Bart Baudonck

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Agriculture and the Agricultural reform in Poland

• Bart Baudonck
• Elke Slegers
• Sofie Vanderheyden
• Wesley Deprez
• Wesley Guerra 8 December 2003

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INTRODUCTION
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INTRODUCTION

• Since transition Agricultural recession
• Unfavourable development terms of trade
• Reduced production (lifestock sector)
• Agriculture as GDP 13 (89) ? 6 (96)
• Agricultural labour force 27 of total
  (inflated)
• Very low labour productivity
• Part-time farming
• Self sufficiency 100

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Agricultural production trade
Model
INTRODUCTION

• Agricultural products 13 export 11 imports
• Trading partners EU-15 (?) and Russia (?)
• Crops cereals, potatoes, fodder crops, sugar
  beet, oilseeds and pulses
• Fruit and fruit products export
• Livestock sector export

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AGRICULTURAL REFORM
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AGRICULTURAL REFORM

• Reform of the agricultural system of transition
  economiesinvolves four main elements (Liefert and
  Swinnen, 2002)
• Market liberalisation
• Farm restructuring
• Supporting market infrastructure (credit
  markets)
• Restructuring upstream and downstream operations

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AGRICULTURAL REFORM

• MARKET RESTRUCTURING
• Price liberalisation
• Elimination of state subsidies to producers and
  consumers producer price consumer price
• Hyperinflation government intervention and
  establishment of the Agency for Agricultural
  Markets (AMA)
• Producers terms of trade worsened

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AGRICULTURAL REFORM

• MARKET RESTRUCTURING
• Trade liberalisation
• Loss of markets within the former Sovjet Union
• Compensated by export growth to the EU
• End 1990 agricultural exports exceeded
  pre-reform levels

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AGRICULTURAL REFORM

• FARM RESTRUCTURING
• Privatisation
• Agricultural Property Agency (APA) formed in
  1992
• Slow process 100,000 ha annually sold
• Problems - Lack of a restitution law leasing
  of land - Uneven distribution of State land
  across the regions

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AGRICULTURAL REFORM

• FARM RESTRUCTURING
• Land reform
• Private ownership of agricultural land is legal
• Land transactions - no restrictions -
  dominated by leasing - high level of transaction
  costs (12.5)
• - Problem of land registration

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AGRICULTURAL REFORM
FARM RESTRUCTURING Number of holdings by size
classes (000 holdings) Category
1990 1995 1996 1997 1998
2000 2000 in 1 to 2 ha
378.3 428.8 462.2 439.2 449.4 448.2
23.8 2 to 5 ha 750.8
690.3 667.6 691.0 676.5 613.6 32.6
5 to 10 ha 636.3 545.2 520.8
503.1 491.2 447.7 23.8 10 to 15 ha
242 219.5 217.2 206.2
202.8 185.7 9.9 15 ha and more
130.1 163.8 173.6 168.8 170.3 185.7
9.9
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AGRICULTURAL REFORM

• ACCESS TO CREDIT
• - Initial network of the Bank for Food Economy
  (BGZ)
• Bank are reluctant to lend to farmers - Loans
  used to be backed up by the government -
  Imperfect information - Inferior bank
  management - collateral problem
• - Government interference remains
• - Importance of credits offered by input or
  agro-processing companies

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AGRICULTURAL REFORM

• RESTRUCTURING UPSTREAM AND DOWNSTREAM
• Downstream
• privatization of food processing enterprises has
  progressed well
• State trading monopolies have been
  disbandedUpstream
• privatisation and demonopolisation are less
  succesful availability of inputs

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AGRICULTURAL OUTPUT
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AGRICULTURAL OUTPUT
Source FAO and Eurostat
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AGRICULTURAL OUTPUT
Output decline

• decline in production observed in most CEECs
• crops survived better than livestock

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AGRICULTURAL OUTPUT
Evolution of crops
Source European Commission
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AGRICULTURAL OUTPUT
Evolution of livestock
Source European Commission
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LABOUR RESTRUCTURING
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LABOUR RESTRUCTURING
Evolution of employment in agriculture

• of agricultural employment in total employment
  in Poland

Source Eurostat
Comparison with other CEECs
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LABOUR RESTRUCTURING
Reasons for high working in agriculture

• few state-owned firms lt-gt a lot of small firms

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LABOUR RESTRUCTURING

• Jobs outside agriculture?
• HOWEVER education, cost of commuting
• Age of farmers 50 39.2 of farms
• percentage overestimated hidden unemployment

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LABOUR RESTRUCTURING
Changes in Productivity

• Productivity increase in agriculture of 3.8
  (1990-2000)
• Hungary 6.4, Czech Republic 15.9
• Compared to EU

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LABOUR RESTRUCTURING

• Slow increase in productivity is due to
• large farm fragmentation
• low production specialisation
• large agrarian population

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Determinanten van de arbeidstroom uit de Europese
landbouw
EU ACCESSION AND IMPACTS

• Overzicht
• - Hypothesen
• Beschrijving arbeidssituatie in de Europese
  landbouw
• Model
• - Bespreking resultaten
• - Conclusies

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EU ACCESSION AND IMPACTS

• Treaty of Accession in April 2003 -gt Poland
  member of EU in May 2004
• EU standards - acquis communautaire (agriculture)
• Obstacles  - Number of farms workers in
  agricultural sector (difficult to
  competitiveness)
• - Address effects of complying with CAP
• -

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EU ACCESSION AND IMPACTS

• Agreements 
• - Accession partnerships (priority areas in
  which further work is needed) -gtPriorities in
  field of CAP
• upgrade capacity of agricultural administration
• continue upgrading of agri-food processing
  establishments (EC food safety standards
  legislation)
• -gt still major concerns by Commission
• - Europe Agreement (aim to barriers to
  trade)
• - Bilateral agreement (double-zero agreement
  liberalisation of wide array of products, fully
  or within tariff quotas)

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EU ACCESSION AND IMPACTS
Pre-accession aid (2000-2006) - Phare
(institution building infrastructure to meet
requirements of acquis) -  ISPA (structural
policies environment transport) -  Sapard
(Special Accession Program for Agriculture
Rural Development) (after accession
structural funds)  
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EU ACCESSION AND IMPACTS
Sapard - support implementation of acquis (CAP)
- solve problems for sustainable adaptation
of infrastructure rural
development - decentralised approach
implementation by national authority
(Poland July 2002 -gt 5 measures) - in 2002
for Poland 177 Mio
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EU ACCESSION AND IMPACTS
Main aims of Sapard in Poland -       To
improve economic viability of Polish agriculture
to be able to meet new opportunities on
domestic international
markets -       To adapt the agri-food sector to
EU standards in respect of hygiene,
quality animal welfare -       To encourage
multifunctional rural development  
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EU ACCESSION AND IMPACTS
The CAP  -        The Common Agricultural
Policy  -        Needed to be reformed  -       
The current CAP's future policy objectives are in
short - to improve the Union's competitiveness
through lower prices- to guarantee the quality
and safety of food- to ensure stable incomes and
a good standard of living for the farmers- to
make the production methods more environmentally
friendly and to respect the animals rights-
to integrate some environmental goals into its
instruments- to search for alternative jobs and
incomes for particular farmers
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EU ACCESSION AND IMPACTS
- Main questions are set for quotas what
production levels to choose?direct payments
gradual introduction?transitional periods how
long?  
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EU ACCESSION AND IMPACTS
The CAP and Poland -        Expectations
Cereals Meat  -        Quotas
EU standards Exemptions
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EU ACCESSION AND IMPACTS
Reaction of Poland concerning the CAP  -       
Strange situation -        Rejection of the
transition period cf. Spain in 1986 -       
Reaction of Franz Fischler (European Commissioner
for Agriculture)    
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POLICY DISCUSSION
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POLICY DISCUSSION

• - Importance of human capital
• agricultural labour outflow
• focus on the profitable farms
• Restitution law
• important for privatisation
• Seperated rural credit market