, the budget through the expressly formed network of small credits banks annually granted lax long-term credits by order of district councils and zemstva and on their security, but only to the poorest (!) peasants. Thus, at the beginning of the XX century prosperity came to Russia, including Bessarabia. We have a fair chance to achieve it today as well. 

After the land reform of 1997-2000 was completed, Moldova’s agriculture started to gradually adapt to market conditions. Thus, in 2002, given the symbolic subventions to agriculture at the rate of about 26 mil MDL (approximate equivalent of 185 kg of gold), there was produced: 1,38 mil ton of cereals with yield of 17,3 c/ha; 1,19 mil of maize with yield 26,7 c/ha; 641,2 thou ton of grapes with yield of 43,3 c/ha. Livestock of cattle, sheep and poultry has practically recovered. Consumption of foodstuffs and export of food industry products grow. But this growth has limits. Private property for land gave a stimulus to development, but its acceleration is impossible without investments, credits and subventions. Leadership of the Agricultural Union speaks of the necessity of 3 bil MDL till 2010, or almost 600 mil MDL a year. The World Trade Organization determined for Moldova the same amount. Given the current price of gold at 140 MDL for 1 gram, it is equal to only 3,8 ton a year. While it was the Russian tsarist government already that assessed annual needs of the regions’ agriculture at more than 22 ton, which means that it requires 5-7 time more at the least.