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Krzysztof Pawlak1, Barbara Tombarkiewicz1, Danuta Mordarska2, Halina Pawlak2 and Jerzy Niedziolka1 ©
Agricultural University of Krakow, Department of Poultry Breeding, Fur Animal
Breeding and Zoohygiene, Al. Mickiewicza 24/28, 30-059 Krakow, Poland 2Malopolska Agricultural Extension Centre, Karniowice 9, 32-082 Bolechowice,
Poland
AN ATTEMPT TO EVALUATE FARM DEVELOPMENT PLANS AS PART OF THE "SUPPORT FOR SEMI-SUBSISTENCE FARMS" PROGRAMME
Abstract: This study attempts to evaluate farm development plans adopted by farmers as part of the "Support for semi-subsistence farms " programme, using the example of the Gdow commune. The study was carried out on 100 randomly selected semi-subsistence farms participating in the "Support for semi-subsistence farms" programme in 2005. As part of the programme, 71 farms purchased agricultural machines, 66 purchased farm animals, and 38 farmers chose to complete training courses. Due to the possibility of a high increase in land prices, only 8 farmers chose to purchase or lease land. Three agricultural businessmen chose to implement the project as part of the Sectoral Operational Programme, while 2 farmers declared that during the receipt of funds for semi-subsistence farms they would document annual agricultural product sales of at least 20,000 zloty. The study showed that the measures chosen by farmers were the easiest to carry out rather than being the most efficient for their farms.
Key words: Semi-subsistence farms, assistance programmes, European Union
Introduction
Those employed in Polish agriculture account for as much as 20% of the total labour force, which is several times higher than the European Union figures.
Problems that afflict this branch of economy include unfavourable agrarian structure, self-sufficiency of most farms, low education level, low crop culture and technological backwardness (Banski J. 2007).
Polish agriculture is characterized by enormous diversity. Large high-production farms are found next to small semi-substance farms (1-2 ha in area), where traditional production is based on multigenerational families.
Unlike other sectors of the economy, which operate on market principles generally, agriculture is given special support and protection (Rowinski J. 2004). By becoming a member of the European Union on 1 May 2004, Poland was given the opportunity to use different forms of support for the development of rural areas, including the agricultural sector.
The assistance programmes offered as part of the Common Agricultural Policy include agri-environmental programmes, afforestation, early retirement, support for farms in less favoured areas, farm investment, assistance for young farmers, improved processing, adaptation and development of rural areas. Additional
© Krzysztof Pawlak, Barbara Tombarkiewicz, Danuta Mordarska, Halina Pawlak, Jerzy Niedziolka, 2008
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programmes for Poland include a programme for harmonization with EU standards and support for semi-subsistence farms (Szumski St. 2007).
Support of semi-subsistence farms is aimed to increase their scope for investment and thus to increase the economic viability of these farms by increasing commercial production and developing non-farming activities. This support is in the form of a premium paid for up to five years. It is assumed that payment of the premium will improve the incomes for farms of low economic potential and help to restructure this group of farms (www.krakow.uc.gov.pl/wpr.htm).
For farmers to join the programme, they have to run their own semi-subsistence farms (those with economic size ranging from 2 to 4 ESU - European Size Units), fill an application form and the "Plan for development of semi-subsistence farms", which has to present the method of making farms viable (ESU greater than 4), and select at least one partial measure, which will help with the modernization.
Possible measures include:
1. Acquisition of an organic production certificate or entering the state of conversion of a semi-subsistence farm into an organic farm, which precedes the acquisition of such a certificate;
2. Joining an agricultural producers' group or organization in accordance with regulations on agricultural producers' groups;
3. Purchase of farm animals;
4. Purchase of agricultural machines;
5. Purchase or lease of agricultural land;
6. Completion of a training course carried out in accordance with terms and conditions of the regulations issued based on paragraph 9 section 3 of the Law of 28 November 2003 or as part of the Sectoral Operational Programme "Restructuring and Modernization of the Food Sector and Rural Development 2004-2006" ("Training");
7. Acquisition of financial assistance to support agri-environmental projects and improve animal welfare;
8. Starting production within special branches of agricultural production;
9. Non-availment of the exemption from the goods and services tax due to supply of own agricultural products and/or provision of agricultural services;
10. Implementation of the project as part of the Sectoral Operational Programme "Restructuring and Modernization of the Food Sector and Rural Development 2004-2006";
11. Achievement of documented annual agricultural product sales of at least 20,000 zloty during the time when payment for semi-subsistence farm is collected;
12. Starting non-agricultural activity and achievement - during the time when payment for semi-subsistence farm is collected - of annual income exceeding 20,000 zloty (www.arimr.gov.pl/index.php?id=5&id1=2&id2=1).
During the fourth and fifth years of the project, payment to farmers is continued if producers carry out the measures declared in the plan for semi-subsistence farm development.
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The ultimate condition of the programme implementation is for the farms involved to achieve the economic size of more than 4 ESU (www.minrol.gov.pl).
The present study attempts to evaluate farm development plans adopted by farmers as part of the "Support for semi-subsistence farms" programme, using the example of the Gdow commune.
Material and methods
The study was carried out on 100 randomly selected semi-subsistence farms participating in the "Support for semi-subsistence farms" programme in 2005. Data for the study were obtained from the "Plans for the development of semi-subsistence farms", which the farmers applying for the above funds had to fulfil (www.arimr.gov.pl/pliki/5/2/2/WNIOSEK.pdf), (www.arimr.gov.pl/pliki/
5/2/2/Plan_rozwoju_wersja_do_druku.pdf)
The Gdow commune is located in the south-western part of the Bochnia Foothills and north-eastern part of the Wieliczka Foothills. This area is dominated by brown soils (40%) and pseudo-podzolic soils (30%). In watercourse valleys, there are alluvial soils (28%) and deluvial soils (2%).
The mean duration of the vegetation period with temperature above 5°C is approximately 210 days.
The total number of farms in the Gdow commune is 3197 as of 31 December 2005. These are mainly diversified farms with an overwhelming majority of farms specializing in two types of production: pig breeding and cereal growing.
The total area of the farms investigated is 484 ha, of which leased land accounts for approx. 4.5% (21.63 ha). Arable land accounts for an overwhelming proportion of the area (80%), with 18% of grasslands and only 2% of orchards and perennial plantations.
Cereals form a considerable proportion of crop production. They occupy 309 ha (89%) out of 346 ha of arable land. Potatoes are also cultivated, but their proportion is small (8.43%; 29.16 ha) and they are mainly produced for own consumption. Other crops include fodder beets, protected and field-cultivated vegetables, flowers and ornamental plants.
As many as 95 farms are engaged in both crop and animal production. Farms specializing in only one type of crop production are 4 vegetable farms and 1 cereal farm.
As far as animal production in 2005 is concerned, pig breeding (81.7% of farms) and dairy cattle breeding (71% of farms) were dominant, with 69% of the farms keeping both these species.
The area of the Gdow commune is characterized by a strong fragmentation of the agrarian structure, considerable proportion of people who have two professions and develop activities outside farming.
Results
As part of the programme, 71 farms chose to purchase agricultural machinery (Measure 4). The farmers planned to purchase both new and used machines. Five farmers planned to buy used tractors. Only one farmer allotted 30,000 zloty for this
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purpose, 4 farms less than 10,000 zloty and the remaining farmers less than 13,000 zloty.
As concerns other machines, a sum of over 10,000 zloty was declared by 18 farmers for the following machines: 2 combine harvesters, 7 straw balers, 1 manure spreader, 2 grain silos, 1 cereal drill, and 1 refrigerating unit.
Machines worth less than 10,000 zloty were a cultivator, a fertilizer distributor, a grain mill (purchase planned by two farms), harrows, a soil miller, a manure loader, a potato ridger, a high-density baler, 3 potato planters, 6 manure spreaders, 7 cereal drills, 8 ploughs (double-furrow, three-furrow and four-furrow), 10 tedding and raking machines, 16 sprayers, and 18 rotary mowers. The data also showed a cultivation unit, a cereal blower, a milking machine, a feed dispenser, a potato harvester, an elevator digger, a tractor trailer, and a branch cracker (1 unit each). The planned investments totalled 527,300 zloty.
Sixty-six farms planned to purchase farm animals (Measure 3). There were plans to buy 168 breeding sows, 49 piglets, 420 animals representing other pig groups, cattle (15 dairy cows), 3 heifers less than 2 years of age, 6 heifers older than 2 years, and 35 beehives.
Thirty-eight farmers have completed training (Measure 6). As part of this project, farms took part in a course on the Code of Good Agricultural Practice organized by the Malopolska Centre for Agricultural Extension in Karniowice.
Eight farmers planned to buy or lease agricultural land (Measure 5). As part of this project, farmers planned to buy land for the cultivation of wheat (21.6 ha), rye (0.6 ha), barley (1.9 ha), cereal mixture (2.7 ha), cereal and legume mixture (12.6 ha), potatoes (4.0 ha), maize for grain (8.8 ha), protected vegetables (0.12 ha), field vegetables (0.7 ha), tree plantations (7.1 ha), flowers and ornamental plants (0.1 ha), cultivable mushrooms (0.1 ha) and other crops (0.5 ha).
Three farmers decided to carry out projects as part of the Sectoral Operational Programme "Restructuring and Modernization of the Food Sector and Rural Development 2004-2006" (Measure 10). This project was chosen by those farmers who soon planned to apply for the purchase of machinery as part of the Sectoral Operational Programme.
Two farmers declared that during the receipt of funds for semi-subsistence farm they would document annual agricultural product sales of at least 20,000 zloty (Measure 11). These farmers are engaged in fruit and mushroom growing.
Discussion
Semi-subsistence farms producing for both own consumption and wholesale account for 33.7% of farms (approx. 900,000) in Poland. They can rely not only on direct payments but also on the assistance programmes offered them as part of the Rural Development Programme (Pokrzywna K. 2004).
In the first stage of submission of applications to support semi-subsistence farms (from 1 February to 22 March 2005), farmers submitted over 114,000 applications to the Agency for Restructuring and Modernization of Agriculture, and 104,000 beneficiaries received support. The Agency paid out the first instalment for a
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total amount of over 511 million zloty. In the Wieliczka district, 221 applications (including 165 from the Gdow commune) were submitted.
As part of this programme, farmers were obliged to choose at least one measure.
This analysis shows that the largest group of farmers chose Measure 4 (purchase of machines). This measure enables farmers to purchase both new and used machines and there is no age limit. Analysis of the values of machines declared for purchase leads us to conclude that these will be mostly used machines that will fail to operate trouble-free in the long term. It should also be remembered that from the economic point of view, investments in agricultural machines is the cost that does not increase agricultural income and improves the quality of farm machinery fleet only (Poczta W. 2003).
The second most popular measure was the purchase of farm animals. All the farms that chose this measure were involved in livestock breeding before. This measure requires a small investment. The adoption of this measure is encouraged by the lack of clearly defined criteria for purchase settlement. The choice of this measure enabled a direct increase in the economic value of a farm to 4 ESU, which fulfils the ultimate condition needed during the implementation of the programme (www.minrol.gov.pl).
The easiest measure to implement was the "Completion of Training". It requires no own funds (trainings were free, farmers were reimbursed their travel costs and received information materials). Training sessions were co-financed by the European Union as part of the Sectoral Operational Programme "Restructuring and Modernization of the Food Sector and Rural Development 2004-2006" as regards action 1.3. ("Trainings"). In the Gdow commune, this measure was chosen by 38 farmers.
Measure 5 (Purchase or lease of agricultural land) was chosen in the Gdow commune by only 8 farmers. Farmers from this area cultivate their own land and leased land. However, they failed to include leased land in the calculation of ESU. This was mainly due to difficulties in obtaining lease contracts for a long-term period. The fact that long-term lease is not possible is very unfavourable, because it makes it practically impossible to plan production in the long term. That is why the economic development of these semi-subsistence farms would be greatly enhanced by the possibility of buying land. Increasing farm area enables increasing production, which in the farms studied is based mainly on traditional crop types (mainly cereals) (Kolarska-Bobinska et al. 2001). Land purchase would therefore be a very good solution for these farms.
The relatively low interest in this measure was probably due to the steadily growing land prices resulting from the development of residential buildings in the vicinity of Krakow. Unstable prices discouraged farmers to choose this measure because 3 years after signing a contract with the Agency for Restructuring and Modernization of Agriculture, the purchase of land might be impossible due to a very high increase in land purchase costs.
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Measure 10 - Implementation of the project as part of the Sectoral Operational Programme (SOP) "Restructuring and Modernization of the Food Sector and Rural Development 2004-2006" in the Gdow commune was chosen by 3 farmers.
The low interest in this measure probably resulted from the much higher requirements of the SOP compared to the programme supporting semi-subsistence farms. The implementation of SOP requires investing one's own funds, investment is settled using bills only, and more complex formal conditions have to be fulfilled (ARMiR 2006). This measure was chosen by those farmers who planned to fill an application to purchase agricultural machines as part of SOP.
Two farmers chose the "Achievement of documented annual agricultural product sales of at least 20,000 zloty during the time when payment for semi-subsistence farm is collected" as their objective (Measure 11). During the implementation of this measure, agricultural producers have to keep the accounts and pay VAT in accordance with general taxation principles. Farmers showed low interest in this measure probably because they were afraid of a slump in production, which might threaten the implementation of this measure.
One of the measures proposed during the implementation of this project was "Acquisition of an organic production certificate or entering the state of conversion of a semi-subsistence farm into an organic farm, which precedes the acquisition of such a certificate". Organic farming is a very good solution for small and medium-sized farms and may provide large income in the future (Strzalko J. et al. 2006). Funds obtained from the semi-subsistence farm programme could be used to cover the costs of conversion, certification, training or compensation of losses related to the start of the new production system. Unfortunately, no beneficiary from the Gdow commune opted for Measure 1. This was probably due to the fact that organic production requires high labour inputs. Starting this type of production is not encouraged by the low unemployment rate, which is due to the vicinity of labour markets in Krakow, Bochnia, Myslenice and Wieliczka. The low unemployment rate in the discussed area is responsible for the lack of interest in working in agriculture.
For many farmers, this type of production is completely new and requires great involvement, determination, skills and knowledge of management methods. Because of this, farmers are afraid to undertake this type of activity. Based on the results obtained, it can be concluded that money obtained by farmers does not contribute to the implementation of set objectives in the programme. This results probably from the fact that for economic reasons, farmers do not have to carry out genuine restructuring of farms and improve farm productivity and profitability. Because of the closeness of Krakow and other smaller local centres, most farmers in the analysed area choose additional employment outside agriculture (either full-time or seasonal) rather than restructuring. In addition, some farmers have an additional source of income as they conduct their own businesses.
The present observations showed the complete lack of interest in Measures 2, 7, 8, 9 and 12.
The study showed that the measures chosen by farmers were the easiest to carry out rather than being the most efficient for their farms.
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Conclusion This study attempts to evaluate farm development plans adopted by farmers as part of the "Support for semi-subsistence farms" programme, using the example of the Gdów commune. The study showed that the measures chosen by farmers were the easiest to carry out rather than being the most efficient for their farms.
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