Moldova - First Agriculture Project

Document of The World Bank Report No. 15120-ND STAFF APPRAISAL REPORT REPUBLIC OF NOLDOVA FIRST AGRICULTURE PROJECT April 8, 1996  CURRENCY EQUIVALENTS (as of November, 1995) Currency Unit = Lei Lei I = US$ 0.22 US$1 = 4.50 Lei WEIGHTS AND MEASURES Metric System ha = hectare kg = kilogram ton = metric ton MOLDOVAN FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS ARD - Agricultural Research Department DC - Direct Contracting EAA - Enterprise Assistance Agency EBRD - European Bank for Reconstruction and Development ERR - Economic Rate of Retum EU (Tacis) - European Union Technical Assistance Progranm for the FSU FAO - Food and Agriculture Organization of the United Nations FSU - former Soviet Union GDP - Gross Domestic Product GOM - Govemment of Moldova ICB - Intemational Competitive Bidding IFAD - Intemational Fund for Agricultural Development IMF - Intemational Monetary Fund IS - Intemational Shopping IPM - Integrated Pest Management LIB - Limited Intemational Bidding MAF - Ministry of Agriculture and Food M&E - monitoring and evaluation NGO - non-govemmental organization NIVO - National Institute of Viticulture and Oenology NPV - net present value NS - National Shopping PFI - Participating Financial Intermediary PHRD - Policy and Human Resources Development Grant PMC - Project Management Committee PPF - Project Preparation Facility PPC - Project Preparation Committee PSDP - Private Sector Development Project R & D - research and development SAL - Structural Adjusment Loan SOE - State-owned Enterprise STF - Systemic Transformation Facility GLOSSARY Adsisio - a farners volunteer assistance (domestic) NGO Apek Moldova - the state institution responsible for national water resource management AcwaProjekt - the technical design institute of Apele Moldova Codru - Research Institute for Fruit Production kolkhoz - collective farm Porumbeni - Research Institute for Maize and Sorghum Sekcisia - the Field Crops Research Institute sovkhoz - state farm Tevit - Veterinary and Livestock Research Institute  STAFF APPRAISAL REPORT REPUBLIC OF MOLDOVA THE FIRST AGRICULTURE PROJECT Table of Contents pAge LOAN AND PROJECT SUMMARY ........................................... i 1. THE AGRICULTURE SECTOR ............................................ I A. The Macro-economy and Agriculture ............. ...................... 1 B. Sector Overview ........................................... .. 2 C. The "Agriculture Knowledge System" .. .................................. 4 D. Land Reform and Farm Restructuring ............ ...................... 5 E. Sector Institutions ............................................. 8 II. THE AGRICULTURAL INVESTMENT PROGRAM ........ .................... 10 A. GOM's Agriculture Investment Strategy . ............................... 10 B. Country Assistance Strategy Context ............ ...................... 12 C. The Agriculture Investment Program Concept ........ .................... 14 D. Rationale for Bank Involvement . ..................................... 18 E. Lessons from Past Bank Experience ............. ...................... 18 Ill. THE FIRST AGRICULTURE PROJECT . .................................... 20 A. Objectives .............................................. 20 B. Project Description and Components ............ ...................... 20 Agro-technology Development and Transfer ....... ................... 20 Institutional Strengthening . ...................................... 23 Project Preparation and Policy Development ....... ................... 23 Project Management ........................................... 24 C. Project Costs .............................................. 24 D. Project Financing ............................................. 25 This project was identified by the Government, FAO Cooperative Program and the Bank; project preparation was conducted by Bank and GOM counterparts. This report is based on an appraisal mission which visited Moldova in April 1995, and subsequent post-appraisal visits during 1995. The appraisal mission consisted of Brian Berman (Task Manager), Camilla Brown (Project Assistant), Michael Cermea (Senior Advisor), Csaba Csaki (Senior Advisor), Florian Grohs (Economist), Oskar Honisch (Principal Agriculturalist), Willem Zijp (Agriculture Extension Specialist), and Frederick Hasselback (consultant). The Division Chief is Geoffrey Fox, and the Deparment Director is Basil Kavalsky.  E. Procurement ................................................... 26 F. Disbursement .................................................. 29 G. Accounts and Audit ...................... ........................ 31 H. Environmental Impact ........ ........... ......................... 31 I. Gender and Family Issues .......................................... 31 J. Participation ................................................... 32 K. Rural Poverty ........................ .......................... 32 IV. PROJECT IMPLEMENTATION .......................................... 33 A. Introduction ................................................... 33 B. Summary of Implementing Agencies .................................. 33 C. Project Implementation Details ...................................... 34 Project Management ........................................... 34 Agro-technology Development and Transfer Component ................. 34 Institutional Strengthening Component .............................. 35 Project Preparation and Policy Development Component ................. 35 D. Implementation Schedule .......................................... 36 E. Reporting and Evaluation .......................................... 36 F. Project Supervision .............................................. 37 V. BENEFITS AND RISKS ................................................ 38 A. Benefits and Justification .......................................... 38 B. Project Sustainability and Risk ...................................... 44 VI. AGREEMENTS AND RECOMMENDATIONS ............ .. ................. 46 A. Agreements Reached During Negotiations .............................. 46 B. Condition of Effectiveness ......................................... 47 C. Condition of Disbursement ......................................... 47 D. Recommendation ................................................ 47  LIST OF TABLES: Table 2.1: Bank Assistance and Critical Elements to Strengthen the Rural Economy .... ..... 14 Table 3.1: Estimated Project Costs Summary .................................... 25 Table 3.2: Project Financing ................................................ 26 Table 3.3: Project Procurement .............................................. 27 Table 3.4: Disbursement Categories ........................................... 29 Table 3.5: Estimated Bank Disbursements ...... ............................... 30 Table 4.1: Project Implementation Responsibility Summary .......................... 33 Table 4.2: MAF Oversight of Research Components ............................... 35 Table 5.1: Expected Cost Recovery ........................................... 39 Table 5.2: Projected Farm Income ............................................ 40 Table 5.3: Project Objectives, Benefits, and Development Indicators .................... 42 Table 5.4: "Feasibility" Analysis of R&D Expenditures ............................. 43 Table 5.5: Sensitivity Test of "Feasibility" Analysis ................................ 44 Table 5.6: Project Risks and Mitigations ....................................... 45 LIST OF BOXES: Box 1.1: Environmental Impact of Agriculture .................................... 2 Box 1.2: The Agriculture Research System ....................................... 5 Box 1.3: Land Reform Statistics .............................................. 6 Box 2.1: Agricultural Sector Policy Reforms .................................... 15 Box 2.2: Complementary Assistance .......................................... 17 Box 3.1: Strengthening Rural Finance ......................................... 22 ANNEXES - VOLUME I o Annex I Implementation Schedules o Annex 2 Terms of Reference for Project Management o Annex 3 Environmental Data Sheet o Annex 4 Economic Analysis o Annex 5 Summary of Major Procurement Packages ANNEXES - VOLUME II - PROJECT IMPLEMENTATION PLANS o PIP I - The Viticulture Component o PIP 2 - The Horticulture Component o PIP 3 - The Integrated Pest Management Component o Attachment I - Detailed Cost Tables Map Number - IBRD 24285R2   REPUBLIC OF MOLDOVA FIRST AGRICULTURE PROJECT Loan and Project Summary Borrower: Republic of Moldova Implementing Agency: Ministry of Agriculture and Food (MAF) Beneficiaries: MAF; National Institute for Viticulture and Oenology (NIVO); Research Institute of Fruit Production ("Codru't), Research Institute for Field Crops ("Selectsia'); Research Institute for Maize and Sorgum ("Porumbeni"); Veterinary and Livestock Research Institute ("TeviJ"); agro-industry managers; Fanners Poverty Category: not applicable' Amount: US$ 10 million [equivalent] Loan Terms: Standard amortization terms, grace period and interest rate for LIBOR-based US$ denominated loans. Commitment Fee: 0.75 % on undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: see Schedule A Economic Analysis: As the direct benefits from R&D (improved product quality and lower production costs) could not be achieved without additional investments in improved production and marketing of key crops, an "affordability" approach was used. To achieve a 10% economic rate of return on research, the net present value (NPV) of export benefits directly attributable to research investments need not be more than 8.6% of the NPV of the added value of projected incremental exports over the next 15 years -- an achievable level. Map: IBRD 24285R2 Project ID Number: MD-PA-8556 1. Poverty groups are not directly targeted benficiaries under this Project. However most of the farmers are near or below te poverty line. The project will, in the short term, have indirect impact on farmers' productivity, while in the longer run the benefits will be direct.   MOLDOVA THE FIRST AGRICULTURE PROJECT I. THE AGRICULTURE SECTOR A. The Macro-economy and Agriculture 1.1 Moldova, which gained independence from the formner Soviet Union (FSU) in 1991, lies in southeastern Europe sharing borders with Romania and the Ukraine. It is a small, densely settled country with a population of 4.4 million; slightly more than half of the population live in rural areas. Moldova initiated a reform program as early as 1990 aimed at creating a market economy. In March 1993, Parliament adopted a comprehensive action program for the stabilization and recovery of the economy. Shortly thereafter, a new currency, the Lei, was introduced and supported with firm financial policies. Although progress has been hampered by the legacy of central planning practices, significant results have been achieved under the macroeconomic stabilization program. Budget transfers to enterprises were cut to about 1% of public expenditure in 1993 from 21% in 1992, and the largest consumer subsidies were eliminated in May 1994. Annual inflation fell from almost 2,000% in 1992 to 1% in the third quarter in 1995. The Gross Domestic Product (GDP) per capita fell over 50% between 1990 and 1993, and there was a further decline in 1994 of 22% to US$870. A turnaround, and a small but positive growth rate in GDP was recorded in 1995. 1.2 Moldova has followed a tight monetary policy since late 1993, supported by an International Monetary Fund (IMF) Systemic Transformation Facility (STF) and two stand-by arrangements. Although monetary policy changes have succeeded in sharply reducing inflation, they have not been accompanied by equally far-reaching structural changes in the economy. Severe problems of inter-enterprise arrears and illiquidity continue to constrain all commercial and industrial activity, including agriculture. The combination of monetary policy, fiscal policy and administration, and enterprise behavior is not yet balanced adequately to provide strong support for sustained stabilization or growth of the real sectors of the economy. A deepening of the initiated structural changes, especially in the enterprise and trade sectors, is needed. 1.3 Agriculture Sector. Between 1989 and 1993 Moldovan agriculture and its food industries' output declined 33%, due to a series of shocks.) Output fell an additional 26% in 1994, due to severe drought, inadequate financing of agricultural operations, and a decline in domestic demand and export possibilities. Favorable weather in 1995 helped to stabilize agricultural production, but at a relatively low level. 1.4 Agriculture accounts for about 40% of Moldova's Net Material Product and employs one third of the labor force. In addition, processing of agricultural products accounts for 40% of industrial output and 20% of industrial employment. Agricultural and food products accounted for over 50% of Moldova's exports in the last years of the FSU. This output was heavily dependent on imported inputs of feedgrains and agricultural inputs. In turn, Moldova's exports were based almost entirely on the centrally planned system of specialized production areas, and directed distribution, across the entire FSU. I including: a large unfavorable adjustment in terms of trade; increase in input and energy prices to international levels; severe droughts in 1992 and in 1994; and the economic disruption associated with the break-up of the former Soviet Union (FSU).  2 Chapter I 1.5 Agriculture is likely to remain the dominant sector of the Moldovan economy and could lead economic growth in the short-run. More than 50% of the population, directly or indirectly, depend on agriculture as a source of income. The country is densely populated and agricultural land is fanned relatively intensively. Moldovan agriculture is characterized by a high proportion of viticulture and horticulture production. These are typically high value and labor intensive crops and, once processed, are the country's major exports. Fertile soils, a favorable climate, well-educated agricultural specialists, and an abundance of low-cost labor will form the basis for successful agriculture after the restructuring of the sector is completed. B. Sector Overview2 1.6 Moldova's agriculture is well favored with a moderate climate and excellent soils. Eighty percent of the soils are chernozems that rank among the most fertile in the world. Production is constrained by erratic rainfall (drought frequency 6 to 7 years in 10) and low levels of groundwater resources in the south of the country. Important products include wine, horticulture, grains, tobacco, and livestock products (hogs and poultry). In part, the dominance of livestock (dependent on imported feedgrains) is a remnant of former Soviet Union (FSU) central planning decisions, which placed an emphasis on Moldova's role as a supplier of both horticultural and livestock products to its pan-Union food supply system. 1.7 Since Independence in 1991, there has been an overall decline in sector output, as the systems adjusts to real market prices, increasing export competition, and reduced domestic demand (see also environment impact -- Box 1.1). Box 1.1: Environmental Impact of Agriculture During the period of the Soviet Union, fertilizers and pesticides were liberally applied with little concern for environmental impact. Groundwater resources became polluted both from agricultural chemicals run-off and from the effluent of the large livestock complexes. Further, the agro- processing plants were not operated with environmentally appropriate waster disposal systems. High levels of pesticide residues were also reported. With the post-independence down-turn in the economy, the levels of application of agro-chemicals have been significantly reduced, and agro- chemical runoff is today not a significant pollution source. Thie livestock and agro-processing complexes have reduced their operating volumes, and consequently, pollution from these point- sources has declined. However, this could quickly be reversed to the previous levels of pollution if there is a return to past levels of economic activity without the introduction of better agro-chemicals, and better controls on levels and methods of application. Similarly, to prevent point-source pollution, the livestock and agro-processing complexes require investments in effluent and wastewater treatment as an integral part of their restructuring and expansion programs. 2 This section based on "Moldova Agriculture Sector Review," (Rept. No. 1258 1-MD, Feb., 1995), with recent updates.  The Agriculture Sector 3 Livestock: Since 1991, the loss of export markets in the FSU, high feed prices, and reduced domestic demand have severely impacted the livestock sector. Meat production decreased by 40%, dairy production by 30%, and egg production by 46%, between 1991 and 1993. Livestock production continued to decline in 1994 as the drought worsened feed shortages, and has held steady in 1995 due to a static domestic market and low export prospects. Further downsizing can be expected over time. Horticulture: Fruit and vegetable production is important in Moldovan agriculture covering about 10% of the arable land, but contributing to about 28% (18% and 10%, respectively), of Moldova's earnings from food exports to the FSU in 1993. Production of horticultural crops fluctuates mainly due to drought, low productivity, poor irrigation systems, and unreliable marketing channels, (e.g. vegetable production in 1993 was 39% lower than in 1986). Potential areas of improvement encompass the full range of activities in horticulture, including availability and choice of plant varieties, crop management, post-harvest treatment, and processing and packaging of finished products. Viticulture: Wine production also plays an important role in Moldovan agriculture with about 8% of the agricultural land under vineyards. Wine production represents one of the major comparative advantages of the country and has good medium-term development prospects. However, a majority of the wine products are of low quality and need to be improved in order to be internationally competitive. The wine industry can be improved through increasing grape yields and improving the quality of wine products, improved processing, adoption of standardized packaging and improved marketing. 1.8 The rural economy is presently experiencing significant de-monetization, with both the fanners and the processors being heavily indebted. There is a dominance of barter trade both for domestic and international transactions by the large agro-processing complexes (formerly state-owned, and now privatized but not effectively restructured or efficient). Some competition is now emerging as a result of de-monopolization and privatization of the state-owned enterprises (SOEs) in agricultural trading and processing. Small and medium scale processors, and informal traders, are emerging. 1.9 Due to tight credit policies, concessional financing to primary production and processors has been very limited in recent years. The Government (GOM) does not intend to provide concessional financing in the future; rather, financing would become the responsibility of the banking sector from its own, and mobilized, resources. During reform and restructuring of the financial sector, financial resources to agriculture, a perceived high risk sector, are expected to remain severely limited. 1.10 The consequent scarcity of working capital from the formal financial markets has resulted in crops not being harvested because the agro-processors could not purchase them. Some of this "surplus" found its way into informal fresh produce trading in neighboring countries' (predominantly in Ukraine and Belarus). The continued economic activity of the agricultural sector during the transition has been, in large part, a result of the emergence of the informal sector, based on the bartering of "surplus" fresh produce and processed produce (given as payment-in-kind for wages to enterprise workers, or as payment for the raw material supply from the farms). These goods were bartered for scarce essentials (fuel, agro- chemicals and spare parts) obtained from neighboring countries.  4 Chapter I 1.11 The Agriculture Sector Review' recommended for the medium term, that Moldova's strategy should emphasize: * yield and efriciency enhancement, through public investment in agricultural research, education and extension; * promotion of agricultural exports-led growth, through liberalized pricing and trade in agricultural inputs and products, improvement of product quality, development of new markets, marketing channels and marketing institutions; and * sector structural reforms in production through rapid de-monopolization and privatization of agro-processors and traders, with parallel farm restructuring, privatization and land reform, the development of land markets and adequate rural (non-concessional) financial services, and the development of new sector institutions, both public and private. 1.12 The Role of New Technology: The comparative advantage of agriculture in Moldova lies predominantly in the production of high value crops, such as grapes, fruits, vegetables, some medicinal and aromatic plants, and in seed and planting material production. To support the production and improve the export potential of high value crops, agricultural research needs to focus on the adaptation of foreign crop varieties to the local climate and the drought risk; improved quality of food and agricultural products; mechanization adapted to the changing land tenure pattern; improved soil fertility practices and crop protection (including integrated pest management (IPM)) to reduce both production costs and the negative impact of agro-chemicals residues on groundwater and food quality (Box 1.1); efficient and economical irrigation; and improved technical and economic crop production and agri-business management. 1.13 To improve productivity and expand agricultural exports, agriculture would need to utilize new production technologies appropriate for high value crops. The full range of improved technologies are needed, e.g. high yielding seeds; integrated pest management; disease resistant new plant breeds; drought tolerance; energy-efficient smaller-scale farm mechanization; water-conserving irrigation; plastic tunnels and greenhouses; etc., all adapted to Moldova's conditions. In addition, new technologies will be essential to ensure the transformation from extensive large-scale collectivized farming systems (now characterized by excess under-utilized labor) to more cost-efficient smaller scale farning, on scarce land resources, with intensive land use, a focus on high value crops, and limited capital and labor (mostly family) resources. Moldova's "agricultural knowledge system" -- agricultural research, education and extension -- will be critical to the success of this technology-facilitated transformation. C. The "Agriculture Knowledge System" 1.14 The "agriculture knowledge system" consists of: * three universities teaching agricultural sciences, and a number of technical schools; * 18 agricultural research institutes under the Ministry of Agriculture and Food (MAF), complemented by basic sciences research under the Moldova Academy of Sciences (Box 1.2); and * MAF's regional network of agricultural extension staff. 3 op. ct.  The Agriculture Sector 5 Box 1.2: The Agriculture Research System Ministry of Agriculture and Food Research Institutes: Experimental Stations: Viticulture and Oenology Vegetable oils* "Selectsia" -- Field Crops Irrigation* Vegetables* "Codu" - Fruits Academy of Science of Moldova 'Porumbeni" -- Maize and Sorghum Agriculture-related Research Institutes: Tobacco and Tobacco Products Biological Plant Protection "Tevit" Veterinary and Animal Breeding Botany Agro-processing Ecology "Mecagro" -- Agricultural Mechanization Genetics Water and Water Conservation Microbiology "Dimo" - Soil Conservation and Amelioration Zoology ') in Transnistia 1.15 The existing agricultural knowledge system has an unsustainable demand for public resources. There are inherent problems with the multi-institutional and multi-tier approach inherited from the FSU. There is a significant lack of integration of research, education and extension, to the detriment of farmers, educators, researchers and students. Its output is, by and large, not adapted to agriculture operating in an open competitive economy. MAF recognizes the need to tackle these problems, but it does not have the resources to do this. A vision of the future needs of agriculture, the role of new technology and the knowledge system, has yet to emerge from the stakeholders. Without this vision, and an overall consensus around it, no rationalization of the system can commence.4 Nevertheless, even in the absence of an overall strategy, immediate priority areas for public investment have been identified (relevant to whatever future form the knowledge system will take -- para 2.5) with the initial focus on research capabilities to introduce new technologies for key export crops, especially for viticulture and horticulture. D. Land Reform and Farm Restructuring 1.16 Land reform and restructuring of farms has proceeded relatively slowly (Box 1.3). The first stage of the land reform aimed at the distribution of land for household plots (average size 0.3ha) to the rural population. This first stage is substantially complete, although title documents have not been distributed to all new owners. Agricultural land subject to privatization was to have been transferred in the second stage of land reform, which began slowly in late 1992, accelerated in the summer of 1993, but was suspended in November, 1994. The second phase of land reform was resumed in mid-1995 on the basis of the Land Code as amended by Parliament in February, 1995. 4 Tchluical assistance under this project will facilitate the development (in a participatofy manner) of this vision,mnd subequenfly a rationalization, prioritization, and reorganization plan for the agricultural knowledge systemi, including the resw system (Chapwer 3).  6 Chapter I Box 1.3: Land Reform Statistics General Land Survey (January 1, 1995) Land Holders Area Category and Land Holder % ('000 ha) % Agricultural Lands 806,614 100% 2,050 100% including 1.0 State ownership 1,199 n.s. 456 22% 2.0 Others 805,415 99.9% 1,594 78% of which: 2.1 Collective farms 549 n.s. 984 48% 2.2 Stock company farms 100 n.s. 190 9% 2.3 Cooperative farms 116 n.s. 78 4% 2.4 Individual farms * 42,968 5% 55 3% 2.5 Farmers' associations 241 n.s. 20 1% 2.6 Household plots ** 761,429 94% 267 13% 2.7 Other 12 n.s. I n.s. * registered and non-registered 11 mission estimate Sources: GOM statistics Notes: "Collective farms" are those sovkhozes and kolkhozes, not restructured, but where the state has no claim to the ownership of the land. "(Joint) Stock companies" are corporatized former sovkhozes and kolkhozes that have not undergone any significant additional restructuring "Cooperatives" are privatized sub-sets of the former sovkhozes and kolkhozes where the land is an indivisible asset of a production cooperative, and not of the individual members of a cooperative. "Individual farmers" and "Farmers' associations" are those individuals who exited from the collectives with individual land shares that have not been placed into the asset pool of a production entity other than that of the owner's -- the emergent "private farmers." "Household Plots" including those plots private individuals and those owned by members who ave not exited from the former sovkhozes and kolkhozes. 1.17 This amendment included the decisions to: extend the circle of eligible persons for firee land entitlements, to employees of inter-farm and service enterprises and some workers in the rural social sector;  The Agriculture Sector 7 * limit the minimum size of land allowed to be taken out from a farm to the size of one crop rotation field' at that specific farm; and * to require only a "qualified farmer" certified by local authorities to manage any of the newly formed farms. 1.18 These measures were justified by the legislators as a response to increasing tensions in rural areas among those who were not included in the list of beneficiaries of the original land reform, as well as concerns by MAF and GOM regarding the fragmentation and improper use of agricultural land as a result of the implementation of the initial legislation. While the decision of the Parliament to modify the land reform procedure is understandable, the amendments have had negative consequences for farm restructuring. The amendment issued in February, 1995 has seriously compromised the rights of individuals to exit from a large-scale farm and to establish new private farms,6 and consequently these changes were not welcomed by the farming population.7 The early 1995 status of the land reform, just prior to the change in legislation, is shown in Box 1.3. "True" private farming is represented by categories 2.4, 2.5 and 2.6 - only 16.7% of agricultural land area, and yet 99.75% of all land holders (including the small household plot holders'). As the freeing up of exit rights occurred only early in 1996 (para. 1.19), and is temporarily suspended from the beginning of April 1996 until the end of the 1996 harvest, these statistics remain a reasonable representation of the current position. 1.19 The Land Code introduced post-independence established a moratorium on selling any land received under privatization and land reform measures until 2001. The moratorium for urban land and rral housing land, as well as household plots and orchards, was lifted on January 1, 1995. This measure has already created a limited land market in Moldova and is a progressive step forward. Selling of land shares inside the large-scale farning structures has recently become possible. At the beginning of 1996, the Prime Minister informed Parliament that the Cabinet has endorsed legislative reform for the rural land code, as proposed by the State's President. This proposal will remove the moratorium on rural land sales (previously set at 2001), and permit immediate trading of rural land parcels. It is now the Cabinet's stated policy that farm land should be treated under law as any other tradable commodity. Very recently the Constitutional Court ruled certain provisions of the 1995 revision of the Land Code to be unconstitutional. The practical implications of this move are as yet unclear. 1.20 It is also not clear at this time: (a) the extent to which the proposed revisions to the land code will permit a range of land reform and fann restructuring options (e.g. the exit of individual farmers, with personal title to identified land parcels and possession of other farm assets from their former 5 This is an FSU agronomic concept which defines the size of a field required to achieve a multiple crop rotation over several seasons, where the rotation is designed for agronomic productivity and fertility conservation. In the Moldovan context, this applied to annual cropped land, and would mean fields of between 30 and 100 ha, depending on location, soil fertility, and agro- climatic conditions. At an average allocation per family of 1.5 ha, of which over SOff (on average) would be in fruit orchards and vineyards, legal compliance requires group exit of between 60 and 200 individuals. 6 defined as non-collective farming, i.e., for the farmer's 'own account," on rented or personally owned land. 7 Systematic surveys, interviews and consultations with farmers and rural elites was carried out as a part of project preparation. The results of this survey are reflected in this section (se also Through Farmers' Eyes: Stud on Land Priw4tzton In Moldova, Badina, 0. and S. Raddulescu; M. Cernea, ed. (forthcoming World Bank Staff Working Paper)).