Agriculture plays a pivotal role in the Bulgarian economy, but the agricultural and trade policies applied during the early transition years have impeded the modernisation and development of the sector. While the privatisation process is now completed, further restructuring is necessary. A dual farm structure is emerging with the establishment of a large number of subsistence holdings. The large over-capacity in the food-processing sector together with the low level of efficiency and low investment is of increasing concern. Bulgaria would benefit considerably from greater investment in general infrastructure, in market infrastructure and in human capital. New policies have replaced the old, however, and the Bulgarian agricultural sector is now in a good position to respond to world market prices for the major commodities. With the gradual emergence of a land sale and leasing market, the necessary consolidation of the fragmented holdings is likely to occur over time. Bulgaria is in the process of implementing reforms (including SAPARD) which should facilitate the adjustment in agriculture and rural areas to the internal European market. An open trade policy makes Bulgaria well placed to improve efficiency and competitiveness of its agro-food sector. The Bulgarian government requested the policy review. Agriculture represents 17% of GDP and 26% of employment in Bulgaria in 1999. Exports of food and agricultural products, although mainly low value-added commodity products, account for about 16% of total exports and contribute significantly to total export earnings. Bulgaria and Hungary are the only Central European countries that have remained net exporters of agricultural products during the transition decade. Similar OECD agricultural reviews have been done for Romania, the Russian Federation, the Slovak Republic, Estonia, Latvia, Lithuania, the Czech Republic, Poland, and Hungary. A review on Slovenia is forthcoming, completing OECD agricultural policy reviews for the 10 central and eastern European EU accession candidates.