Privatizing Socialist Farming in Hungary Interest, Efficiency and Equity

In the early 1990s, some 1400 collective farms were privatized in Hungary and became agribusinesses and other farm enterprises. An important step in privatization was the division of common property (cpd) among the members, and the choice of exiting individually or in groups with one's share, or of continuing in a successor farm enterprise as a shareholder. The study reports on privatization in 78 collective farms. Constraints on farmers' choices were the privatization legislation and preserving farming efficiency. In cpd decided by majority vote in farmers' assemblies, it appears that in a third of the collective farms, interest voting prevailed, in another third equity voting was dominant, balancing need and contribution justice, and that in the others both interest and equity voting occurred. Though successfully accomplished, privatization does not yet provide the same benefits which exist in a mature market economy.