The paper is investigating the recent evolution of farm productivity in five EU New Member States (NMS): Bulgaria, Hungary, Romania, Poland and Slovenia. More precisely, the paper deals with determinants influencing farm productivity in a changing market and policy environment brought by their full integration to the CAP. With a combination of multivariate statistics and econometric techniques, it attempts to identify and explain the patterns of agricultural labour productivity change in the period 2003-2005. Results suggest that adjustment patterns are diverging and are region-specific, depending mainly on the initial farm structural conditions, and availability of non-farm jobs. Policy implications of the paper suggest that agricultural policy should move away from the concept of transfers to agriculture to more pro-active role in creating conditions for job creation in rural areas.