Determinants of Commercial Orientation and Sustainability of Agricultural Production of the Individual Farms in Romania

Subsistence farming, a widespread phenomenon in developing countries, emerged as well in Central and East European and former Soviet Union countries during their transformation process from a centrally planned to a market economy. Romania is one of the Eastern European countries with a large share of subsistence farmers where the commercialization of agriculture could be a means of reducing rural poverty and increasing the competitiveness of agriculture, although with possibly detrimental effects on the environment. The study examines which constraints should be addressed to promote commercial orientation and how commercial orientation and ecological sustainability are related. Based on an agricultural household survey in 2003 and with the help of econometric analysis, the research finds that, against the conventional wisdom, in the current Romanian context commercial orientation and ecological sustainability are positively related. Moreover, commercial orientation is negatively influenced by high transaction costs related to the lack of demand from processing factories and wholesalers as well as lack of cooperation.