Following Enver Hoxha's 1967 proclamation that the regime had collectivized all of Albania's private farmland, the country's only legal forms of agricultural production were state farms, collective farms, and personal plots granted to members of collective farms. The first Albanian state farm grew out of a large experimental farm set up by Italian colonists in the 1930s. After World War II, the government amalgamated small collective farms and transformed them into state farms in each district. The 216 state farms, which still controlled 24 percent of the arable land in 1991, functioned like industrial organizations thus, state farm workers, like factory workers, toiled for set wages. The state farms received the best land and equipment and a disproportionate amount of investment monies. Collective farms were the result of government campaigns to coerce peasants into signing over their private holdings to cooperatives and working the land in common, according to the instructions of the central government's economic planners. The authorities later took gradual steps to transform collective farms into "higher-type" farms more closely resembling state farms in their organization. Faced with dire food shortages, the regime in 1990 attempted to reform the agricultural system by lifting a 200-square-meter limitation on the size of the personal plots of collective farmmembers .

In July 1991, the government enacted a law that nullified old property claims and regulated redistribution of the expropriated farmlands given to collective farms after 1946. The law granted landownership rights to members of the former collective farms and their households without requiring compensation it also granted land-use rights to up to 0.4 hectares to other qualifying residents of villages attached to collective farms. The law provided for the inheritance of property but banned land sales and leases, thereby blocking voluntary consolidation of tiny landholdings and limiting farmers' access to credit by precluding the use of land as collateral.

The government established the National Land Commission to oversee the land reform. The minister of agriculture chaired the commission and reported on its activities to the Council of Ministers. District and village land commissions demarcated the land, issued ownership titles, and compiled a land registry.

Albania's land redistribution program proceeded rapidly but unevenly. It met especially stiff resistance in the country's mountainous northeastern regions where clans anxious to stake out the boundaries of their traditional family lands tried to stop large numbers of postwar immigrants from gaining title to them. Land disputes threatened to trigger blood feuds. Local officials also impeded the reform process. The central government countered by threatening to prosecute anyone who seized land illegally. Under the land-distribution program, Albania's agricultural sector would gain about 380,000 small family farms averaging about 1.4 hectares in size and often made up of two or three plots. In mountain areas the parcels wereb50 re significantly smaller. In Pukė, for example, the average size was just over 0.5 hectares, and in Kukės, almost 0.9 hectares. Western economists estimated that 35 percent of the new farms would not be economically viable and expressed concern that, unless restrictions on land sales were lifted, inheritance would lead to land fragmentation and hamper development. Fearing that smallholdings would not provide sustenance, the government amended the land law to provide for income support of farmers in mountainous areas. As privatization progressed, some families and owners of contiguous fields began to form private cooperatives to take advantage of economies of scale.

Left in limbo by the land reform were the 216 state farms and their 155,000 employees, who accounted for about 20 percent of the agricultural labor force. State farms contributed about 30 percent of the value of the country's agricultural output and supplied city dwellers with most of their dairy products, fruits, and vegetables. The state farms' yields normally outstripped those of the cooperative farms by a third or more because the state farms benefited from richer soils, more mechanization, and easier access to farm services, government finance, and transportation. The breakdown of the communist structure dealt the state farms serious setbacks. By mid-1991 lines of authority had snapped, equipment and buildings had been plundered, and the amount of cultivated land had decreased by half. Although it planned to dissolve sixty money-losing state farms in the mountainous northeast, the government generally spared the state farms from redistribution because their breakup would lead to serious land fragmentation problems and reduce urban food supplies. Pasturelands and forests were also exempted. Western economic analysts concluded that some of the state farms could turn a profit and that foreign companies might follow the lead of one Italian firm that had entered into a joint venture with a state farm.

Data as of April 1992