- Email: [email protected]
Paying the Hungarian cooperative farmer
WILLIAM
F. ROBINSON
Paying the Hungarian Cooperative Farmer
Hungarian agriculture experienced three attempts at collectivization before the cooperative became the country’s predominant agricultural production unit and a viable economic institution. During the first two collectivization drives, under Matyas Rakosi (1948-1953 and 1955-1956), the method of payment was based almost entirely on the Soviet rrududen model, and thus the peasant was simply a residual claimant on cooperative income. The sole exception to this was the system introduced in semiclandestine fashion in 1953 at the Red Star Collective at Nadudvar, near Debrecen in eastern Hungary. The Nadudvar system was a combination of the production-labor contract and wage-payment methods under which an individual, family, or unit was assigned to a specific area of cropland to carry out certain agreed-upon functions. In return, the peasants involved received a fixed number of labor-day units determined in advance, as well as a specific percentage of the total crop produced on the land, no matter what its size. The cash payment for labor-day units was based on cooperative income net of expenses but was distributed during the growing season. The payment in kind could either be sold by the peasant or be used to feed livestock on his plot. The Hungarian revolution of October-November 1956 resulted in the effective dissolution of the cooperative farm network, and it was not until 1959 that a new collectivization drive began. Once cooperatives were in full operation again-in the spring of 1961-it was STlmIES IN coMP.4IuTIvE
COHMUNISH
VOL. IX
No. 3, AUNMN
1976. 210-274
REWARDING
THE
AGRICULTURAL
WORKER
271
not long before the Kadar leadership allowed them to institute a series of incentive programs for the purpose of increasing agricultural output. Owing to its previous success, albeit on a limited number of farms, the Nadudvar system was adopted by the majority of the newly founded cooperatives. Because it was most suitable for the more profitable agricultural units and for labor-intensive production (such as row crops and horticulture), however, variants of the system soon appeared. One of the most common variants was direct sharecropping-a form of wage payment retaining some aspects of the productionlabor contract method. Under this system, cooperative members did not earn labor-day units at all, but were instead given a higher percentage of the crop yield than under Nadudvar. As in the latter system, however, individuals and families were assigned specific fields to tend and sharecropping was limited to labor-intensive spheres of work. This method was most often used on the poorer cooperative farms because it promised greater security to the peasant, who, under Nadudvar, could theoretically receive no payment whatsoever for his labor-day units. According to Fred E. Dohrs,’ in 1965 about 25 percent of the Hungarian cooperatives (most of them poor farms) were using direct sharecropping, while approximately 65 percent were using the Nadudvar system. Dohrs has the following caveat, however : These figures require some qualification. Most farms have a state-imposed requirement to grow wheat on about 25 to 35 per cent of their arable land, so that the Nadudvar system is not applicable to these fields. A large number of farms using Nadudvar methods may also have other incentive systems, especially in their livestock and horticulture sectors. These figures do suggest that something more than half of all row crops. . . grown in Hungary [at the end of 19671 are being cultivated by the Nadudvar tenancy system.
Still another method of payment was the “efficiency labor-day unit,” under which labor-days were awarded not on the basis of the kind of work performed, but on the basis of the quantity or value of the crop produced. Once again, individuals and members were assigned specific fields to work, although the system was also applied in dairy and livestock cooperatives. Despite the fact that it was more 1. See his “ Incentives in Communist Agriculture: The Hungarian Models,” Slavic Review, Vol. 27, No. 1 (March 1968), pp. 23-38, for more details on cooperative payment methods in the early and mid-1960s.
272
STUJXES
IN
COMPARATIVE
COMMUNISM
flexible than the Nadudvar system, the efficiency labor-day method did not become widespread, most probably because it was essentially a residual claimant system and did not guarantee even minimal payment. It was, however, used for livestock workers in combination with bonus payments based on both quality and quantity and adjusted to different types of cattle and breeds of hog. The various incentive systems developed in postrevolutionary Hungary, coupled with the abolition of compulsory deliveries and the elimination of state production directives, considerably increased agricultural output and peasant incomes. In fact, by the end of 1967, total per capita income among the cooperative peasantry amounted to 97.6 percent of that of the industrial blue-collar worker. Although peasant earnings included remuneration from the private plot, this was nevertheless an historic achievement for Hungarian Communist agriculture. Indeed, since the indirect social benefits provided to the cooperative sector were only three-fourths those granted industrial workers, it meant that the cooperative farmer actually had slightly more cash at his disposal than his urban counterpart2 The introduction of the New Economic Mechanism (NEM) on January 1, 1968, accelerated this process even further, for the NEM did away with previous incentives and established an almost pure wage-payment system. Each cooperative now determines how much its members are to be paid. Of this sum, usually 80 percent is guaranteed in the form of monthly wages, with the remaining 20 percent distributed at the end of the year, depending on the amount of income remaining after expenses have been met. If the cooperative has had a profitable year, the individual member may receive a share of the profits above and beyond the 20 percent due him.S In any event, the amounts to be distributed among the various cooperative funds (participation-wages and profit shares-investment, social-cultural, and so on) are determined by vote at the general membership meeting. To qualify for the full payment of his wages, as well as for a private plot, pension benefits, and other social allowances, the individual member must complete a minimum number of ten-hour working days (not labor-days) per year (150 for men, 120 for women). Since many cooperatives find it difficult to offer their members suffi2. See William F. Robinson, The Pattern of Reform in Hungary (New York: Praeger, 1973), pp. 318-321. 3. Poor cooperatives often elect to guarantee 100 percent of the wages, which are met in part by state subsidies, rather than risk losing a portion of them on the off-chance of a profitable year. If this method is chosen, the members forgo any claim to bonuses or profit shares.
REWARDING
THE
AGRICULTURAL
WORKER
273
cient employment on the common farm to qualify for all benefits, the government has allowed them to introduce alternative methods to meet the requirements of the law. One such method has been the development of ancillary cooperative activities: the farm engages in nonagricultural pursuits to supplement its agriculturally derived income. These activities may encompass construction, food-processing, transport, service, trade, light, and even (under certain circumstances) heavy industry. All work done in these spheres is credited to the member’s account as if it were labor performed on the common farm itself. The success of this device is reflected in the fact that approximately 30 percent of cooperative gross income is now derived from ancillary activities. The second method introduced under the NEM is to allow certain types of work done on the private plot to be credited toward the member’s mandatory yearly total of working days. Under this system, a contract is concluded between the cooperative and the private plot owner according to which the private plot farmer agrees to sell the fattened animals he has raised through the cooperative. In return, he not only receives the money for his livestock but also is credited with a specified number of working days depending on the type and weight of the animal. There are variations of this system, of course. In some cases, the private plot farmer raises his own animals; in others they are provided by the co-operative. Often the private plot farmer receives the value of his working day in cash and/or kind in addition to the sale price for the animals. Usually the cooperative arranges in some way to provide the necessary fodder, grass land, modem machinery, equipment, veterinary care, transportation, and reconstruction of stables and pens. Sometimes this is done largely free of charge. . . sometimes at cost or on credit. In one case. . . the collective has offered women who cannot participate in common farming a contract to produce a specified quantity of goods on private plots. In return they will be credited with the. . . working days. . . necessary for a woman’s pension, and will receive all the rights of a co-operative member, including social benefits.‘
The wage payment system introduced with the NEM has contributed to a new dynamism in the agricultural sector, as well as greatly improving morale among the cooperative peasantry. At the end of 1969, the total per capita income of cooperative members exceeded that of industrial workers by 0.1 percent, while cash income was 4 4. Robinson, op.
cit.,
pp. 117-118.
274
STUDIES
IN
COMPARATIVE
COMMUNISM
percent greater.5 Between 1970 and 1972, real peasant incomes continued to rise at a more rapid rate than those in the industrial sector, despite the floods of 1970 and the imposition of restrictions on ancillary activities by the state. In fact, it was only government intervention in the form of central wage hikes for the blue-collar worker that prevented a continuation of this trend in 1973 and 1974. The future of Hungarian agriculture is hardly free of problems; yet, it seems true to say that it is still in a period of growth and development and that it has entered a period during which both results and prospects are better than they have ever been under the postwar Communist system.
5. See the Central Statistical Office’s study, A lakossdg joevedelme 6s 19684969 [Income and Consumption of the Population 196% 19691 (Budapest, September 1970). 96 pp.
fogyasztdsa
F. ROBINSON
Paying the Hungarian Cooperative Farmer
Hungarian agriculture experienced three attempts at collectivization before the cooperative became the country’s predominant agricultural production unit and a viable economic institution. During the first two collectivization drives, under Matyas Rakosi (1948-1953 and 1955-1956), the method of payment was based almost entirely on the Soviet rrududen model, and thus the peasant was simply a residual claimant on cooperative income. The sole exception to this was the system introduced in semiclandestine fashion in 1953 at the Red Star Collective at Nadudvar, near Debrecen in eastern Hungary. The Nadudvar system was a combination of the production-labor contract and wage-payment methods under which an individual, family, or unit was assigned to a specific area of cropland to carry out certain agreed-upon functions. In return, the peasants involved received a fixed number of labor-day units determined in advance, as well as a specific percentage of the total crop produced on the land, no matter what its size. The cash payment for labor-day units was based on cooperative income net of expenses but was distributed during the growing season. The payment in kind could either be sold by the peasant or be used to feed livestock on his plot. The Hungarian revolution of October-November 1956 resulted in the effective dissolution of the cooperative farm network, and it was not until 1959 that a new collectivization drive began. Once cooperatives were in full operation again-in the spring of 1961-it was STlmIES IN coMP.4IuTIvE
COHMUNISH
VOL. IX
No. 3, AUNMN
1976. 210-274
REWARDING
THE
AGRICULTURAL
WORKER
271
not long before the Kadar leadership allowed them to institute a series of incentive programs for the purpose of increasing agricultural output. Owing to its previous success, albeit on a limited number of farms, the Nadudvar system was adopted by the majority of the newly founded cooperatives. Because it was most suitable for the more profitable agricultural units and for labor-intensive production (such as row crops and horticulture), however, variants of the system soon appeared. One of the most common variants was direct sharecropping-a form of wage payment retaining some aspects of the productionlabor contract method. Under this system, cooperative members did not earn labor-day units at all, but were instead given a higher percentage of the crop yield than under Nadudvar. As in the latter system, however, individuals and families were assigned specific fields to tend and sharecropping was limited to labor-intensive spheres of work. This method was most often used on the poorer cooperative farms because it promised greater security to the peasant, who, under Nadudvar, could theoretically receive no payment whatsoever for his labor-day units. According to Fred E. Dohrs,’ in 1965 about 25 percent of the Hungarian cooperatives (most of them poor farms) were using direct sharecropping, while approximately 65 percent were using the Nadudvar system. Dohrs has the following caveat, however : These figures require some qualification. Most farms have a state-imposed requirement to grow wheat on about 25 to 35 per cent of their arable land, so that the Nadudvar system is not applicable to these fields. A large number of farms using Nadudvar methods may also have other incentive systems, especially in their livestock and horticulture sectors. These figures do suggest that something more than half of all row crops. . . grown in Hungary [at the end of 19671 are being cultivated by the Nadudvar tenancy system.
Still another method of payment was the “efficiency labor-day unit,” under which labor-days were awarded not on the basis of the kind of work performed, but on the basis of the quantity or value of the crop produced. Once again, individuals and members were assigned specific fields to work, although the system was also applied in dairy and livestock cooperatives. Despite the fact that it was more 1. See his “ Incentives in Communist Agriculture: The Hungarian Models,” Slavic Review, Vol. 27, No. 1 (March 1968), pp. 23-38, for more details on cooperative payment methods in the early and mid-1960s.
272
STUJXES
IN
COMPARATIVE
COMMUNISM
flexible than the Nadudvar system, the efficiency labor-day method did not become widespread, most probably because it was essentially a residual claimant system and did not guarantee even minimal payment. It was, however, used for livestock workers in combination with bonus payments based on both quality and quantity and adjusted to different types of cattle and breeds of hog. The various incentive systems developed in postrevolutionary Hungary, coupled with the abolition of compulsory deliveries and the elimination of state production directives, considerably increased agricultural output and peasant incomes. In fact, by the end of 1967, total per capita income among the cooperative peasantry amounted to 97.6 percent of that of the industrial blue-collar worker. Although peasant earnings included remuneration from the private plot, this was nevertheless an historic achievement for Hungarian Communist agriculture. Indeed, since the indirect social benefits provided to the cooperative sector were only three-fourths those granted industrial workers, it meant that the cooperative farmer actually had slightly more cash at his disposal than his urban counterpart2 The introduction of the New Economic Mechanism (NEM) on January 1, 1968, accelerated this process even further, for the NEM did away with previous incentives and established an almost pure wage-payment system. Each cooperative now determines how much its members are to be paid. Of this sum, usually 80 percent is guaranteed in the form of monthly wages, with the remaining 20 percent distributed at the end of the year, depending on the amount of income remaining after expenses have been met. If the cooperative has had a profitable year, the individual member may receive a share of the profits above and beyond the 20 percent due him.S In any event, the amounts to be distributed among the various cooperative funds (participation-wages and profit shares-investment, social-cultural, and so on) are determined by vote at the general membership meeting. To qualify for the full payment of his wages, as well as for a private plot, pension benefits, and other social allowances, the individual member must complete a minimum number of ten-hour working days (not labor-days) per year (150 for men, 120 for women). Since many cooperatives find it difficult to offer their members suffi2. See William F. Robinson, The Pattern of Reform in Hungary (New York: Praeger, 1973), pp. 318-321. 3. Poor cooperatives often elect to guarantee 100 percent of the wages, which are met in part by state subsidies, rather than risk losing a portion of them on the off-chance of a profitable year. If this method is chosen, the members forgo any claim to bonuses or profit shares.
REWARDING
THE
AGRICULTURAL
WORKER
273
cient employment on the common farm to qualify for all benefits, the government has allowed them to introduce alternative methods to meet the requirements of the law. One such method has been the development of ancillary cooperative activities: the farm engages in nonagricultural pursuits to supplement its agriculturally derived income. These activities may encompass construction, food-processing, transport, service, trade, light, and even (under certain circumstances) heavy industry. All work done in these spheres is credited to the member’s account as if it were labor performed on the common farm itself. The success of this device is reflected in the fact that approximately 30 percent of cooperative gross income is now derived from ancillary activities. The second method introduced under the NEM is to allow certain types of work done on the private plot to be credited toward the member’s mandatory yearly total of working days. Under this system, a contract is concluded between the cooperative and the private plot owner according to which the private plot farmer agrees to sell the fattened animals he has raised through the cooperative. In return, he not only receives the money for his livestock but also is credited with a specified number of working days depending on the type and weight of the animal. There are variations of this system, of course. In some cases, the private plot farmer raises his own animals; in others they are provided by the co-operative. Often the private plot farmer receives the value of his working day in cash and/or kind in addition to the sale price for the animals. Usually the cooperative arranges in some way to provide the necessary fodder, grass land, modem machinery, equipment, veterinary care, transportation, and reconstruction of stables and pens. Sometimes this is done largely free of charge. . . sometimes at cost or on credit. In one case. . . the collective has offered women who cannot participate in common farming a contract to produce a specified quantity of goods on private plots. In return they will be credited with the. . . working days. . . necessary for a woman’s pension, and will receive all the rights of a co-operative member, including social benefits.‘
The wage payment system introduced with the NEM has contributed to a new dynamism in the agricultural sector, as well as greatly improving morale among the cooperative peasantry. At the end of 1969, the total per capita income of cooperative members exceeded that of industrial workers by 0.1 percent, while cash income was 4 4. Robinson, op.
cit.,
pp. 117-118.
274
STUDIES
IN
COMPARATIVE
COMMUNISM
percent greater.5 Between 1970 and 1972, real peasant incomes continued to rise at a more rapid rate than those in the industrial sector, despite the floods of 1970 and the imposition of restrictions on ancillary activities by the state. In fact, it was only government intervention in the form of central wage hikes for the blue-collar worker that prevented a continuation of this trend in 1973 and 1974. The future of Hungarian agriculture is hardly free of problems; yet, it seems true to say that it is still in a period of growth and development and that it has entered a period during which both results and prospects are better than they have ever been under the postwar Communist system.
5. See the Central Statistical Office’s study, A lakossdg joevedelme 6s 19684969 [Income and Consumption of the Population 196% 19691 (Budapest, September 1970). 96 pp.
fogyasztdsa