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FRENCH EXPERIENCE ON FUNCTIONING OF THE LAND FACTOR MARKET István Fehér, Ph.D, professor Szent István University, Gödöllő, Hungary School of Economic and Social Sciences E-mail:FeherIstvan@gtk.szie.hu 1. INTRODUCTION This study has been based on a research program about the functioning of the labor, land, and financial markets in the EU candidate countries before their EU-accession. The land market issue were one of the main important economic factors to improve structural competitiveness and viability of the Central and Eastern European Countries’ agriculture, before the enlargement of the European Union. The importance of agricultural performance has been clearly recognized by policy makers and other important players of the sector dealing with agricultural and rural development. The successful integration of agricultural farmers depends on the way of the transformation of agricultural sector and the building of an institutional framework. The research work in France and the study preparation in Hungary were possible due to the important supports of FAO. The main objective of this study has been review the relevant experience and lessons learned through the land consolidation and farm restructuring in an European Union member country, namely in France and to provide a lesson for EU candidate countries under accession. The study outlines (i) the land transaction process (ii) the leasing conditions (iii) the legal and institution framework (iv) the impacts of the land policy, and (v) the adaptability of these processes to differing situations. 2. LAND MARKET AND LAND LEASING IN FRANCE 2.1. Historical background Before the Second World War the land market was not organized as a coherent part of agricultural policy in France, the average farm size was very small, 5-10 ha and the country was in a net importing situation of agricultural products. It is important to recognize that the farm size structure of France was significantly influenced by the ‘Code Napoleon’, which was responsible for many fragmentation of agricultural land. Under this code, upon a land title holder’s death, all children had a right to a proportion of the holding. Under French law it was not within the title holders 1 gift to bequeath his farm to any one of his children1. This Code was in sharp contrast to, for example, English law which, historically, allowed lands to be passed down in their entirety to the eldest (male) heir. A practice which has contributed significantly to the, economically, more efficient farm size structure of the UK. In France after 1945, the production increased and the prices of agricultural products decreased. In this situation most of young farmers considered that the only way of avoiding a mass exedos from agriculture (due to the small farm size structure and technical inefficiency) would be through increased prices for agricultural products. They expressed their opinion in a voluntary way to improve the farm structure by a degree of consolidation of previously partitioned agricultural holdings. Based on several estimates in 1960, it was forecasted that, without the support of Public Administration (i.e. the provision of subsidies to agricultural producers), in medium term, the number of farms in France would have fallen to around 250 000, with an average of 200 ha, and that in several regions would have effectively been abandoned. In reality, the number of holdings declined with 1 million units between 1967 and 1997 and today the number of farms is 679 000 units functioning with an average of 40 ha farm size, 735 000 persons, - 3,9% of active population - are working in agriculture sector. In the same period the number of agricultural holdings of at least 50 ha in France increased by 85%, in the EU this figure is 101%. The fall in the number of agricultural units in the EU has mainly affected holdings of less than 20 hectares, and especially those of less than 5 hectares disappeared by more than 60% in France and by 42% at EU average level. ( Source: EUROSTAT) In the sixties a strong need was expressed to find a solution encompassing a systematic structural policy with the support of the Public Administration. One of the solutions was the establishment of the SAFER2 network. The basic principle was to guide transactions (including rental agreements) to persons who needed to reach a minimum viable farm size, rather than to allow the market to be dictated purely by those who had the most financial resources. Certain persons were afraid of the subjective attributions of lands and of the “war” in the villages, because through these actions they felt suffering of right of property. But the case was not that, because in fact, the legislatures and the farmers organizations, especially the Young Farmer Organization were able to create the rules of the game still existing today. During the last 40 years the legislation was modified 14 times, and no political force tried to cease the activity of SAFER in spite of certain criticisms. Even now these principles are basic in SAFER actions. 1 Today, property may be purchased ‘en tontine’ which, to an extent, negates the principle of the Code Napoleon, nevertheless the Code still remains to this day a part of the French tradition. 2 SAFER ; Organization with right to buy land in order to retain it for agriculture 2 2.2. Basic elements of SAFER policies - Transparency: a policy of balanced development of farms and installation can not be realized without total transparency at all stages: about prices, projects in presence of legal scrutiny and call for candidates, the procedures of SAFER, the criteria of choice of the technical committee and the board of administration. These facts emphasize the great importance of the existing right of preemption, competing for that transparency. - Local concentration: it is the necessary complement to transparency while also contributing to it. Local players, at county and village level participate in the debates, under the condition of not ruling out anyone. The different farmers unions play a determinant role in the process. It is obvious to provide complete and strict information at local level and to explain the subsequent choice. It seems to be preferable adapting this rule on the same way also in some subjects other than land transaction (for example, the right to production and early retirement) - Quality of services and listening to projects: the collective management of the attribution of means of production does not find fully its direction if: - the arbitration is brings to the local agriculture and to the realization of departmental priorities, a better solution than a spontaneous land transfer (installation of young farmers, restructuring several farms): all these can be measured in the activity report of SAFER and the Departmental Committee of Agriculture Orientation or the list of farm installations. - all projects in presence, all applications, even those which are being rejected are subject to the same consideration and to the same interest from both the boards of administration and technical committee side. A project refused today could be accepted tomorrow, this is writing down the action in time.(opinion of a SAFER representative) - Active involvement of professional organizations Upholding the rules of agricultural professional organizations, of administration and technical services: belongs to the agricultural professionals and to the representatives of the shareholders of SAFER which defines, within the board of administration and in a legal framework, the political orientation of the action, in each department, for contributing to the decisions, on initiating a transparent debate. - State supervision and auditing The representatives of the State assure the legality of the operations and the respectation of the priorities of national or departmental policies and the coherence of actions. The technicians of SAFER collect the maximum of information useful for decisions, advise on all applications in a fair and transparent way and make propositions for development or distribution which are able to improve the impact of interventions. 3 These basic principals created the strength of a collective voluntary action strongly reorienting the spontaneous structural evolution designed in 1960. They permitted French agriculture to benefit of a high performance land property structure until nowadays. 2.3. Legal framework and functioning The subject and origin of SAFER were based on the Law of Agricultural Orientation, dated 05.08.1960. The legal form is a Shareholding Company, chosen freely by SAFER, due to the fact that the law did not impose any legal form. The reasons for having chosen the form of Company are the following: need to minimize the start-up capital, the responsibility of all the associates is limited to the amount of their share of capital and a great flexibility of managing the Company SAFER has three specific characters forming its statute as follows: - SAFER is under the approval of the Minister of Agriculture and the Minister of Finance and Economics, its action zone is defined in the decision of approval, - SAFER cannot have a profit-making goal, - each SAFER conducts its activity under the control of two government auditors, appointed by the Minister of Agriculture and the Minister of Finance. The field of operation of SAFER and their zones of actions are subordinated to the obligations of joint right, which means that the elected President needs to have the approbation of the Minister of Agriculture and when the case arises, the Director is also appointed by him. SAFER is under obligation to present its annual program of operation for approval to the Minister of Agriculture and Finance. At the beginning SAFER had several fiscal advantages, including tax-holidays on income and professional tax, only the social charges and tax on the company, in case of surplus (profit) being generated, were applied. For financing land purchases (3%) and works (1,25%), the State provided preferential credit lines with low interest rates. Credit Agricole also, as a bank, provided its own resources, as an exclusive loan to SAFER for facilitating the operation connected to the regrouping of lands and installations. These loans were meant for a 10 years period, being repaid during the last four years. The amount of loans reached 3 billion FF by the end of 1970. In the State budget a line was separated to be able to follow the land structure development subventions. 2% of the amount of retrocession was agreed on as a subvention and a forfeit for preemption. The Ministry of Agriculture limited the invoicing level by 2%. The financial condition loans and subventions at the beginning were satisfactory for financing the operation of SAFER. 4 One limiting factor has been noticed in the case of some regional companies due to their own not sufficient sources, as the bonus loan was limited to the 15 fold of their own found. In certain regions the demand was higher than the limitation level. In 1980, due to low land prices, the increase of interest rate and an important land inventory, certain SAFER’s were faced with a delicate position. In 1987 the Ministry of Agriculture agreed on a special subvention followed by a reorganization plan dealing with increasing the capital and the reduction in staff members and an the acceleration of the reduction of the land inventory. Since 1987, after the redressing plan, SAFER’s financial situation improved. We can say that the SAFER management proved to be capable and succeeded in adapting to the new challenges, after the difficulties of the 80’s. The SAFER organized its activity in 26 home countries and 3 overseas companies. The way of functioning was organized independently and harmonized with the statute of the Shareholding Company regulation. The main responsibilities are the following: The President, elected by the Board of Administration and agreed by the Minister of Agriculture is responsible for applying the policy defined by the Board. The Director General, selected by the President, approved by the Board and agreed by the Ministry of Agriculture, is personally responsible for the company management including submitting the short and medium term objectives and financing plan. His work is supported by two deputies. Services of a SAFER agency include several services at central and regional levels, like; administrative services, finance, human resource, legal problems, different work services, responsible for development of farms, hydraulic, technical study, buildings, projects, study services, study on local and land structure, farm economics for intervention of SAFER etc. Services at department level, which is managed generally by an engineer who is head of service and represents locally the SAFER, also takes part of the price evaluations, negotiations, prepare the acquisitions and economic study. He mobilizes the land technicians who are permanently in the fields and keep close contacts with farmers. Furthermore, he organizes temporally the management of land acquired by SAFER. He is charged to cultivate the land, to sale harvest during the process of retrocession definite and organizes the leasing of land defined as precarious. 2.4. The National Federation of SAFER Agencies The National Federation of SAFER agencies has the mission of assuring the national representation of SAFER agencies at the Public Administration and at all the Organizations interested in the activity of SAFER. 5 The National Federation of SAFER Agencies holds a General Meeting every year, composed of the representatives of all the SAFER agencies, where also are invited the directors, the organizations and the persons interested in agricultural land improvement. In short, the National Federation of SAFER agencies assures the relationship with similar organizations, existing in other European countries, in particular in the framework of the European Association of Rural Improvement Institutions. 2.5. The role of Farmer’s Organization The public Administration insisted upon the inclusion of the Professional Organizations representing the agricultural and rural world, in practice and in majority in the General Assembly. Farmer’s Organizations have played an important role not only in the establishment of the SAFER network in France, but also, since its inception, in its functioning. The representative organizations are partially shareholders in each SAFER and take part in all organizations of SAFER, ( General Assembly, Board of Administration, Technical Committee). The participation of Departments Organizations has been anticipated by the law. Each of the organizations has representation in the General Assembly. The Organizations have a certain number of proportional votes based on their participation in the social capital of SAFER subject to the following limitation: - the statute of SAFER anticipates that the number of votes attributed to a shareholder should be limited to 5%, namely 1/20 of the number of shareholders. This regulation contributes to the good functioning of SAFER. Most of these organizations setting at the General Assembly have a very close and limited number of votes which leads to consultation for making the most important decisions in common. 2.6. Government Auditors SAFER exercises its activities under the control of the Government, because SAFER fulfils a mission of general/public interest. The State provides to SAFER preferential loans and state subventions for its functioning. The control is exercised by the Ministry of Agriculture and the Ministry of Finance. 2.7. Consultation proceedings In each department, the consultation procedure is carried out with a large participation of the Departmental Professional Organization and the Local Administration. An Advisory Technical Committee has been created in all departments, gathering: - administrators of SAFER, - representatives of the main agricultural organizations, 6 - representatives of the interested Public Administrations. This Committee examines all projects of retrocession and sometimes of purchases, mainly when they present some unusual characteristics or particular difficulties. The Committee provides an opinion to the Board of Administration having the only decision power subject to the approval of the Government audits. Several SAFER estimated that a consultation on departmental scale was not sufficient for fully associating the rural collectivity. In most of the cases they asked for the Professional Organizations to have a structure on small region, district or even village level, to establish consultation proceeding destinated to give a preliminary opinion to the Technical Committee. Rarely it happens that it is SAFER which is organizing this consultation. In case of real local consultation a consensus resulted as an output can help the local integration. The local opinions do not have an obligation in the Technical Committee and the Board of Administration decision. It is useful to repeat that only The Board is entitled to make decisions and it has the right of not to follow the opinion of the Technical Committee at local or departmental level. Based on extended consultation SAFER shows that the decision on land consolidation cannot figure on the technical decision, but really an action taking care on the relation between nature, man and society. 3. ACTIVITIES OF A SAFER AGENCY 3.1. Land purchases and acquisitions SAFER has the possibility to buy only agricultural properties or properties designated for agricultural use. Inside these categories it can however acquire parcels, pieces of farms, complete farms, with or without buildings. SAFER purchases concern essentially some transfers in return for payment and are carried out by sellers putting freely their goods for sale: these are voluntary sales. SAFER can also buy properties for future sale by auction, voluntary and even judicial. Under certain circumstances, it can after all announce its intention to purchase in the cases of annuity sales. The typical type of purchase, and far the most frequent, carries out sales by mutual agreement. This kind of sale is generally the result of the land technician’s work of prospecting, marking also its success. A notification can also be the origin of this sale, particularly when the land technician succeeds to have, after negotiating with the seller and with the buyer, an agreement permitting to reorient the result of the sale in SAFER’s favor. In the opposite case 7 SAFER has the possibility, under certain precise conditions and in occasions, to use its right of preemption. In the case of purchase project contrary to its plan of restructuration, it can happen to substitute for buyer. This procedure can be accompanied by price revision if the case arises. SAFER also uses its preemption right on an invitation to tender. Nevertheless, the right of control on voluntary sale by auction used by most of SAFER today, permits to avoid the appeal to that procedure. In this case the purchase can be realized by simple acceptance of the preliminary offer of the invitation to tender. Acquisition does not require the obligation of transfer of property title. It is possible for SAFER to lease communal lands, sectional properties, or any other agricultural or agricultural purpose land, on concluding a lease of long-term (9 years at minimum) or an emphyteotic leasing. Finally, SAFER can carry out some exchanges: if it appropriates, SAFER takes over isolated parcels or those being far away from the head office of exchanger’s farm, and yield him, in compensation, parcels neighboring his. Even if SAFER agencies can make freely purchases, they don’t have however access to the totality of agricultural land market, so that the market being accessible to them represents about 60% of the total agricultural land market. Furthermore, SAFER limits its purchases to the necessities of land improvement. The majority of sales of agricultural lands is carried out without any intervention of SAFER. The purchases of SAFER represent about 25 – 50 % of the market being on its access, and 15 – 35% of the total agricultural land market. 3.2. Functions and services of SAFER The different types of activities realized by SAFER can be divided into two main categories: - on the one hand, the techniques permitting to increase the capacity of production of the lands, being a part of the holding appraisal, - on the other hand, the techniques, contributing to the improvement or to the creation of buildings for residence and of farms as well as to the establishment of the infrastructure, necessary to the agronomic production, techniques, being a part of the equipment. The appraisal consists of the works for the improvement of the soil; clearance, leveling of embankments, different replanting and hydraulic works; cleaning up, drainage, irrigation ect. 8 The equipment consists of: work on the buildings; habitat, buildings of farms, different networks; water, electricity, telephone, and work for highway maintenance and special equipment. 3.3. The retrocession When the lands are being purchased, the Departmental Services of SAFER studied at the same time what would be their best destination. They search could taking into consideration the requirements of land improvement, whether it is right to enlarge certain farms, existing in the countryside, where the lands have been gained or new ones should be constituted. They observe whether these lands could be retroceded in the state or in the contrary, if they need the execution of improvement works. The Departmental Services draw up then the first project of retrocession being submitted to the opinion the Departmental Technical Committee, afterwards to the Administrative Board of SAFER for making the final decision, subject to the agreement of the Auditors of the Government. The retrocession represents the success of the action of SAFER agencies: they realize their mission of land improvement. 3.3.1. Nature and form of retrocession The retrocession is a result of SAFER action, which can be put on diverse forms. In all cases when SAFER can, re-sales the land within a few time after having purchased it. Often it can happen that the re-sale takes times. In reality the land and the farms can be kept in inventory for different reasons: - properties before being subject of improvement and important equipment, - properties added by new purchases permeating a better restructuration of the farms or realization a tailored action, - properties meant for constituting series of actions to regrouping lands or exchange them in perspective, - properties situated in the perimeter of works to be realized and being affected to this title as land inventory. The average time limit of land inventory made by SAFER is about 18 months. In this interval of time the lands can be put in temporary rent to farmers or to the future owners, if they are appointed. SAFER cannot keep lands in property during more than five years or ten years in certain particular conditions. This is an obligation declared by the law. A retrocession is characterized principally by the origin and nature of the retroceded property, by the way of retrocession and finally by the quality of the owner. 9 When the group of parcels comes from a single purchase, it can correspond with the entirety of the initial purchase – it is about like a transfer - or on the contrary with only one part of this purchase, this is then a plot or a fragmentation. Conversely, when a retrocession unity has been constituted from several purchases we speak about grouping together. When the parcels or properties are grouped together, due to these exchanges we speak about reshaping. The way of retrocession depends mostly on the way of purchase. In most of the cases every retrocession act succeeds to the transfer of property in favor of the farmer. Several cases can be distinguished: - the lands gained in property by SAFER, make subject of a sale for the attributer, - the acquisition realized by way of exchange admits in return an exchange in retrocession, - the properties gained in life annuity are retroceded in life annuity (except if SAFER proceeded to the constitution of capital for payment of an income). Nevertheless there are cases when the farmer is not obliged to become property of land retroceded by SAFER: - retrocession by SAFER of an emphyteotic lease (duration of 1 and 6 years) concluded, before with a village or with those having the rights to the sectional properties, - retrocession by SAFER to a non farming landowner, provider of capital engaging himself to take as a farmer the candidate designed by SAFER, - retrocession by SAFER to a Civil Property Company, type of Agricultural Land Group (G.F.A.) gathering a number of providers of capitals and consenting a lease to the candidate. 3.4. The land allocations of SAFER All farmers or future farmers can submit an application for candidature when SAFER carries out some retrocessions. For better information of the farmers an appeal for candidature is carried out by the way of press and bill-sticking at the local council. The notice posted up and published in the press indicates the nature of the properties for retrocession, the place where the farmers should present their candidature and the date limit of inscription. Only the candidatures received within the time limit will be examined by the consultative authorities of SAFER and only in the case if the candidates satisfy the requested general conditions. The candidates have to: a.) Justify the conditions of experience and of professional capacities determined by the order of the Minister of Agriculture. 10 b.) Possess the necessary qualities for a good exploitation of the allocations and to have the indispensable financial capacities, taking into consideration, namely, the characteristics of the farm and of the use of the soil. c.) Engage himself to respect the clauses of the specifications established possibly by the Company and to make farming activity personally for fifteen years at least, except substitution to the interested party of one of his descendants or of the spouse of one of them with approval of the Company and agreement of the Auditors of the Government. The farms can be yielded by the Company to persons engaging themselves to give them for renting with the approval of this Company and the agreement of the Auditors of the Government to candidates satisfying the defined conditions. The farms can also be allocated to the Agricultural Groups of Common Farming. Each SAFER agency is obliged to examine with care the candidatures received. The decisions are made according to the requirements of the land improvement, the received instructions and the qualities and abilities of the candidates. If the majority of the beneficiaries of the retrocession made by SAFER are farmers, other categories of persons - physique or moral – having an activity not always agricultural, can be attributers of SAFER. The following list presents the different types of attributers: - farmers, - associations of farmers and agricultural groups, - different Companies and Associations, Collectivities, Public Establishments, - individuals and provider of private capitals. 4. THE PRE-EMPTIVE RIGHT The Public Authorities have accepted the possibility for SAFER to acquire under certain circumstances agricultural land for sale. Though the pre-emptive right is neither automatic nor general nor absolute. The pre-emptive right was put into legal framework with a precise motivation, requiring the agreement of the commissioners of the government. The mandate at the SAFER is to be a co-responsible person for its utilization. The pre-emptive right of SAFER is always motivated by and its objective is: a.) to settle, re-settle or keep farmers at the land, b.) to extend the existing farms (at a limit of 4 MSI3) and to improve their plot structure c.) to preserve the equilibrium of agricultural enterprises (i.e. farms) when they are concerned by public interest works, 3 Four times the Minimal Surface of Installation 11 d.) to defend the family type of farms, e.) to fight against land property speculation, f.) to conserve the existing viable farms which could be threatened by the possibility of separating the land from farm and living buildings, g.) to valorize and protect the forest and improve the forestry structures within the framework of agreements with the state, h.) to protect the environment (Law 9/07/99). The pre-emptive right must not be used in the case of transactions including particularly: - co-inheritors, close relatives or co-indivisible of the seller, - a tenant or land renting farmer who works on the land for more than three years, - an expropriate farmer. It is important to make a remark: SAFER uses the preemptive right moderately, it rather prefers the friendly negotiations between the parties. SAFER is concerned in only 7 % of total land acquisitions. Under no circumstances SAFER can either be expropriates or oblige anybody to buy or sell. 4.1. The impacts of the pre-emptive right For each agricultural property based transactions notaries send a notification or a Declaration of Intention of Alienate (D. I. A.) to SAFER specifying the nature and the place of the asset, the name and position of the buyer and the seller, as well as the selling price. SAFER has two months of delay for the answer, which can be reduced, if the claim for accelerated procedure is accepted by SAFER. SAFER introduced a consulting process. If a farmer is interested in the asset he can ask SAFER to put together a pre-emptive file. After the decision taken by the board of directors of SAFER those, candidates who have been refused and as well as the initial buyer are informed in written form about the reasons for the decision of SAFER and on the future of the given asset. After the decision it is highly recommended to satisfy those people who did not get any advantage during this operation, especially those who have been refused. This act can be done by involving them into another operation in the same sector. 4.2. The criteria for land allocation The best method to choose the person, for whom the purchase of the new land provides, improvement in farmland structure, work conditions and living standard in his family life. Also it contributes for him the improvement of his professional experience and his possibilities for financing the debts. 12 The Article R.142-2 of the Rural Law defines the criteria for the allocation of property, bought by SAFER: "The assets are to be allocated to those candidates, physical persons or legal entities who are able to assure management and valorization of the assets with the most chance for success and also to those for whom the intervention of SAFER can provide the most interest both from economic and social point of view regarding the situation of their families, their financial capacity for the acquisition and management of the asset (property), the existence of their non-agricultural income, their professional competencies and their personal quality. Each candidates must respect the clauses of an action plan (tender offer) the eventually established by SAFER.. SAFER can cede the properties for the persons who can undertake to rent them. SAFER can do it by using a rural rent document or an agreement with those who are willing to buy, either they are physical persons or legal entities, received the agreement of SAFER only in the case when if this operation contributes to the improvement of the farm, to the settling of the farmer or to keeping the farmer at the farm." It is highly recommended to promote: - the settling of a young farmer, a supplanted farmer, an expropriate farmer, etc, - the expansion of a farm comparing with its initial size, regarding the distance of the requested land from the initial farm, the age of the farmer and the future of his farm (is there any chance for inheritance (succession of the farmer) or not), as well as the possibility for regrouping or changing plots between neighboring farmers, - the development projects of the given community or of an other group, generally within the framework of a contract signed with the community, - the protection of the nature and the environment. The objective of SAFER is not to resell the land for those who offer the most for it. The action of SAFER is carried out at a departmental level and context. The punctual interventions are the most frequent and are realized for the benefit of agriculture, likes: a.) reshaping of land parcels as a farm structure development by exchange, b.) enlargement, extending the farm size of (less than 1 hectare is adjustment, more than 1 hectare is “etoffement” if the enlargement more than 50% of initial surface), c.) installation, this is a retrocession of a farm unit to an agricultural producer. The interventions in groups: these actions are succeeding in the restructuration of extended surfaces and concerning great number of farmers. These interventions are made often for long term ( 2-5 years), realizing important means from SAFER side and comprising several elementary operations (as purchasing, works and retrocession). These interventions can be preceded by studies: studies of micro analysis or local 13 studies of land structure (creation of farmer files, establishment of situation plans of farms),models of growing of farms, etc. When SAFER is the only organization for intervening on land structures, it is meant about concentrated interventions. Concentrated interventions without systematic appraisal, focusing on four great types of interventions: a) consolidation of land parcels at large scale in a whole sector of a village, without increasing or extended the size of the farms, b.) restructuration and the increase of the surface of the farms, due to a combined policy of sales and exchanges made by SAFER, beginning by multiple acquisitions, spreader in the time, c.) reconstitution of one or more farms, d.) realization of different actions, consisting of some increase of multiple surfaces and constitution of new farms. Concentrated interventions with systematic appraisal: these actions consist of important investments such as irrigation, clearance, cleaning up, drainage. The extra-agricultural interventions, the transfer of agricultural land into non- agricultural purpose are increasing, due to the industrial and urban development, infrastructure and tourism extension. It has two types; first one is the private benefit, second one is the common benefit. In this framework, SAFER facilitates the mobility of agricultural land, has got a land inventory, maintains the structure of agricultural farms, re-installs the expropriated farmers. Furthermore SAFER protects the farmers and the collectivities against the shooting up of prices and unwanted speculations. 5. RESULTS OF FARM STRUCTURE POLICY IN FRANCE The French experience shows the systematic building of a multifunctional agriculture, and family size model, based on a clear and transparent structural policy. One of the main elements of this constructive policy is the looking for a national consensus about the common vision of the agriculture sector. The common word meaning is the continuos dialog among the main players and interest groups of the rural society. There is an important lesson for each EU candidates countries that is a good agricultural policy is based on the national agreement of the players of the sector. The State cannot be privileged as the only responsible player of the agricultural sector, the interest harmonization can be managed by a consultation proceedings which can result the agreed consensus. During the last fourteen years the structural policy was discussed a lot in France where a big competition has been between agricultural and non-agricultural use of land. These 14 discussions resulted two laws, one was about the status of land lease conditions of minimum nine years, providing a strong security for farmers since 1946. The other law was the Law of Agriculture Orientation in 1962 which is the basis of Agriculture policy with clear objectives included structural goals. The farm structure policy in the French case bases on four pillars of State involvement, providing legal and institutional framework for land owners and land users. The first pillar was the creation of SAFER network providing a legal regulation. This regulation established a series of instruments to realize the objectives of the Agricultural Policy. SAFER network is functioning and its results are described in this study. The main philosophy of the establishment of SAFER was based on the fact that, offer and demand in market economy in the field of land market do not permit to succeed to find a solution justified, socially and economically at the same time. The principle of SAFER is to intervene in an authoritarian way in the land market by controlling and guiding the land property structure and the related land transactions via the different types of interventions of SAFER. The main priorities of SAFER’s activities are young farmers’ installation and enlargement of the existing farms. From the time of its creation, SAFER was involved in the allocation of more than 3 million hectares of land. The total surface of agricultural land is 30 million hectare including 18 million ha cultivated land. The second pillar is the regulation of tenant farming. The tenant farming regulation fixes the relations between land owner and tenant, particularly as to the minimum duration of the renting (9 years, with the possibility of 9 years more extension) and the tariff categories of renting depending on the region and the quality of the land. These obligations have social justice and economic efficiency on consolidating the land use by keeping the renting fee at a relatively low level in relation with the level of interest rate and inflation. These renting conditions mean that the 679 000 actual farmers were not obliged to use their financial capacity for buying the cultivated land by themselves, but have got the possibility to put their money in investment and technical development. Nowadays 60% of agricultural land is leased and 40% is owned. In the last fourteen years the situation changed a lot in the French agriculture and for that reason the need for revision of a regulated relation between land owner and tenant farmer arose in the last period for the sake of creating a better balance between them. SAFER can provide temporarily location contract for all agricultural properties of the duration of between 1 and 6 years with one renewal. In this case SAFER can find a registered local farmer for using the property and guarantee the payment of the equivalent of the renting fee. There is a relevant solution for the owner of the property having some reasons for not to immobilize his property at long term such as: selling it 15 within a short period of time, intention to arrange the inheritance, keeping the property for the installation of one of the family members, in the case of hesitation, the avoiding of all management worries and so on. This kind of renting is connected with some fiscal advantages. The third pillar is the structural control which is difficult to understand because this is a French specificity. According to the actual French regulations one can buy agricultural land without any limits and up to a certain limit he can farm without claiming for any authorization but above this limit he is obliged to have a certain farming authorization. In French this is called as “Control de structure” – structural control. The control includes the size of property and rent. The structural control sets the limits for farms for the sake of neither to expand too large nor to become too small in size. Generally, in most French Departments the limit of the size is varying according to the agricultural activity (e.g. 120 hectares for cereals). Finally it can be concluded that the farmer is on one side and the farm is on the other. In this field the decision is made by the prefect. His decision is based on the regulation and the opinion given by the Departmental Committee of Structural Control for the claim of the submitter. For example, if the Committee of Structure concludes that there is a young farmer who does not have a viable sized farm and needs more land, in that case the Committee refuses the application of the other submitters. This principle is based on the fact that the land market cannot create a viable social and economic equilibrium. As a result of this regulation the small sized farms are favored by limiting the expansion of larger sized farms and also limiting the right of practicing the farming profession. It is also important to mention that for sugarbeet and milk the right of production is also limited by the quotas and a farmer is permitted produce more only in the case when his neighbor produced less. These limitations are linking to the land surface too. In the case when the farmer wants to be retired he has to announce his time of retirement two years before the planned date to be able to plan his farm transfer according to the criteria of the regional structural policy . The fourth pillar of the property structure is to avoid farmers’ departing from the regulation and the applicable laws against the expanding of the farm size. For this reason the state has the right to control the movements of company shares within the given company of farmers including the land owners structure and applying the structural policy. The structural policies can be commented in the following fields: The State intervenes in the agricultural land market by an authority way because the rules of competitive market are playing in a restrictive level. According to the liberal opinion the market regulates itself without any external intervention. On the other hand policy makers at the French Ministry of Agriculture and the representatives of 16 the Farmers’ Organizations defend the idea of intervening into the market because they consider that it is done for a good objective due to the fact that the land market is mostly adapted to the local economic and social conditions of offers and demands. Furthermore the total agricultural land offer is relatively stable, and cannot be increased in case of increasing demand. The change of the land property is slower than other property, this is the raison why sellers and buyers are occasionally participating in the market. SAFER information and guidance services help the transfer and the rent of land, according to the priorities. Policy makers acknowledge that the agricultural sector is over administrated and is not perfect in all cases. However, regarding the good results, it can be said that the French agriculture has reached a relevant structure, capable to utilize EU subsidies and it is technically developed and innovative. Family farms are generally medium sized which should be viable economically. Only the major farmers organization (FNSEA) has representative right in different commissions and the beneficiaries of its market intervention are the members of this farmers’ federation. Pluralism of farmers’ organizations must be favored and the representing privilege of the only one federation must be modified. Thus an improvement of decision making could be reached having more balanced and justified decisions and possibilities for corruption could be further decreased. 6. CONCLUSION LESSON FOR THE CENTRAL AND EASTERN EUROPEAN COUNTRIES SAFER – Organization with the right to buy land in order to retain it for agriculture use, during 40 years, contributed in a positive way to improve the family farm structure in France. In any transition economy the full adaptation of the French experience is very restricted. Analyzing the major results, the main elements are the following: - democratic process and conditions are evolving, the necessary institutions and policy making processes are under continuos changing, the good practice of creating consensus and relevant compromised solutions in policy making and influencing process has not always worked well, - there are certain tendencies of governments for a strong centralization, sometimes in a subjective way, which might be a real obstacle to achieve the expected results in a full implementation of the SAFER network concept and can create artificially a strongly over administrative and expensive structure, without strong democratic control and transparency, - among landowners the expected future benefit from the agriculture land is very uncertain actually, including the adaptation of the CAP subsidies and the date of EU accession. There is a furthermore dilemma, how EU production rights as to the 17 quota and the set a side system will be implemented and impacted the creation of land market, - it will take more time to establishing an efficient land market conditions, for creating more dynamic agricultural land transactions. The motivating factors are not existing in significant level among the landowners, and in the land market is not always clear why the land offer for sell is very limited. That is why a relevant institution network is needed to provide information and fiscal channel advantages in a transparent way, linked with agricultural sector priorities, - there are a few fields where the presented French experience can be suggested for adaptation partially, based on local conditions and specificity, for example, the guided State involvement in the agricultural land market transactions can be relevant in different fields, like environmental zone creation or highway investment preparation or privatization of certain state agriculture land or introduction of the life annuity or temporary leasing options for aged owners of agriculture land, - the priority to help young farmers installation in a viable sized farm or the early retirement also can be followed as a good element of SAFER’s policies and services, - the transparent information system about land owner and land leasing conditions, helped by the State and professional institutions, would be an important supportive element to create less ambiguous agricultural land market situation and more healthy motivation to sell or buying land, - the spontaneous land owner concentration and family size farm development started gradually in most of the transition countries. The States are trying to influencing directly or indirectly the land transactions for achieving the viable farm size. The results are not promising yet, due to the facts like; lack of financing resources and the missing institution network for providing market information and organizing the land transactions and exchanges, that is why a relevant institutional network establishment is suggested. Summarizing the State roles in the agricultural land market development, the direct interventions can be done through regularization of land transactions by price control and taxation and leasing conditions. The land market indirectly can be impacted by the macroeconomic activities including job creations, purchasing agriculture land for infrastructure investments, interest rate policy, inflation policy etc. All State interventions which can impacting the factor markets, at the same time will influence the land market as well, furthermore agricultural subsidies will be capitalizing in land prices. In the developed economies State does not leave off the land market, its objectives are multiple, like: impacting the farm structure (concentration, limiting the land fragmentation), trying to limit the transfer of agricultural land to non - agricultural purposes, protecting the soil quality and regulating land uses. Any transition economy has not the same responsibility and all lessons can be helpful. 18 The French experience can provide useful positive and negative examples for all candidate countries for a successful integration, depending naturally on national priorities and reflecting the natural, economic and social features of the given country. 7. REFERENCES 1. Hubert Buchou, Bernard Collet, Guy Robilliard, Michel Rougier (1999): Partager la terre, L’histoire des SAFER, Societe Atlantique d’Impression, pp.125. 2. Szűcs István (1999): Az állam szerepe a földbirtokpolitika alakításában, Állami szerepvállalás az agrárszférában, Magyar Tudományos Akadémia, Agrártudományok Osztálya, pp. 19-40. 3. Szűcs István-Udovecz Gábor (Szerk.): Az agrárgazdaság jelenlegi helyzete és várható versenyesélyei. Agrárgazdasági Tanulmányok, AKII, Budapest, 1998/16. 4. Tanka Endre (1993): A földbirtokpolitika alapkérdései az átalakuló mezőgazdaságban. AKII, Budapest. 5. Csáki Csaba-Zvi Lerman (2000): Poland Rural Factor Markets Study: Land Module, ECSSD. Working paper, World Bank. Washington D.C. 19
"FUNCTIONING OF THE LAND FACTOR MARKET"