Turkmenistan'S New Private Farmers: The Effect Of Human Capital On Performance

Almost all former socialist countries are introducing private farming as part of land reform. In countries where such farming existed one or two generations ago, land might be restituted to former owners. In Turkmenistan, where there had been little private agriculture and no small landowners, land was distributed to new beneficiaries. This paper shows that the previous position of the new farm “owners” strongly affected what resources they had (land, capital, water) and how effectively they used them. The study is based on a survey conducted in 2000 on a sample of 143 farmers from Turkmenistan’s all five administrative regions. The farmers were divided for analysis into five categories, according to previous positions (managers, middle-level specialists, skilled and unskilled workers, and administrative staff). On the average, all categories of farmers turned a profit. However, the most successful were the middle-level specialists (agronomists, engineers). They had the largest plots, the best land, and the best-equipped farms. Like the managers and the administrative staff, they had savings, some of which they used as startup capital. They diversified their production more than others, and were better able to obtain credit. Former unskilled workers were the least successful, lacking capital, and unable to afford risks, thus growing only wheat and cotton at the expense of other crops and of livestock. Earlier studies have shown that former position affected the share of resources received by individuals in the ex Soviet Union. In addition to confirming the finding, we have shown that former position also affected the use of those resources, and the economic performance of the users. Unfortunately, the sample size was small, and our conclusions remain thus tentative.