The profound changes in the centrally planned economies, including the Former Soviet Union (FSU), have resulted in an economic transition of unprecedented proportion. In these planned economies, production decisions were made centrally, and distribution was largely organized through a fixed and artificial price system. The market transition in these nations has been accompanied by policy uncertainty and structural adjustment as governments have freed prices, introduced private property, and left production and distribution more to the forces of supply and demand (Csaki). In general, the reforms have resulted in an initial sharp decline in production and consumption levels and in productivity (Stuart). For the nations of the FSU, adjustments in agriculture have been of particular importance because of the prominence of the sector, the share of population in rural areas, and the major roles of food and agricultural subsidies during the past regime. Input prices have increased by an order of four compared to output prices (due to both continuing state control and decreasing food demand) and have resulted in declining output levels and farm incomes (ERS). In addition, high nominal interest rates, decreased farm income, and uncertainties about the pace of the economic restructuring have reduced farm investment. Governments are introducing short-term adjustment policies to stabilize farm income and food production and longer-term initiatives to address privatization, antimonopoly, monetary and fiscal stabilization, trade, and the creation of markets. The restructuring and policy decisions in these formerly planned economies are occurring with little support from empirical analysis of the impacts of the reform process. Data have been limited, and few economists with access have had the opportunity to produce the analysis required to inform difficult decisions on the scope and sequencing of the economic reforms. For example, efficiency analysis of agriculture has been limited to highly aggregated data (Johnson and Brooks, Koopman). Analysis of detailed, farm-specific data available for Ukraine may yield insights on the reforms, the condition of agricultural enterprises or farms, and an improved basis for anticipating the consequences of interventions whether designed to stabilize the transition process or to support the longer-term restructuring of the sector.
