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FUNCTIONING OF THE LAND FACTOR MARKET

VIEWS: 4 PAGES: 19

									    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.




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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



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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



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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



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    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




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    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.




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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.




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