Economic Reform, the Free Market and Agriculture in Poland

Abstract

The paper examines the effects on Poland's agriculture of economic reform and the introduction of a free market, following the Stabilization Programme of January, 1990. It was hoped, after stopping hyperinflation, that price equilibrium and greater productive efficiency in farming would be achieved, but the evidence suggests that farming costs rose rapidly while produce prices rose slowly. Farm household incomes, in 1990, were only maintained by reduced inputs to agricultural production or by earnings from non-farm activities. Examination of market prices, plus field enquiry suggest that removing controls and subsidies from the produce markets has resulted in low prices and sales uncertainty. Without greater confidence in produce markets, investment in agriculture will continue to be low. POLAND'S ECONOMIC AND SOCIAL GEOGRAPHY are in the midst of a radical transformation created by economic policies introduced in 1989 and 1990. The process will take many years before the socialist structures have been sufficiently dismantled for Poland's economy to be described as capitalist, but several new elements intended to create a free market and develop private entrepreneurship are in place and some contradictions between policy intentions and reality have already emerged. Nowhere is this more apparent than in agri- culture, where dependence on a free or decontrolled market has been developed more rapidly than in any other economic sector. This has occurred partly because in socialist Poland agriculture already had a small 'free' market of independent dealers competing with the system of state-controlled markets or buying points, grouped in gmina co- operatives or in specialized cooperatives serving the private farmers (the gmina is the smallest admin- istrative unit in Poland), and partly because 72 per cent of the agricultural land was already in private farms of which there are just over two million (in holdings of 1 hectare or more; GUS, 1990: 114-16 and GUS, 1991: 193, 284). GUS (Glowny Urzqd Statystyczny) is the acronym of the Head Office of Statistics in Warsaw. In the author's experience the agricultural data published annually by GUS have an acceptable standard of accuracy for national and voivodeship accounting