In
this context, foreign observers adopted a wait-and-see attitude toward
the changes in collective farm organization and in the method of payment
to farmers introduced in January 1971 (see Organization, this ch.). They
nevertheless expressed doubt about the ultimate efficacy of these
measures because the income of farmers would still remain far below that
of industrial workers.

INVESTMENT AND CREDIT

Investment

Investment in agriculture has been rising steadily, reaching an annual
volume of almost 13 billion lei in 1970. The share of agriculture in
total investment, however, declined from 19.5 percent in the 1961-65
period to 15.8 percent in the years 1966 through 1969. In relation to
industrial investment during the same periods, investment in agriculture
declined from 40 to 30 percent. Under the Five-Year Plan (1971-75),
agriculture is to receive investments of at least 100 billion lei--an
amount that is twice as large as the actual investment in the years 1966
through 1970 and that represents a somewhat larger share of total
investment than was allocated to agriculture in that period.

No information is readily available on the proportion of the total
investment used for the replacement of wornout assets and for the
expansion of productive facilities. In the 1966-69 period replacement
capital constituted about 30 percent of investments; in 1969 alone the
proportion was as high as 46 percent.

The largest part--and a rising proportion--of the agricultural
investment has been financed by the state; collective farms supplied the
balance out of their own income. The share of state funds in the total
agricultural investment increased steadily from about 66 percent in 1963
to 80 percent in 1969; this proportion is to be maintained during the
Five-Year Plan (1971-75). Investment in collective farms has also been
increasingly financed by the state through long-term credits; the share
of government credits rose from 13 percent in 1965 to 35 percent in
1969. Investment out of the collectives' own funds remained stable
during this period, at from 2.2 billion lei to 2.4 billion lei per year.

State farms have received a disproportionate amount of investment--38
percent in the 1965-69 period, as against 34 percent for collective
farms. The investment share of collective farms during this period
declined from about 38 to 30 percent of the total. On the basis of
farmland acreage, investment in collective farms in 1969