Agrarian reform I: re-division of land

The Republic of Latvia was proclaimed only one week after the end of World War I. Shortly after a radical Agrarian Reform, which envisioned land subtraction from manors to farmers and peasants with little or no land, was made up. After WWI, manors owned almost half of the agricultural land. The average size of the manors were around 2000 ha, some of them reaching an area of several tens of thousands hectares. Land owned by farmers constituted 38% of the land, while state owned land only 10%. As a result of WWI, the population of Latvia shrunk by one third, to 1,6 million, compared to the situation before the war. 1,2 million was rural. The large percentage of rural population was due to the evacuation of industry from cities to Russia.

The main aim of the reform was establishment of historical justice and not economic efficiency. Expropriation of land was justified by the fact that ownership of manors was established through inheritance. One of the main objectives of the reform was to maintain peace, since many farmers did not possess any land and were revolutionary minded.

State Land Fund (Valsts Zemes Fonds) was established for land provision to new farmers or for the enlargement of small farms. The fund included all state owned land and expropriated land from manors and forests. In total, the fund constituted 3,4 million hectares or 52% of total land. Large share of land was gained from private manors. The land which was sold to peasants as a result of the abolition of serfdom, was not incorporated into the fund. 

The government aimed to provide everyone who wanted to sustain a family through agriculture with enough land. Although the plan was never entirely executed, it was planned to give new farmsteads minimum 15 ha to maximum 22 ha of land in order to fit the abilities of one family to cultivate the land.

Farmers who previously owned land got their former properties back. Lands varied in size from 2 to 20 ha for the 'new farmers', whereas the 'old farmers' had much larger lands. There wasn't a clear plan on how to keep helping the new farmers and because there wasn't an existing system it was hard for young farmers to survive. Eventually due to the situation in the market, quality of land, expensive loans etc. majority of the new farmers sold their lands to the old farmers and became their employees.

During the 1920's numerous people moved from cities to the countryside to work in the farms. However, less than 20% were paid employees, the rest of the workers were owners of the farms or family members of the owners. Due to the fact that during the 30s a large part of more wealthy farmer children did not want to remain and work in the countryside, small farmsteads cultivated by one family lacked workforce. As a result, thousands of workers were imported from Poland and Lithuania. The state paid the richer farmers to lend their machinery to the poorer farmers.

Already at that time, the cost of locally grown food compared to imported products wasn't competitive. Nevertheless, farmsteads had the ability to sell their produce on the market and build up a form of self sovereignty. Cereals, cattle breeding, dairy farming, cultivation of linen developed gradually. Dairy and meat (pork) was exported.