Agriculture and the Agricultural reform in Poland
Bart Baudonck
Elke Slegers
Sofie Vanderheyden
Wesley Deprez
Wesley Guerra 8 December 2003
INTRODUCTION
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%
ModelINTRODUCTION
• 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
Agricultural production & trade
AGRICULTURAL REFORM
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
AGRICULTURAL REFORM
MARKET RESTRUCTURING:
Price liberalisation
- Elimination of state subsidies to producers and consumersproducer price = consumer price
- Hyperinflationgovernment intervention and establishment of theAgency for Agricultural Markets (AMA)
- Producer’s terms of trade worsened
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
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
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
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
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
AGRICULTURAL REFORM
RESTRUCTURING UPSTREAM AND DOWNSTREAM:
Downstream
-privatization of food processing enterprises has progressed well
-State trading monopolies have been disbanded
Upstream
- privatisation and demonopolisation are less succesfulavailability of inputs
AGRICULTURAL OUTPUT
AGRICULTURAL OUTPUT
Source: FAO and Eurostat
AGRICULTURAL OUTPUT
Output decline
• decline in production observed in most CEEC’s
• crops survived better than livestock
AGRICULTURAL OUTPUT
Evolution of crops
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1989 1991 1992 1993 1994 1995 1996 1997 1998
Pulses
Sugar
Potatoes
Rapeseed
Cereals
Source: European Commission
AGRICULTURAL OUTPUT
Evolution of livestock
Source: European Commission
LABOUR RESTRUCTURING
LABOUR RESTRUCTURING
Evolution of employment in agriculture
% agr. in total 1994 1995 1996 1997 1998 1999 employment 24 22,6 22,1 20,5 19,1 19,1
Source: Eurostat
Poland 27,7Czechoslovakia 11,9Hungary 20,4Romania 22,1Bulgaria 19,2Source: Agriv, 1992
Comparison with other CEEC’s
% of agricultural employment in total employment in Poland
LABOUR RESTRUCTURING
Reasons for high % working in agriculture:
• few state-owned firms <-> a lot of small firms
1986 1988 1990 1992state-owned farms 508 501 470 204cooperatives 178 188 146 87private farms 3883 3732 3578 3449Source: GUS
LABOUR RESTRUCTURING
• Jobs outside agriculture?
HOWEVER: education, cost of commuting
• Age of farmers: 50+ = 39.2 % of farms
• percentage overestimated: hidden unemployment
age 15-19 20-29 30-39 40-49 50-59 60-64 65- ,,,% holders of farm 0,3 8,4 20,6 31,5 21,1 5,8 12,3
LABOUR RESTRUCTURING
Changes in Productivity
• Productivity increase in agriculture of 3.8 % (1990-2000)
• Hungary: 6.4%, Czech Republic: 15.9%• Compared to EU:
1994, Poland 1993 EU-12Share of agr. in GDP 6,3 2,8% empoyment in agr. 24 5,8
LABOUR RESTRUCTURING
• Slow increase in productivity is due to:
– large farm fragmentation– low production specialisation– large agrarian population
Determinanten van de arbeidstroom uit de Europese landbouw
Overzicht
- Hypothesen
- Beschrijving arbeidssituatie in de Europese landbouw
- Model
- Bespreking resultaten
- Conclusies
EU ACCESSION AND IMPACTS
EU ACCESSION AND IMPACTS
• Treaty of Accession in April 2003 -> 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
- …
EU ACCESSION AND IMPACTS
Agreements
- Accession partnerships (priority areas in which further work is needed) ->Priorities in field of CAP:
• upgrade capacity of agricultural administration
• continue upgrading of agri-food processing establishments (EC food safety standards & legislation)
• …
-> 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)
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)
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 -> 5 measures)
- in 2002 for Poland: € 177 Mio
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
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
EU ACCESSION AND IMPACTS
- Main questions are set for
*quotas: what production levels to choose?
*direct payments: gradual introduction?
*transitional periods: how long?
EU ACCESSION AND IMPACTS
The CAP and Poland:
- Expectations: *Cereals *Meat
- Quotas: *EU standards *Exemptions
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)
POLICY DISCUSSION
POLICY DISCUSSION
- Importance of human capital
agricultural labour outflow
focus on the profitable farms
- Restitution law
important for privatisation
- Seperated rural credit market
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