Background Poland
Poland: Land of small farmers and high subsidy
The Polish government statistics agency GUS has published new figures on the development of the agricultural sector over 10 years. These show that Poland is still an agricultural country with enormous potential. Farms with less than 5 hectares still dominate half of the landscape, although professionalization is progressing very quickly.
The report quantifies agricultural developments between 2010 and 2019. The past year was marked by a major drought for Polish farmers. After an extremely wet autumn in 2017 and a subsequent wet spring, a period of drought followed that actually lasted until this summer. It is still dry in some areas. That characterizes the sector.
Small scale
Last year Poland had 1,4 million farms that together cultivate 14,7 million hectares of agricultural land and manage 10 million livestock units. What is special is that more than half of these companies are no larger than 5 hectares. Only 2,4% farm 50 hectares or more. Unlike, say, the Czech Republic or Slovakia, Polish agriculture was not greatly reformed under Soviet rule. Agriculture remained small-scale and still is. The average farm size is now 10 hectares. The figures slightly distort the image of this agricultural nation, because there are certainly enough large companies with thousands of hectares.
The area of arable cultivation last year amounted to 10,9 million hectares. This figure has remained fairly stable over the past 10 years. Grain is sown on almost three quarters of the plots. About 10% is intended for vegetable cultivation, although this is decreasing in its entirety. In 2019, Polish livestock farms together numbered 6,3 million cows. An increase of 1,3% compared to the previous year. In addition, there were 11,2 million pigs (+1,7%).
Higher turnover
The drought has not only resulted in significantly lower yields, but also higher turnover due to higher product prices last season. The arable turnover in 2019 was an average of €539 per hectare. A year earlier it was €488. For livestock farmers last year this was €815 per hectare. The total company income for 2019 is on average €9.624 per company. An increase of 15% compared to 2018. The smaller companies cannot survive without subsidies. Business owners are therefore mostly part-time farmers. Land prices have been on the rise for years. In 2019 they rose again, to an average of €10.384 per hectare.
The pig sector in Poland is affected by African swine fever. The number of registered infections decreased last year, but remains strong with almost 2.500 cases. Nevertheless, the total number of animals grew slightly. In particular, the number of breeding sows increased. In addition, the country imported 7,2 million pigs from other European countries in 2019. The cattle farming sector also grew. The number of calves in particular increased, by 2,2%. Milk production increased by 2,3%.
Instant payments crucial
As mentioned, the average company size is small and revenues are relatively low. Farmers are even at the bottom of the list of income per profession, while the overall Polish economy is clearly on the rise. An average income in 2019 was €400 per month (+5%). For farmers, that is only €200 and the expenses are often higher than the income. Direct payments from the CAP are therefore crucial. Since 2015, Poland has had access to this. 30% of income comes from direct payments. Including other support measures, even 45% comes from subsidies. By way of comparison: in the Netherlands this is 20%.
The total Polish budget within the CAP is €23,7 billion, almost all of which comes from EU funds. The country has direct coupled support for a number of crops such as sugar beet. For beets it is €335 per hectare, for starch potatoes it is €244. To qualify for a subsidy, farmers must comply with a few basic rules, such as keeping fertilizer accounts, use of crop protection products and spraying inspection.
EU trading partner
For many years Poland has been the crossroads of Europe for trade between east and west. Almost 13% (€31,4 billion) of the total Polish export value comes from the agricultural sector. This is more than 8% of total imports (€21,1 billion). EU Member States purchase 80% of Polish products. Germany has a 25% share in this. The United Kingdom is in second place and the Netherlands is in third place, with a share of 2%. There is also considerable export to the east. Ukraine bought €3 million worth of products in 6,4 and Russia bought €2019 million. That is roughly equal to exports to the US.
The country is the European market leader and globally large in the production of hard and soft fruit such as apples, strawberries and cherries. In addition, many frozen vegetables are exported. It is also the largest EU exporter of poultry meat. Dairy exports grew by 2% in 2019, with European countries declining by three quarters. This mainly concerns cheese (35% of the total).
Organic acreage is decreasing
After joining the EU in 2004, Poland was obliged to encourage organic farming. The number of organic companies has been on a downward trend since 2013 and currently stands at 20.000. There were 7 26.600 years ago. This mainly concerns arable farms (88%). Together they farm 485.000 hectares, 3,3% of the total agricultural area.
The future
Despite the fact that professionalization and economies of scale are also increasing in Poland, it remains a country of small-scale agriculture with poor companies that do not grow in line with the Polish economy. The re-elected conservative Catholic government stimulates the small-scale family businesses, which are mainly found in the east. This hinders further professionalization of agricultural exports. Meanwhile, the top 2% of Polish companies are no longer inferior to their Western counterparts. They produce at a very high level, but are hampered in their development by conservative policies. EU subsidies, mainly in the form of direct payments from the first pillar of the CAP, remain crucial to guarantee an income for Polish farmers. With a Pole as agricultural commissioner in Brussels, the future seems secured for now.
More information and figures? Download and read the full report in English here.
Niels van der Boom
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