The 1968 reform allowed agricultural enterprises to diversify into nonagricultural economic activities. Twenty years later, the government granted cooperatives the right to change their internal structure, to engage in new activities, and to extend their involvement in nonagricultural production withouÍÍÍÍt the permission of regulatory bodies. State farms and cooperatives were engaged in food processing, machinery repair, parts production for manufacturing enterprises, construction, trade, and the restaurant business. Several large-scale farms developed "technically operated production systems" for crop production, horticulture, and animal husbandry that used state-of-the-art technology. The farms sold these systems, which included input and output programs and consulting services, to other large-scale farms. These systems have accelerated the modernization of the agricultural sector.

The nonagricultural activities of state and cooperative farms have increased profits and tapped manpower once lost during off-seasons. In 1983 nonagricultural activities accounted for 47 percent of state-farm profits and 44 percent of cooperative-farm profits. By 1988 the farms' ancillary activities accounted for more than 7 percent of Hungary's total industrial production.

Data as of September 1989