agriculture and the agricultural reform in poland bart baudonck elke slegers sofie vanderheyden...

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


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


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


• 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


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


• 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


• 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

- …


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)


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)


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


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


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


- Main questions are set for

*quotas: what production levels to choose?

*direct payments: gradual introduction?

*transitional periods: how long?


The CAP and Poland:

- Expectations: *Cereals *Meat

- Quotas: *EU standards *Exemptions


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

agriculture and the agricultural reform in poland bart baudonck elke slegers sofie vanderheyden...

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