Opportunities for the Development of Agricultural Firms in East Germany

J. Zeddies, C. Fuchs and H. Schole

No 346213, 9th Congress, Budapest, Hungary, 1993 from International Farm Management Association

Abstract: On the basis of empiric data gathering and dynamic planning calulations, this investigation analyses the decisive planning hindrances for agricultural enterprises in the new states after the change to market economy. With dynamic planning calculations for typical enterprises of different legal and business forms the optimum development of these enterprises for a ten year period is described and the influence of alternative location and support conditions analysed. Apart from the disadvantages in the area of the decision making structures, which can be described only insufficiently in an quantitative model, the results of the model calculations indicate, that the legal successors of the APCs (Agricultural Production Cooperatives) are thoroughly able to fulfill the requirements for a stable enterprise development. This can only be successful if through in time rationalisation and extension investments the future production guidelines are taken into account and the workforce of the enterprises can be adapted to the requirement. This statements are also true for partnerships, that originated in an APC and are now operated under the management of a trust. Though the usually very low equity capitalisation and relatively high fixed cost burden of these enterprises restricts their development opportunities considerably. On the other hand, partnerships with financially strong western partners and an efficient management can be profitable even under less favourable frame conditions. In this case a stable enterprise development and operational growth can be achieved largely by oneself. Re- and newly established family farms have, contrary to larger enterprises with foreign labour, no problems in the area of working motivation. Under the condition, that the scale of the production can be adapted to the labour capacity of the family and the financing of necessary modernisation measures is guaranteed, the ordinary planning model for this group of enterprises indicates an ensured existential development.

Keywords: Agribusiness; Agricultural Finance (search for similar items in EconPapers)
Pages: 16
Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma93:346213

DOI: 10.22004/ag.econ.346213

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