Transformation debt of agricultural enterprises in the Czech Republic

The average level of debts of agricultural enterprises in the CR is several times higher than in countries with established market economy. The main source is so-called transformation debts connected with the transformation of ownership and enterprise structure in the Czech agriculture after 1989. This specific form of farm indebtedness is a great debt burden with very different impacts on the particular categories of agricultural enterprises. A specific debt structure is characteristic of cooperative farms. The existence of many of them is directly endangered by bankruptcies in connection with unsettled payable liabilities from the ownership transformation towards entitled persons-non-members. Higher subsidies after the CR accession to the EU may considerably improve the financial situation of Czech agricultural enterprises, but the debt burden from transformation will remain a great handicap for a longer time and it will constrain the increase in competitiveness of many of these enterprises.