Possibilities of Changes in Energy Intensity of Production Depending on the Scale of Farm Investments in a Polish Region

Abstract

The purpose of this paper was to analyze the possibility of changes in energy intensity of production in the context of farm investment scale. The empirical section relies on unpublished FADN microdata. The study answers the question of whether investments and fixed capital growth can contribute to improvements in environmental performance of agricultural production. As it turns out, the group of farms with the greatest amount of investments saw an increase in energy consumption costs, though at a much slower rate than growth in production value. As a result, there was a drop in energy intensity of production, defined as the ratio between energy costs and production value. These findings corroborate the hypothesis advanced in this study, namely that upon reaching a sufficiently large amount of investments, farms can become capable of reducing the energy intensity of their production activity. Hence, higher levels of capital productivity are attained when the farms invest in more energy-efficient fixed assets. Conclusions cannot be universal, as the analysis involved a portion of selected farms. However, the research indicates a trend in the study of energy intensity of production depending on the scale of investment and the validity of the investment comprehensiveness approach. These conclusions provide a basis for recommendations for an agricultural policy which should include support for investments that are large and comprehensive (in relation to the farm’s assets) and go beyond the simple renewal of assets. Therefore, in its investment-oriented measures, the agricultural policy should take the innovativeness (including energy efficiency) criterion into account.