Subsistence holdings and modernization of agriculture

A big number of subsistence holdings strongly determines the efficiency indexes of the Polish agriculture. An ordinary arithmetics determines it. The economic considerations, including in particular fighting off the competition on the agricultural and food market and improvement of agricultural incomes constitute important premises for the land concentration. This is in compliance with the dominant trend of the economic and agricultural thought, according to which the basic and at the same time unambiguously negative feature of the Polish agriculture is the fragmentation of the agrarian structure, which next translates into the economic weakness of the dominant mass of agricultural holdings. The view on the need for concentration in agriculture and inevitable displacing family holdings with great capitalistic agricultural holdings has its history⁹. Such holdings were supposed to constitute the only perspective form of agriculture. Admittedly, the possibility was permitted of the advantage of the peasant economy in relation to work-consuming and less capital-absorbing products, but in the remaining ones the advantage was absolutely on the side of capitalistic holdings (M. Weber). Marx’s thesis on the advantage of large agricultural enterprises that they tried to fulfil in the period of real socialism, still has its followers – even too many – despite that great latifundia have become outdated. Large-surface capitalistic enterprises function better, however there is no clear decision in their favour. At present the thesis from the 1930’s of

9 The justification of such view is found among others in the study: K. Kautsky, Kwestia rolna. O tendencjach wspó³czesnej gospodarki rolnej i polityce rolnej socjaldemokracji, KiW, Warszawa 1958.

W. Sombart and A. Czajanow is reviving on the ability of family holdings to oppose great agricultural holdings¹⁰.

The present agrarian structure undoubtedly constitutes an essential factor of ineffectiveness of the Polish agriculture. But this does not need to be exaggerated, because as it seems, the quality of the human factor (knowledge, enterprise), the state of agricultural institutions and the whole agricultural and food sector has not smaller, or even bigger significance. This obviously does not belittle the need for the improvement of the agrarian structure, understood as increasing the average area of a holding by reducing the number of agricultural holdings, which is followed by reducing the number of people engaged in agricultural activity. The increasing of the natural potential of agricultural holdings is important not only in the model of conventional (industrial) agriculture, but also in the model of sustainable agriculture, including organic agriculture¹¹, as well as for undertaking within an agricultural holding (agricultural family) an extra-agricultural activity, including agrotourism, providing environmental public goods, or resources for the needs of energetics.

However, contrary to the model of industrial agriculture, in these remaining cases there is no need to increase the area of a holding to the size of a latifundium.

The fragmented agrarian structure is difficult to combine with the economic sustainability of an agricultural holding, but first of all with the requirement of competition of the sector and the pressure of globalization. From this a conclusion is drawn on the need, or even the necessity, to speed up the structural changes, including especially the land concentration, concentration of production and specialization and further intensification of production. The panaceum to solve almost all problems of Polish agriculture, as well as agriculture in uniwersum, are sought in it, directed by the path of agriculture development followed by the developed countries¹². It is difficult to deny the need to deepen the land and production concentration in Polish agriculture.

However, there are limits of this concentration outlined by the final increments principle, on the basis of which it is easy to establish the optimum relation work-land for specific conditions. And therefore the sizes of concentration of the production potential and the scale of production can be established and justified

10 This is widely argumented by G. Schmitt in his article Why is the agriculture of advanced Western economies still organized by family farms? Will this continue to be so in the future?

European Review of Agricultural Economics, vol. 18, no. 3-4, 1991.

11 This was shown in article: J.S. Zegar, Gospodarstwa ekologiczne w rolnictwie indywidualnym, Wiadomości Statystyczne nr 10, 2006, s. 35-44.

12 F. Tomczak, Gospodarka rodzinna w rolnictwie. Uwarunkowania i mechanizmy rozwoju, IRWiR PAN, Warszawa 2005.

economically, opposite for example to the capital concentration (in the economic sense), where it is difficult to establish the economic upper limit.

Large mechanized farms are not necessarily more effective than small family farms, if correct political instruments are used. Often there is a situation that smaller holdings are more effective. Looking forward, however, it is difficult to clearly assess the changes in the mutual relation of progress and area structure.

In the age of biotechnology and genetic engineering the area structure can recede into the background, however if the innovations in this scope are commercialized by great concerns, then they will be more available for big agricultural holdings.

The core of the problem of the agrarian structure consists however in the fact that small holdings – despite even high effectiveness – do not generate a sufficient income for a farmer and his family oriented at earning living from an agricultural holding. This causes that fragmented agriculture is poor, despite the fact that it is effective. This determines the need for a change in the agrarian structure towards increasing the area of holdings.

Deciding positively the need for concentration, first of all the speed of concentration has to be decided, and secondly cannons have to be found. In relation to the first issue it seems obvious to adjust the changes of the agrarian structure to the conditions and changing criteria of the social optimum. The state policy faces here a dilemma of choosing the lesser evil: not speeding up the changes of the agrarian structure and agreeing to concealed unemployment in peasant holdings or increasing the pace of changes in the agrarian structure and a greater disclosed unemployment in the extra-agricultural sector. Tertium non datur. Taking this into account we should be oriented rather to moderate changes in the agrarian structure of individual agriculture, adjusted to the actual demand for workforce. Increasing this demand creates conditions to speed up the changes of the agrarian structure. In each situation it is important to shape commodity holdings, earning their living mainly from an agricultural holding, having a competition ability; it is also important to speed up the integrations, combinations and improving the runner of holdings. Particularly important is connecting the structural changes with introducing the spatial order and shaping a valuable landscape on rural areas.

The second issue concerns the supply of agricultural land. The main barrier in the concentration process is not on the side of subsistence holdings, merely for the simple reason that they can offer relatively small natural potential for developing holdings. This potential should be mainly sought among non-subsistence holdings, i.e. holdings that produce mainly for the market, but with a small scale of production. The supply of lands from the side of subsistence holdings, because the process of concentration is mainly about it, requires

incurring significant transactional costs. The flow of land from those holdings basically results in a necessity of the above mentioned integrations, combinations and equipment undertakings. Not in all cases it would be even technically possible. And this costs quite a lot. Therefore holdings oriended at subsistence and low scale of production, with non-agricultural sources of income, can be regarded not only as a temporarily necessary¹³ but also as a relatively permanent element of the structure of the Polish agriculture, which will be subject to self-limitation. At present it can be even regarded as a desired element, if it will be maintained within reasonable limits and will not aspire to support from the side of the state, however it is difficult to refuse help for such holdings, if highly commodity intensive agricultural holdings are benefiting from such help. Therefore the common suggestion that the public funds should be transferred only to intensive holdings, especially large-surface holdings, can be regarded as doubtful, or at least one-sided. This is justified neither socially, nor in accordance with the competition principle, however these groups have a decisive meaning now and probably in the future for shaping the situation on the agricultural market. The generally quoted argument of competition in the regional or global market cannot be defended.

Taking into consideration the above, one should not ignore the diversity of agricultural holdings in terms of the production potential, directing the activity, sources of support for families connected with agricultural holdings, etc.