Public policy for the promotion of family forms in Italy: The experience of the Fund for the formation of Peasant Property

Italian public policy, as well as the European Community in general, especially since the end of World War II, has emphasized the socio-economic and political value of the family farm. Along with, and subsequent to, the regionalised land redistribution via expropriation in key depressed areas in the early 1950's, subsidized credit and fiscal relief have helped promote the formation or enlargement of hundreds of thousands of family-sized farms via the market places A special agency, the Cassa per la Formazione della Proprieta Contadina, was created to act as intermediary between potential sellers and buyers and as long term, low-interest lender to about 20,000 individual buyer and 166 farming cooperatives. The implicit capital grant element from 1948 to 1991 has fluctuated between 60 and 70 percent and the average grant element per client family has been equivalent to about US$220,000 at 1991 prices, largely owing to the negative real interest rate during the period of high inflation. Actual and hypothetical case studies demonstrate how, despite the largely favourable "terms of trade" between land prices and farm wages since the 1960s, many borrowers would not have been able to maintain a standard of living above the poverty line if they were to have paid the full market price for both the land and the credit. This appears to validate the need for a grant element in support of the public strategy;the size of the grant element is a political decision based on economic and fiscal realities.