Selling farms may save the life of Poland’s agricultural sector

Date: 16/09/04

SINCE the beginning of August, Polish farmers have been besieging the regional offices of the Agency for Restructuring and Modernization of Agriculture (ARiMR). They wish to give up their farms in exchange for so-called structural pensions financed, in greater part, by the European Union. The EU will pay €640 million over the next two-and-a-half years for the project.

In the first two days of the scheme's implementation, almost 4,000 farmers submitted applications and some 50,000 picked up the forms.

The resources allocated in the present budget will be sufficient only for about 100,000 farmers but the number of prospective beneficiaries is much higher. The Polish ministry of agriculture is already studying ways to reallocate funds to meet potential demands.

"In case the financial resources for compensation payments are exhausted, the ministry will immediately appeal to the European Commission for the reallocation of funds within the framework of the Programme for Development of Rural Areas," says Malgorzata Kasiazek, the ministry's press officer.

Since 2 August, every farmer who is older than 55, has practised farming for more than ten years and has contributed to the national retirement scheme for at least five years is eligible for early retirement allowances. The applicant must hand over the farm to a third party or to the state in order to receive a "structural pension". This will be paid until the farmer reaches retirement age and is eligible for a regular state pension.

The EU first introduced such early retirement schemes in 1992. They were applied in most member states and were particularly popular in Germany and Greece where they led to a greater concentration of arable lands and to the liquidation of ineffective farms.

The Polish authorities hope the scheme will help restructure the agrarian sector.

While in western Europe only a small percentage of the population is employed in agriculture, in Poland the figure is 28%. The average Polish farm has around nine hectares while in the West the market is dominated by large agricultural enterprises. The arable lands are dispersed, too small for rational development and cultivation is often technologically backward. The majority of those engaged in farming are old people and their descendants are not eager to continue the family tradition.

The number of farms in the country has diminished from 2.2 million in 1987 to 1.5m. Some 300,000 of them only produce for their own needs and 876,000 sell products for less than 10,000 zlotys (a little over 2,000 euro) yearly.

The project is also directed at fishermen who want to give up fishing. It is estimated that by the end of 2006, one in fifteen farm owners (90,000 out of 1.4 million) and one-third of the owners of fishing cutters (1,200) will have left the business. Fishermen's ranks have shrunk significantly in the past 15 years but without further drastic reductions the fish resources in the Baltic Sea may soon be seriously endangered. Twenty years ago, 800,000 tons of fish were caught in Poland. Today, only 250,000 tons are being fished.

European Commission experts claim that if every second fisherman in Poland changes trade, the remaining group will be capable of catching enough fish to make a decent living.

The compensation payments provide relatively good money to live on. "It is a God-sent opportunity for people like me," says Jozef Stolarczyk, an owner of a 14-hectare holding near Sandomierz in central Poland. He is 56 and cultivates vegetables and corn on his fields. "I'm approaching the retirement age and none of my children are interested in farming. I feel tired. Working on a land like mine is a permanent struggle with the forces of nature and the ill-will of people. It provides only for basic needs and leaves no option for investments or development. I'm planning to sell my lands and live with my daughter and son-in-law. We both applied for the compensation money, my wife and I. Now my future seems to be secured."

Analysts assess that, because of the early retirement scheme, around 350,000 hectares of arable land will come onto the open market. That means a chance for the owners of larger farms to add some land to their possessions. In many regions of Poland it is difficult to purchase land. No wonder that the government is interested in prolonging the project beyond 2006.

The greatest interest in the early retirement scheme is in the south and east of Poland. The majority of farms there are small and many of their owners are employed outside the agricultural sector. "We are swamped with applications and inquiries about this new opportunity," says Lukasz Osik, a spokesman of the ARiMR regional office in Lublin. "Up to 6 September, we have accepted 1,508 applications which puts us in the lead among other regions in the country."

The calculations are simple. The income from a three-hectare farm is on average 517.5 zlotys (around 100 euro) per month while the early retirement allowance provides three times more money. So the incentive to apply for the scheme is enormous. The Commission decided that the highest gross payment might reach the level of 2,420 zlotys per month (around 500 euro).

Even greater grants await fishermen. For a medium-sized, 14-year old cutter with a displacement of 23 tonnes, the Union is willing to pay €177,000 and for a 32-year-old boat with a displacement of 420 tonnes, €1.12m . A new boat of that class costs €1.5-2m. The offer is hard to refuse.

The biggest barrier in applying for early retirement compensations is of a psychological nature. "There is a popular saying that you do not replant old trees," says Janusz Klister, a sociologist.

"Farmers are generally people who have strong ties with the earth, strong feelings for nature. They had quite often fought for their land against foreign oppressors and crazy reformists. They think the land is the only solid and valuable property one may possess; the only product not worth commercial transactions. Many of them have held their lands for many generations. Such attitudes cannot be ignored and they will diminish the number of applicants."

But the economic security of many Polish peasant and fishing families, haunted by the spectre of unemployment, is also at stake.

• Wieslaw Horabik is a Polish freelance journalist.

Polish farmers who are willing to give up their farms are able to apply for an EU funded early retirement scheme.