Regular readers of this column (to both of you, my thanks - you know who you are) will have noted a certain fixation with the condition of agriculture here in Bulgaria. More specifically, the condition created by the lack of a farmland market. Perhaps it is past time for me to give up my modest little crusade, for all the good it has done over the past six years, or is likely to do in the future. On the other hand...

Last week, it was reported that the average wheat yield this year in the Dobrudzha region is unlikely to exceed two tonnes per hectare. To put that into perspective, a well-run wheat farm, with good soil and appropriate inputs, could expect up to eight tonnes per hectare. And in 1989, the Bulgarian wheat yield averaged nearly six tonnes nationally.

The Dobrudzha region is Bulgaria's "bread-basket" - the major grain-producing part of the country and routinely held out by politicians and bureaucrats as a shining model of Bulgarian agriculture. Unfortunately, it has been hit by drought for the second year in a row. Indeed, the drought condition is given as the major reason for this dismal forecast, along with the inadequate application of fertiliser and pesticides.

What, you might ask, has this got to do with the lack of a farmland market? The reason that the Dobrudzha wheat harvest will be so badly affected by the drought is that there is virtually no functioning irrigation in that region or indeed anywhere else in the country. And the reason that the irrigation system which existed in communist times has fallen into decrepitude is that the land over which it spreads - then collectivised - has been broken up into small pieces with a multitude of owners. These owners typically have neither the money nor the incentive to maintain or repair the network. And when they farm - if they farm at all - they do so inefficiently, in smallholdings, largely at the mercy of nature.

Of course in the Dobrudzha, there are some very big grain-growing operations, such as the British-managed RF&T enterprise. But without exception, these big operations use leased land, with tenures typically of two to five years. So there is no incentive to make investments in expensive irrigation systems. To justify the cost and be confident of a return on investment, you need to have a much longer security of tenure. Ideally, you would own the land, but because there is no market in Bulgaria, you cannot buy the land.

And it's not just grain growing which is affected by this condition. At this time last year, a winery, owned by an acquaintance of mine, succeeded in selling 100 tonnes of bulk red wine to a Canadian buyer. The price was $1.00 per litre ex-winery. By the time it reached Canada, the cost to the buyer was around $1.25. This year there will be no repeat business. Why? Because although the Bulgarian winery is very keen to sell again, and although it is willing to drop its price to as low as 85 cents per litre, the drop in international prices has been such that the Canadian buyer can get equivalent quality Australian or Chilean wine for 75 cents per litre delivered. So, for the Bulgarian winery to be competitive, it would need to sell at around 55 cents per litre - a drop of nearly 50 per cent on last year's price - something it is unwilling to accept.

The main cost item for a winery is typically the grapes. It might be thought that Bulgarian wineries would have a competitive advantage and that grape prices, like other costs in this country, would be much lower than internationally. Unfortunately, that's not the case. Bulgarian wineries pay as much as, if not more than, wineries in France, Italy, New Zealand or California for their grapes. And with few exceptions, Bulgarian wineries are forced to rely on independent growers for grapes. Independent of the wineries that is, but not averse to collaborating amongst themselves to maintain the price.

In an ideal world, wineries here in Bulgaria would decide to invest in their own vines, so as to break their dependency on the producers over whom they have little or no control as to quantity or quality. They would be able to bring some cost discipline to the production of their key raw material. At the very least, they would have the option to make such a decision. And the mere existence of that option would impose disciplines on the grape producers.

But this dynamic will not develop because the wineries cannot acquire the land to start their own plantings. A grape vine needs five years to come into commercial production, so leasing is not a practical option.

Some time ago, I was talking to a highly regarded private sector Bulgarian economist about this problem. She responded by saying that Bulgaria has too many wineries, that there are six big wineries which - somehow or another - have established their own vineyards and that this is enough capacity for the Bulgarian wine industry. The implication being that the remaining 35 or so wineries should not have access to land for vines and should be allowed to fail. I looked at her mournfully. If this is representative of influential post-communist macro-economic theory in Bulgaria, there really is nothing to be done.

Except, mozhe bi, to bring in the National Movement Simeon II. Could it get any worse?

Frank Quin is a New Zealand lawyer and business facilitator with a long-standing interest in Bulgaria. His column appears fortnightly. Frank can be contacted at fxq@quinconsult.com