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Agriculture in Poland


2001-07-17

Based on the 'Poland 2000' Report published by Polish Market Review.

OVERVIEW

Nearly 38% of Polish population lives in rural regions. In 1999 private farms comprised 57% of the total area of the country and occupied about 84% of agricultural land. The agricultural sector employs over 4.1 mln people, and for about 1.9 mln of them agriculture is the only way of earning a living. Polish agriculture is very diffused both in terms of area and infrastructure equipment. Most of Polish farms are self-sufficient.

EMPLOYMENT IN THE SECTOR

A survey of economic activity of people in agriculture areas shows that at the end of 2000 the employment rate in rural areas accounted for 49.3% of the rural population. The CSO survey reveals that registered unemployed persons at the end of 2000 amounted to 14.3%, but this number is higher because in the period in question about 42.4% of the rural population was economically inactive and was not looking for employment.

The second, after income from agricultural production most important source of income for farmers are pensions and social benefits. In 2000 there were 1.88 mln retired people in rural areas, a drop of 2.2% in comparison with 1999. Farmers pensions are a huge burden on the state budget. From 1991-1999 budget expenditures (for farmers pensions) increased by 910%. In 2000, budget expenditures for farmers' pensions increased by 4.6% together with a falling number of pensioners.

STRUCTURE OF POLISH AGRICULTURE

The size of Polish farms varies. In 1998 56.6% of all farms were smaller than 5 ha (1 ha = 10,000 m2) and the average size of a farm was 7.7 ha. A large portion of farms are barely self-sufficient.

There are over 56,000 villages with very poor technical and community infrastructure. These infrastructure problems hamper the development of companies and weaken the investment attractiveness of rural areas, and even low labor costs cannot couterbalance the high costs of infrastructure investment. As a result most investors stay away from these areas.

Land Use. June 2000
 Area (thousands ha)Share of Total
Agricultural land1841358.9
of which
Arable land1406245
Orchards2670.9
Meadows26088.3
Forests900328.8
Others385112.3
Source: Central Statistical Office, 2000

AGRICULTURAL PRODUCTION IN 2000

At present agricultural production is about 10% lower than in the years 1981-1987. The main structural changes in agriculture include a reduced production of potato, rye as a result of the reduction of use of poor soil areas, increasing crops of fruits and vegetables, improvements in the quality of crops and animal output. The main reasons for these changes were the falling incomes of farmers, the difficulty of selling crops profitably and the changing diets of consumers.

Crop Production in 2000
CropsProductionin mln tonsChange (1999 = 100)
Cereals22.386.8
of which basic ones21.385.1
   of which:
       Wheat8.594
       Rye477.3
       Barley2.7881.8
Rape and agrimony0.9684.7
Sugar beets13.1104.4
Field vegetables5.5105.2
Tree fruit1.893.8
Berry fruit0.495.4

Source: Central Statistical Office, 2000; preliminary data

It is estimated that gross agricultural output in Poland amounted to PLN 50 bln/USD 11.5 bln in 2000. Crop production was down by 3% compared to 1999 figures mainly due to low rape and fruit crops. Animal production decreased by 5.5%. A poor harvest and high level of demand were the main reasons that prices increased on the agricultural market. The highest price increases were for milk (by 28.5%), potatoes (by 23.6%) and rye (by 21%).

Worse harvest and a long period of low profitability of animal production influenced the negative trends in the sector. Nevertheless, the situation was territorially differentiated and dependent on the weather. Areas which had suffered from droughts (Wielkopolskie, Mazowieckie, Podlaskie and Kujawsko - Pomorskie) showed worse results and their income situation worsened in 2000. On the other hand, rising prices of agricultural products compensated farmers for the reduced crops and the falling number of livestock. To protect consumers against high price increases, the government introduced a program of interventionist purchases of key crops and a system of direct charges in purchasing centers. The market had to be additionally supplied with imports of corn.

POLISH AGRICULTURE IN LIGHT OF EU ACCESSION

A great chance for Polish agriculture is EU accession and future participation in European Common Agricultural Policy. Rural poverty, diffusion of farms and development delays are the greatest obstacles in negotiations with the EU. But EU membership is a great incentive for Polish agriculture to improve its quality and efficiency. After EU admission, Poland will have access to a consumer market of 400 million people. A comparative advantage for many Polish products (fruits, vegetables, juices) is the prospect of a significant share in the European consumer market. Also very important is the low level of fertilization in Polish farms (2 - 3 times lower then in OECD countries). This can be a great advantage because Poland can specialize in the production of ecological food and get a large share of the European market.

EU integration will accelerate restructuring in rural areas and increase the level of protectionism in agriculture in Poland through participation in a system of direct subsidies within the EU. The latter is the most important bone of contention in negotiations because there are no additional financial resources in the EU budget for subsidies to Polish farmers.

The cost of upgrading and adapting Polish agriculture to EU requirements is estimated at PLN 24.5 bln/USD 5.6 bln up to 2004. Additionally, private sector costs (costs directly affecting farmers) would amount to PLN 7.2 bln/USD 1.66 bln. Modernization will increase the price of agricultural products but after EU admission they will be offset by higher sales prices for these products. However, even after admission they will still be 15% lower than the EU average.

The benefits of EU admission are higher prices of sold products, direct subsidies for products within the framework of Common Agricultural Policy, access to EU structural funds, improvements to food quality and technical infrastructure in rural areas, and an increase in jobs mainly due to funding from the SAPARD program. The total value of these benefits is estimated to be between PLN 14.1 - 17.7 bln/USD 3.25 - 4 bln up to 2004.



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