Diana Kopeva

Formation of land market institutions and their impacts on agricultural activity

Abstract The process of transformation of Bulgarian agriculture from a centrally controlled economy to a market-oriented economy is resulting in land reform, which will necessitate the immediate development and operation of land markets. On the one hand, the land reform is restoring land to those who owned it in the year 1947, or their heirs, who not only have very small and scattered holdings, but who often live in urban areas far from the claimed land and do not practice farming. On the other hand, farming is being changed by the liquidation of the former collective farms and the emergence of privately managed farms and new forms of co-operatives. These new operating units may or may not have their own land claims, but in most cases, do not have immediate access to sufficient land for adequately sized operations. Without land market institutions for information, contracting land use, and enforcement of contractual rights, the transaction costs of bringing the suppliers of land together with those demanding land will result in unused land and distorted agricultural activity. The paper explores both the formation of institutions and the evidence of transactions, as well as the possible impacts on farming.