THE ECONOMICS OF FARM ORGANIZATION IN CEEC AND FSU

In Western Europe, USA and other developed countries agriculture is dominated by small familyfarms. In Central and Eastern European Countries (CEEC) and Former Soviet Union (FSU) dualstructure of farms exists. There are large corporate farms (CF) and small family farms (FF) inCEEC and FSU. Our paper shows that both CF and FF specialize in commodities in which theyhave comparative advantage. CF specialize in capital intensive products and in products with lowlabor monitoring. FF specialize in products with higher labor monitoring requirements. Theimplication of this paper is that farm structure determines in which products the country will becompetitive on international markets. This is especially important for transition countries wherehigh transaction costs hinder the change of farm organization. For this reason in transitioncountries suffering from high transaction cost the choice of product structure is more importantthan the choice of farm organization.