As a result of the government's industrialization policy, the relative importance of agriculture in the economy has declined. During the decade of the 1960s the contribution of agriculture to national income, in terms of arbitrarily established official prices, dropped from about 30 to 20 percent, even though half the working population continued to be employed on farms and farm output was gradually rising. The growth in output, however, did not keep pace with official plans, mainly because of a lack of income incentives for farmers under the government's low farm-price policy and because of inadequate investment and fertilizer inputs. The farm problem has been exacerbated by the generally low qualifications of the farm labor force and by the prevalence of widespread underemployment.

Various revisions in agricultural organization and methods of compensation made from 1968 to 1971 did not produce any marked improvement by the end of that period. The failure of agricultural output, including livestock products, to advance according to plans created economic difficulties by depriving the country of potential exports urgently needed to pay for industrial imports. It has also hampered the improvement of the population's protein-deficient diet. Substantial advances in all phases of agriculture are planned for the 1971-75 period. In the light of past experience, attainment of the established goals is uncertain. The full production potential of agriculture remains largely unexploited.

AGRICULTURAL REGIONS

Natural conditions are generally favorable for agricultural development. A varied topography has produced diversified regional weather and soil conditions. The climate is basically continental, with warm summers and cold winters, but the growing season is relatively long—from 180 to 210 days.

The amount of precipitation fluctuates from year to year, which results in recurrent droughts. Rainfall averages about twenty-five inches, ranging from only fifteen inches on the Dobruja plateau to forty inches in the mountainous regions. In the principal farming regions, annual precipitation averages about twenty-three inches in the fertile southern plain but dips below twenty inches in the hilly regions of Moldavia in the northeastern part of the country. Moisture is generally sufficient during the spring growing period (see ch. 3).

Soils vary from mountain-type soils to heavy, relatively infertile podzolic soils in the plateaus and rich chernozem (black earth) soils in the plains. About 20 percent of the agricultural land is of the chernozem type. Alluvial soils cover the flood plains of the Danube River.

Topography and climate divide the country into five agricultural zones, the most important of which is Walachia. Walachia includes the rich southern plains, where half the country's grain is grown. Almost half the vineyards and orchards are located in the foothills surrounding the plains. Vegetable production is also important in this area, especially near the city of Bucharest. Despite the fertility of this region's soils, production in Walachia fluctuates because of recurrent summer droughts.

Transylvania, the largely mountainous region in the central and northwestern parts of the country, receives substantial rainfall but has relatively infertile soils. Livestock production predominates on the mountain pastures and meadows. Grain and potatoes are the major crops in the central basin.

Moldavia in northeastern Romania has generally poor soils and receives scant rainfall. Corn is the main crop in this zone, followed by wheat and potatoes.

The Banat region on the country's western border has the most favorable natural conditions for agriculture. Chernozem soils predominate, and the seasonal distribution of rainfall is more propitious than in Walachia. Grain, primarily wheat, is the principal crop; fruits and vegetables are also important.

The Dobruja plateau in southwestern Romania is the country's least important farming area. Although soils are generally fertile, cultivation is limited by inadequate rainfall. Grain, sunflowers, and legumes are grown in this area.

To combat the destructive effects of recurrent droughts, a large-scale program of irrigation was undertaken by the government. Execution of the program, however, has consistently lagged behind the plans.

LAND USE

In 1970 agricultural land comprised almost 37 million acres (63 percent of the country), about two-thirds of which was arable. The balance was devoted to pastures, meadows, vineyards, and orchards. During the decade of the 1960s substantial additions to the agricultural area were made through various land improvement measures. At the same time, however, large acreages were diverted to industrial and residential uses, particularly of the more valuable arable land. The net result was an increase in the total farmland area, mainly in orchards and pastures, and a decline in the arable acreage (see table 7).

Table 7. Land Use in Romania, Selected Years, 1960-70¹
(in thousands of acres)

Forests occupied an area of 15,604,000 acres in 1970, the equivalent of about 27 percent of the country's land surface. The forest acreage declined slowly but steadily after 1961, for a total loss of almost 247,000 acres.

Slightly more than two-thirds of the more than 24 million acres of crop area in 1969 was under grains. Technical crops for industrial uses, consisting mainly of oilseeds and sugar beets, and fodder crops occupied almost one-fourth of the sown area. The remainder of less than 10 percent was devoted to legumes, potatoes, vegetables, and melons and to seed-producing and experimental plots. Half the grain acreage was devoted to corn, which is used for food and feed by the farmers; and more than two-fifths was under wheat, which is the staple food of the urban population.

The grain acreage declined in absolute and in relative terms after 1960, when it accounted for almost three-fourths of the sown area. All other major crop acreages, excluding that under sugar beets, increased during the 1960-69 period (see table 8). Romanian economists attributed the shift in the crop pattern to the government's emphasis on adapting crop production to the economic needs of the country and to the natural conditions of individual farms. A severe flood in the spring of 1970, the worst in the country's history, reduced the crop area by nearly 1.25 million acres below the level of 1969.

Table 8. Cultivated Acreage in Romania, by Major Crops, 1960 and 1969
(in thousands of acres)

Encroachment by builders upon agricultural and, more particularly, arable land was facilitated by the government's policy, pursued until the spring of 1968, of treating land as a free good and assigning no value to it in calculating the cost of industrial and housing investment projects. Arable land was especially attractive to builders because it required no expenditure for leveling.

In an attempt to prevent further waste of valuable farmland, a law for the protection and conservation of agricultural land was passed in May 1968. The law prohibited the diversion of farm acreages to nonagricultural uses, with the exception of special cases which, depending upon the nature and location of the land involved, required the approval of either the Council of State, the Council of Ministers, or the Superior Council of Agriculture (a government agency that functioned in lieu of a ministry for several years). Nonagricultural state organizations that held land that they could not cultivate were obligated to surrender it without payment to neighboring state or collective farms.

The conservation law enjoined socialized (collective and state) farms and private farmers to put all land to optimum use; called for a review of the building code to reduce the land areas allowed to individual construction projects; provided for the inclusion of the value of land in construction costs; and spelled out various other measures to safeguard and improve agricultural land. The law also directed the establishment of a land register, excluding lands of the socialized farms, to facilitate stricter controls over the remaining private farmers, who held 9.2 percent of the agricultural land and 4.6 percent of the arable acreage.

Heavy fines and criminal penalties, including imprisonment up to one year, were provided for infringements of the conservation law by enterprises and individuals. During the first year of the law's operation, fines were also to be imposed upon holders of uncultivated arable land, of improperly maintained orchards and vineyards, and of meadows and pastures on which maintenance work did not comply with agrotechnical rules. Like the establishment of the land register, this provision was also aimed at private farmers. A further provision stated that lands on which the described conditions continued after the first year were to be assigned to socialized farms for cultivation. The transferred land could be subsequently restored to the original owners under conditions prescribed by the Superior Council of Agriculture. The effect of the punitive regulations on private farm property was not apparent from the official statistics for 1968 and 1969.

Shortly after the adoption of the conservation law, the deputy chairman of the State Committee for Construction, Architecture, and Systematization published an article in which he stated that mere administrative regulations by the committee and the Superior Council of Agriculture could not ensure the proper use of land, particularly on the collective farms. He called for the development of appropriate economic levers based on an adaptation of "the systems that limit land waste in some capitalistic markets." This official's concern about the efficacy of the new legislation was well based. By 1970 the arable acreage had declined by 158,000 acres, at an average annual rate more than half again as large as the annual losses during the 1962-68 period.

ORGANIZATION

Collective and state farms are the principal types of farm organization (see table 9). Substantial areas of state agricultural land are also operated as subsidiary farms by various industrial and other economic organizations. Small private farms survive mainly in the mountainous regions where collectivization is impractical. In 1970 the state owned 30 percent of the farmland, about half of which was cultivated by state farms. Almost 61 percent of the land belonged to collective farms, including 6.6 percent in plots for the personal use of their members. The collective farm population consisted of almost 3.5 million families, including more than 10 million collective members. About 9 percent of the farmland was in the possession of private farmers.

Table 9. Agricultural Land in Romania, by Type of Ownership, 1969
(in thousands of acres)

In order to raise agricultural productivity and output, the state and collective farm sectors underwent frequent organizational changes, the latest of which went into effect in February 1971. There was not sufficient evidence in early 1972 on the extent to which they had been put into practice and even less information on their economic effects.

Collective Farms

At the beginning of 1971 there were 4,626 collective farms, officially called agricultural production cooperatives, comprising more than 22 million acres of farmland, about 18 million acres of which were arable. Their number had declined by 1,800 through consolidation during the preceding decade. The farms had an average of about 750 families and 1,000 able-bodied members each.

The average acreage of collective farmland per family in 1970 amounted to 6.4 acres, including a private family plot of about 0.7 acres. Although the family plots constituted only 6.6 percent of the country's farmland and 8.2 percent of the arable acreage, they accounted for a substantially larger share in the output of various crops and livestock products.

Information on the organization of individual collective farms and of the collective farm sector as a whole is inadequate, particularly with regard to the range of responsibilities and authority of the various administrative entities. The organizational framework has been complicated by the proliferation of new measures and regulations since 1967. Farm operations are carried out in common, under the direction of an administrative and management body theoretically accountable to the general assembly, composed of all the members of a collective farm. Groups of workers are organized into so-called brigades for the performance of specialized tasks. The farm management includes a chairman, a director, a management council, brigade leaders, and trained technicians specialized in various aspects of farm operation.

Intercooperative councils are charged with responsibility for improving collective farm management by initiating and coordinating cooperation on various levels among neighboring farms for better use of their physical and human resources. Collective farms are subordinated to the National Union of Agricultural Production Cooperatives and are also subject to the direction of the Ministry of Agriculture, Food Industry, and Waters (referred to as the Ministry of Agriculture) and of county authorities. Collective farm associations are organized for various types of specialized production.In theory and according to law, but not in actual practice, collective farms are jointly owned by their members. The ownership supposedly extends to the land, other productive resources, and the annual farm output. About 11 percent of the collective farm land, however, is allocated for the personal use of members, and almost half the livestock other than horses is individually owned. No information is available on the existence of any provision for the compensation of members who are authorized to leave the farms for employment in other sectors of the economy.

Regulations concerning the allocation of their income by collective farms among investment funds and various social and other obligatory funds and distribution to members were modified in late 1970 or early 1971 with a view to stimulating the members' interest in raising the efficiency of production. Under the old system, distribution to members was made from residual funds remaining after all statutory public and social obligations were met. The revised farm statutes authorize the farms' general assemblies to allocate net income in ratios ranging from 18 to 25 percent for investment and from 75 to 82 percent for consumption. In actual practice, however, income distribution is reported to follow a somewhat different pattern, which tends to reduce the share available for distribution to members. The new regulations have not altered the generally acknowledged fact that farm incomes remain very low, particularly on the poorer farms.

The system of remuneration for collective farmers was also modified in 1970 with a view to strengthening work incentives. The new method provides for monthly payments on account, in cash and in kind, based on the farms' planned annual receipts and for a share of profits in excess of those planned. Payment to individual members is to be based on centrally established work norms and rates of pay for various categories of operations, similar to the practice in industry and construction. The system is intended to relate individual remuneration more closely to the quantity and quality of the work performed and thereby to eliminate inequities of the earlier method. It is also meant to provide a steady and assured income to all members who contribute a specified minimum of workdays per month. If, for reasons beyond its control, a farm's receipts turn out to be lower than the amount legally distributed to its members during the year, the shortage may be covered by a long-term bank credit. As a further inducement for farmers to remain on the land, their social security benefits, generally much lower than those of industrial workers, were substantially liberalized.

The extent to which the new pay system has been put into practice is not known. Effective January 1, 1971, a minimum wage of 300 lei (for value of leu, see Glossary) per month was to be paid to all male farmers who worked regularly at least twenty days and to all women who worked fifteen days. A survey published by a collective farm organ in March of that year found that within a single county twenty-one out of twenty-two farms had not taken the trouble to forward the necessary documents to the Agricultural Bank and apply for the funds with which to pay their members. Various excuses were offered by the farm chairmen for their lack of action. The chairmen, farm directors, and brigade leaders, however, were reported to have taken appropriate steps to secure their own minimum pay.

The marketing of farm products by collective farms is based on officially fixed prices and monopoly-buying powers of state procurement agencies and the food-processing industry. Products move into government stocks through contracts between the farms and state agencies for quantities specified by the government; through payments in kind for services rendered by agricultural mechanization stations, flour mills, and other specialized government agencies; and, in the case of meat and wool, in the form of compulsory deliveries. Any products remaining after the obligations to the state have been met may be sold in open markets.

State Farms

Through consolidation of 370 previously existing state agricultural enterprises, the farm reorganization of February 1971 created 145 larger enterprises subordinated to the Department of State Agriculture in the Ministry of Agriculture. In addition, seventy-four state agricultural enterprises for fattening hogs, raising poultry, and producing feeds and hothouse vegetables were subordinated to four specialized trusts. The consolidation increased the average size of the state enterprises from 16,000 acres to 34,600 acres of farmland. The enterprises comprised about 3,000 state farms on an area of over 5 million acres. Romanian sources reported that the reorganization was intended to bring management closer to production, to ensure improvement in all aspects of farm operation, to intensify concentration and specialization of production, and gradually to attain agro-industrial integration.

In official terminology, state agricultural enterprises will operate on the principle of economic self-administration. The enterprises will be responsible for their subordinate farms and will supervise operations according to the principle of internal economic administration. Briefly, this means that the agricultural enterprises and the farms must be financially self-sustaining, that directors of enterprises and farms are accorded a certain measure of discretion in planning and organizing production and in the use of resources, and that financial rewards beyond the normal pay accrue to each farm's managerial personnel and workers in accordance with the farm's own performance, regardless of the results obtained by other farms within the enterprise or by the parent enterprise itself.

Individual state farms, nevertheless, have no juridical status or bank accounts, nor may they enter into direct relation with other economic entities outside the state agricultural enterprise of which they are a part. In large measure, they remain subject to the direction of the enterprise management. Information on the division of authority between the agricultural enterprises and the Department of State Agriculture in the ministry is not available. Complaints have been voiced in the Romanian press about unwarranted interference by higher authorities in the management of both the farms and the agricultural enterprises.

Workers on state farms and other state agricultural units are salaried employees of the state, entitled to paid annual vacations, social security and medical assistance, allocations for children, age or disability pensions, and various other benefits provided by law for employees of state enterprises. During slack periods, workers may be allowed up to 120 days of unpaid vacation per year, without losing seniority or other rights.

State farms are the best endowed agricultural units in the country. Although they included only about 17 percent of the arable land in 1969, they possessed almost 28 percent of the tractors, 24 percent of the grain combines, and similar proportions of other major types of farm machinery. Moreover, they received more than 37 percent of the chemical fertilizers delivered to agriculture and farmed almost 33 percent of the irrigated land. As a consequence, per-acre yields on state farms have been generally higher than yields on collective farms.

Agricultural Mechanization Enterprises

The bulk of the mechanized operations on collective farms has been performed for payment in cash and in kind by specialized state enterprises for the mechanization of agriculture, which control a large share of the country's farm machinery and tractors. This policy has provided the state with an added lever of control over the farms; it was used in the past to extract a substantial volume of farm produce for the state through payments in kind for services rendered. For political reasons, and also because of the weak financial position of many collective farms, the government has not followed the example of other Eastern European states that disbanded their machine-tractor stations and sold the equipment to the farms.

In 1969 the agricultural mechanization enterprises controlled 70 percent of the available farm tractor power and an even larger share of the tractor-drawn and self-propelled farm machinery. State farms owned virtually all the balance. Collective farms, which cultivated 75 percent of the arable land, possessed only 1.6 percent of the tractor power and a still smaller proportion of major farm machinery items.

As of January 1, 1971, the system of agricultural mechanization enterprises was reorganized with a view to improving the quality of their operations. Forty enterprises were established throughout the country—one in each of the thirty-nine counties and one in the Bucharest area—with 772 subordinate stations to service an equal number of farm associations and about 4,500 sections to work with individual collective farms. The main stated task of the mechanization sections is to introduce and expand the mechanization of plant and animal production on the farms.

To accomplish the task, each mechanization section is to coordinate the use of its own equipment with that belonging to the collective. Within the framework of this cooperation, the state mechanization enterprises were made increasingly responsible for the agricultural production process. The planning of mechanized farm operations, the allocation of equipment for specific purposes, and the timing and supervision of all operations are joint responsibilities of the section chief and the farm's chief engineer. Close cooperation and a smooth working relationship between them is therefore needed for effective performance.

Mechanized work on farms is carried on by permanent teams composed of agricultural mechanics and collective farm members. They take over assigned areas in all sectors of the farm and are in charge of all relevant operations until the crops have been stored. In slack period the mechanization sections work outside the cooperative farms in order to utilize more fully their manpower and equipment.

The reorganization of the agricultural mechanization enterprises was accompanied by a change in the system of pay for mechanics and maintenance men to provide for greater incentives. For work done on the farms, these workers receive 80 percent of their annual salary, and the remainder is paid at the end of the year, in whole or in part, depending upon the degree to which the production plans of the farm on which they work are fulfilled. Provision was also made for bonus payments in the event of over-fulfillment of production plans. The shift in wage policy was accompanied by a raise in the rates of pay for mechanics, maintenance men, and personnel operating the equipment in the field on a piecework basis. This measure increases the burden on the already strained budgets of many collective farms.

FARM LABOR

The agricultural labor force presents a paradox of substantial underemployment associated with widespread labor shortages, particularly of more productive, skilled personnel; the shortages are especially prevalent during the planting and harvesting seasons. This phenomenon is an outgrowth primarily of a progressive qualitative deterioration of the agricultural manpower pool, owing to a continuing transfer of predominantly young male workers into nonagricultural occupations. Maldistribution of the labor force and poor management of the available manpower resources have been important contributing factors. The outmigration from agriculture has been spurred by a wide disparity in urban and rural incomes and by the relatively inferior living conditions on the farms. At the beginning of the 1970s the average income of farmworkers was only half as high as that of industrial workers.

Only fragmentary information relating to the farm labor force has been published in official statistics. Agricultural employment in 1969 constituted 51 percent of total employment, compared with 65.4 percent in 1960 and 74.1 percent in 1950. Published absolute figures bear only on employment by the state; in 1969 the state employed 431,200 persons, including 290,000 on state farms and 93,500 in agricultural mechanization enterprises. Data published in connection with a conference held by the Romanian Academy of Social and Political Sciences, however, implied that total agricultural employment in 1968 amounted to 5.2 million persons, including 4.3 million able-bodied collective farm members. The proportion of women in the collective farm labor force was reported to be 57.5 percent in 1966; the proportion was much larger in highly developed industrial zones. More than 70 percent of the collective farm workers, but only about 10 to 15 percent of the workers on state farms, were engaged in crop production.

Not all the collective farm members participate in the work of the collective. Some are permanently employed in nonagricultural branches of the economy. Others—as many as 25 percent of all farmers in 1969—work as day laborers in industry and construction, on state farms, and in other occupations. Housewives with small children and wives of salaried farm employees also take no part in the collective work. Members who do participate generally work only a portion of the year because there is not sufficient work for them to be fully occupied. In the years 1967 to 1969, these members, on the average, contributed only from 139 to 142 man-days per year. In 1968, for example, 22 percent of all collective farmers put in not more than forty man-days, and 55 percent of the farmers worked fewer than 120 days. Many farmers work only the minimum number of days required to keep their personal plots. There are wide variations in the degree of labor participation between geographic regions, between individual farms, and among production sectors of a single farm. At the beginning of the decade of the 1970s about 40 percent of the income of collective farm families was derived from nonagricultural pursuits.

Underemployment in agriculture is expected to continue at least throughout the 1970s. Industry, though growing very rapidly, will not be able to absorb any significant numbers of farmworkers because of the government's emphasis on mechanization and automation of production. In the 1971-75 period industrial manpower requirements will be met almost entirely through natural population increase. Relieving agricultural underemployment through an expansion of the services sector is not being given serious consideration on the grounds that "no further expansion of this sector can be undertaken at the expense of achieving a high level of productivity in the branches of material production and hence in agriculture, too."

Raising the low productivity level of collective farm labor through greater capital inputs, and thereby increasing the incomes of members, presents a difficult problem not only because of a shortage of investment funds but also because the magnitude of the collective farm labor cannot be adjusted to the needs of production, as in the case of state farms; it is determined by the number of families living on the farm. The collective farm cannot limit the number of members who may participate in the work. Each member has the right and, at the same time, the duty to participate in the work performed for the collective, and the collective has the duty to provide equal opportunities for all its members to work and to earn adequate incomes; yet modernization of production necessarily brings with it an ever smaller need for manpower.

A solution of the farm manpower problem was not in sight by late 1971. There was general agreement among Romanian economists concerned with the matter about a need to improve the utilization of the available labor resources, to increase farm incomes and, above all, to stop the migration of young people from villages to towns. No concrete program for attaining these ends, however, emerged from a national conference on farm labor held in mid-1970. Proposals advanced by a number of economists to expand industrial activities in the villages, particularly cottage industries and the processing of farm products, were questioned by others who feared that these activities would tend to drain some of the remaining productive elements from the collective farm labor force.

As expressed by one of the conferees, the search was on for a hybrid solution that would ensure full employment of the redundant labor force despite the process of farm modernization—a policy that inevitably leads to the maintenance of low earnings on many farms because the available work must be spread among an excessive number of members. In this context, foreign observers adopted a wait-and-see attitude toward the changes in collective farm organization and in the method of payment to farmers introduced in January 1971 (see Organization, this ch.). They nevertheless expressed doubt about the ultimate efficacy of these measures because the income of farmers would still remain far below that of industrial workers.

INVESTMENT AND CREDIT

Investment

Investment in agriculture has been rising steadily, reaching an annual volume of almost 13 billion lei in 1970. The share of agriculture in total investment, however, declined from 19.5 percent in the 1961-65 period to 15.8 percent in the years 1966 through 1969. In relation to industrial investment during the same periods, investment in agriculture declined from 40 to 30 percent. Under the Five-Year Plan (1971-75), agriculture is to receive investments of at least 100 billion lei—an amount that is twice as large as the actual investment in the years 1966 through 1970 and that represents a somewhat larger share of total investment than was allocated to agriculture in that period.

No information is readily available on the proportion of the total investment used for the replacement of wornout assets and for the expansion of productive facilities. In the 1966-69 period replacement capital constituted about 30 percent of investments; in 1969 alone the proportion was as high as 46 percent.

The largest part—and a rising proportion—of the agricultural investment has been financed by the state; collective farms supplied the balance out of their own income. The share of state funds in the total agricultural investment increased steadily from about 66 percent in 1963 to 80 percent in 1969; this proportion is to be maintained during the Five-Year Plan (1971-75). Investment in collective farms has also been increasingly financed by the state through long-term credits; the share of government credits rose from 13 percent in 1965 to 35 percent in 1969. Investment out of the collectives' own funds remained stable during this period, at from 2.2 billion lei to 2.4 billion lei per year.

State farms have received a disproportionate amount of investment—38 percent in the 1965-69 period, as against 34 percent for collective farms. The investment share of collective farms during this period declined from about 38 to 30 percent of the total. On the basis of farmland acreage, investment in collective farms in 1969 amounted to only 18 percent of the funds invested in state farms. If the state investment in agricultural mechanization enterprises is included as investment for the benefit of the collective farms, the ratio of collective to state farm investment per acre was still only 25 percent.

Collective farm statutes require the farms to devote from 18 to 25 percent of their annual gross income to investment. Some Romanian economists consider net income to be a more equitable base; under such a system more of the farms' income would remain for distribution to members. In calculating gross income, amortization of fixed assets is generally not included as an expense, which further raises the base used for the computation of the compulsory investment fund. An official of the Agricultural Bank reported that, in the last few years of the 1960s, one-fourth of all collective farms set aside for investment up to 10 percent more than the maximum legal requirement.

Only partial information is available on the use of investment funds. Roughly 40 percent of the investment in the 1962-69 period was devoted to construction and assembly work, and 33 percent was used to increase farm mechanization. It has not been made clear whether land improvement and irrigation are included in construction, but it seems likely that this is the case. Substantial funds were also invested in the expansion of orchards, vineyards, and livestock. Although significant advances were made in most of these areas, the level of farm mechanization and of irrigation remained low. In 1969 the equivalent of one fifteen-horsepower tractor was available for every 136 acres of arable land, and irrigated acreage constituted 6 percent of the arable area. The use of fertilizers lagged by comparison with other Eastern European countries.

Credit

Farm credit has been provided by the government through the Agricultural Bank, which was reconstituted as the Bank for Agriculture and the Food Industry in May 1971. Available information on the credit operations of the bank is limited to a few summary data on credits to collective farms. Information on the financing of state farms is lacking.As expressed by the bank's president, long-term credits for investment and short-term credits for production needs have been used by the state as levers for the economic and organizational development and for the consolidation of collective farms. Long-term credits granted during the 1962-69 period amounted to 6.4 billion lei, or an average of 800 million lei per year. During the same period the farms received about 30 billion lei in short-term production credits, or about 3.75 billion lei per year. The annual volume of investment credits increased sharply after 1967; it was reported to have reached 1.8 billion lei in 1970 and to have been planned at more than 2 billion lei for 1971. A rise was also reported in the yearly volume of production credit.

Investment credits generally carry an annual 3-percent interest charge, but the interest rate may be reduced to 2 percent for economically weaker farms. Comparable information on production credit is not available, except for an official statement that a large part of it has been granted free of interest.

Postponement of scheduled long-term credit repayments may be authorized by the bank with the approval of the Ministry of Finance for periods of up to one year in the case of collective farms that are unable to meet the due date for reasons beyond their control, such as a crop failure. At the same time the bank may discontinue credits or demand repayment before the due date in the event that borrowed funds are improperly or inefficiently used. Penalties are also provided for short-term borrowers who fail to respect contractual obligations. As a measure of assistance to poor cooperatives, the repayment of loans in the amount of 1.15 billion lei, contracted before 1968 and due in 1972, was remitted by decision of the Central Committee of the Romanian Communist Party in December 1971.

The distribution of long-term credits to collective farms among different types of investment projects changed significantly during the 1960s. In 1962 and 1963 more than half the credits were granted for the expansion of livestock production, and one-fourth of the credits were devoted to the construction of farm buildings. In the last two years of the decade, however, only 5 percent and 3 percent of the credits, respectively, were earmarked for these purposes. Emphasis shifted in the mid-1960s to land improvement, the extension of orchards and vineyards, and vegetable production. In the 1967-69 period 83 percent of the investment credits were used for these projects. A lack of significant progress in the livestock production of collective farms, despite the heavy investment, was the main reason for the drastic reduction in credits to this farm sector.

In mid-1971 the bank was authorized to grant credits to private farmers and to individual members of collective farms for periods of up to five years at an annual interest rate of 3 percent. These credits may be used to purchase for breeding and production purposes a limited number of cattle, sheep, bee colonies with hives, and fruit tree seedlings for orchards up to 7.4 acres in size. Credits may be granted up to 70 percent of the purchase value of these items. To ensure repayment of the loans, recipients must conclude contracts with state procurement agencies or collective farms for the sale of their products.

Procedures for granting credits to collective farms were tightened in 1969 in a move to ensure a more effective use of borrowed funds and the timely repayment of outstanding debts. Under the new regulations, credits may be granted only for investment projects and production expenditures that guarantee the attainment of planned returns and unconditionally ensure loan repayment on the due date. The principal criteria for granting long-term credits are the need for, and the economic effectiveness of, the investment projects and the outlook for completing the projects within prescribed time limits. Economic effectiveness is analyzed in terms of production growth, increase in output per acre or per head of livestock, and rise in labor productivity and revenues.

Despite increasingly close supervision by the bank of its borrowers' activities, the effectiveness of investment credits in many instances has not measured up to expectations. Inadequate project analysis, construction delays, cost overruns, dissipation of funds, program changes that made partially or fully completed projects obsolete, and various other shortcomings have been cited by bank officials as the major reasons for this situation. As a means of resolving the problems, the officials have stressed the need for more profound project evaluation, greater stringency in granting loans, and increased firmness in the supervision of borrowers. They have also emphasized the criterion of ability to repay as being one of basic importance.

PRODUCTION

Total Farm Output

Official statistics on total farm output are limited to a percentage distribution of the output between crop and livestock production. In the 1965-69 period, for which comparable data are available, crop production accounted for 62 to 63 percent of output; and livestock production, for the remaining 37 to 38 percent. This ratio is reported to have prevailed throughout the 1950-70 period, even though the government has consistently sought to raise the contribution of the livestock sector to total output. An increase in the proportion of livestock products to 40.6 percent in 1970, reported by another source, was attributable mainly to the damage sustained by crops from the spring flood in that year.

Total gross agricultural output was unofficially reported to have reached 72.4 billion lei in 1969 and to have fallen to 68.7 billion lei in 1970 as a result of disastrous spring floods. The 1969 output volume, equal to that of 1967, represented the highest level attained through 1970. According to official index data, farm output in 1967 and in 1969 was 31 percent larger than it had been in 1960; the 1970 output was only 24 percent larger. These figures are equivalent to annual growth rates of 3.9 percent for the 1960-67 period and 2.2 percent for the years 1969 through 1970.

Net farm output increased much more slowly because the cost of material outlays per unit of output was steadily rising. In the 1963-68 period the increase in material costs amounted to 33 percent.

The growth of farm output during the 1960s was well below the planned levels of 70 to 80 percent for the years 1960 through 1965 and 26 to 32 percent for the 1966-70 period. Instead of more than doubling, output increased by barely one-fourth. Unfavorable weather conditions during some of the years were only partly responsible for the nonfulfillment of the agricultural output plans. Other major factors included the government's failure to provide the planned volume of inputs and an apathetic attitude on the part of farmers owing to inadequate incentives.

The shortfall in fertilizer deliveries during the 1966-70 period alone amounted to 1.3 million tons of nutrients, or one-third of the planned tonnage. For the decade as a whole, the shortfall approached 2 million tons. Deliveries of tractors and farm machinery also lagged behind schedule. Although an area of almost 2 million acres was to be irrigated by 1965 and, under revised plans, an acreage of from 1.6 million to 1.7 million acres by 1970, only 550,000 acres had been actually irrigated by 1965 and 1.45 million acres by 1969. A careful and sympathetic Western student of Romanian economy concluded that the production targets for 1965 could not have been achieved even if all the planned inputs had been provided on schedule.

In the view of some Western observers, an attitude of indifference on the part of farmers, based on the inadequacy of returns from farming, particularly on the collective farms, was an important contributing cause for the failure of agriculture to realize its growth potential. The real income of farmers was scheduled to rise by 20 to 25 percent during the 1966-70 period; the official announcement of the plan results, however, merely noted an increase in income, without citing any figure—a clear indication that the target was missed by a wide margin.The negative effects of the disparity in incomes on the collective farmers' sense of responsibility and, hence, on agricultural production were officially recognized. This recognition led to a revision of the system of compensation for collective farm work and to a reduction of farm taxes in early 1971 but did not significantly alter the position of agriculture within the economy (see Organization, this ch.). The possibility of alleviating the situation by raising farm incomes through a general increase in farm prices was rejected on the grounds that such an increase, without a corresponding rise in productivity per worker and per acre, would constitute a redistribution of national income incompatible with the best interests of the economy.

Crop Production and Yields

Production of major crops and of fruits was larger during the 1960s than it had been in the preceding decade. The greatest advances were made in the output of industrial and fodder crops, and the smallest were in potato and vegetable production (see table 10). In large measure, the rise in output was achieved through greater yields per acre, owing to an increased use of fertilizers; the introduction of improved varieties; and some improvement in crop production methods, particularly on state farms. Crop yields, nevertheless, remained among the lowest in Eastern Europe.

Livestock and Livestock Products

Livestock numbers increased slowly from 1961 to 1970 but, except for poultry, were generally lower at the end of that period than the peak levels reached for the different types between 1965 and 1968. From 1961 to 1965 the number of cows declined but increased steadily thereafter, without, however, fully regaining the level of 1961.

Development of the livestock economy has been hampered by an inadequate feed base, poor quality of livestock and livestock breeding, and inefficient production methods. Significant improvements in the livestock sector are planned for the 1971-75 period and beyond to 1980.

Although livestock production failed to increase as a proportion of the total farm output, the volume of livestock products, nevertheless, rose significantly during the 1960s (see table 11). Compared with the average annual outputs of individual products attained in the 1962-65 period, increases in average annual production for the years 1966 through 1969 ranged from 18 percent for wool to 24 percent for meat.

Table 10. Production of Major Crops in Romania, Selected Years, 1960-69
(in thousand metric tons)

Table 11. Output of Livestock Products in Romania,
Selected Years 1960-69

Data on the contribution of the different types of farms to the total farm output are lacking, but detailed figures are available for individual products. The most noteworthy aspect of these data is the light that they shed on the importance of the collective farmers' personal plots and of the private sector in the production of the higher valued farm products. On their small personal plots, the collective farmers in 1969 produced roughly one-third of the wool, vegetables, and potatoes; two-fifths of the meat, milk, and fruit; and three-fifths of the eggs (see table 12). Together with the small number of private farms, they accounted for 35 to 80 percent of the output of these items. Foreign observers have interpreted this phenomenon as clear evidence of the inadequacy of incentives for work on state and collective farms.

Exports

Substantial quantities of farm products have been exported in raw and processed form. In the 1965-69 period exports of grain, fruits, vegetables, and eggs ranged from 10 to 13 percent of output. Exports of wool reached almost two-thirds of the total production volume. A wide range of other vegetable and livestock products were also exported, including pulses; sugar; sunflower seeds and oil; live cattle; fresh, frozen, and canned meat; butter; wine; and tobacco (see ch. 14).

Table 12. Crop Production and Livestock Products in Romania, by Type of Farm, 1969
(in percent)