Land fragmentation, cropland abandonment, and land market operation in Albania

Albania's radical farmland distribution is credited with averting an economic crisis and social unrest during the transition. But many believe it led to a holding structure too fragmented to be efficient, and that public efforts to consolidate plots are needed to lay the foundation for greater rural productivity. This paper uses farm-level data from the 2005 Albania Living Standards Measurement Survey to explore this quantitatively. The analysis finds no support for the argument that fragmentation reduces productivity. However, producers fail to utilize about 10 percent of the country's productive land, and, in the majority of cases, this land has been idle for at least five years. Farmers quote inefficiently-small plots as the reason for this in few cases, casting doubt on the scope for land consolidation to solve this issue. Instead, the data are consistent with the notion of land market imperfections, which can be traced to gaps in the legal and policy framework, as well as inefficiencies in registry operations, leading to land abandonment on a large scale. To maintain the productive potential of Albania's rural economy and, if and when needed, the ability to conduct consolidation in a cost-effective and sustainable manner, it will be critical to complement the emphasis on consolidation with an effort to address those gaps and inefficiencies on a priority basis.