Savings of Small Farms: Their Magnitude, Determinants and Role in Sustainable Development. Example of Poland

Barbara Wieliczko,Agnieszka Sompolska-Rzechuła,Agnieszka Kurdyś-Kujawska

doi:10.3390/agriculture10110525

Barbara Wieliczko, Agnieszka Sompolska-Rzechuła + Show 1 more

Open Access

https://doi.org/10.3390/agriculture10110525

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Abstract

Savings are a catalyst for capital creation and are the driving force behind economic growth and development. The degree of development achieved by farms will largely depend on their ability to accumulate income and their way of spending. The aim of the article is to determine the savings-generating potential of small farms in Poland and the impact of savings on their sustainable development. In this article, firstly, the literature on savings in small farms and their role in sustainable development is synthesized. Secondly, presents empirical research that was conducted considering the economic and social characteristics of 1485 small farms to help understand saving behaviors in the chosen context. The research material consisted of data on entities participating in the Polish Farm Accountancy Data Network (FADN) in 2017. The factors influencing the generation of savings were identified using the logit regression model. The results of the research indicate great diversity in the scale of savings generated by small farms in Poland. Moreover, the study showed that 4 out of 21 variables characterizing small farms were significant, with a good fit of the model as evidenced by the model quality assessment measures used (coefficient R2count and ROC curve). It was found that two variables, namely area of farmland and gross value added, each had a statistically significant positive influence on the probability of generating higher savings by small farms in Poland. On the other hand, the possession of liabilities and gross investment each had a statistically significant negative influence on the accumulation of higher savings. The research reveals some limitations that may hinder the mobilization of savings by small farms and thus affect their sustainable development. Therefore, as recommendations, we present measures that can increase savings by small farms in Poland.

Highlights

Sustainable farm development is a process of structural transformation, changing the relations of production factors within a farm, the structure of economic activity, or the nature of its relations with the market towards achieving a new point of balance at a higher level of economic efficiency in accordance with external conditions, including the need to protect natural resources [1]
Savings are an important aspect of the functioning of agricultural holdings, as they allow farmers to have a direct influence on the development and changes in their economic activity, as well as being a vital element of financial security in case of unforeseen events
This study provides evidence of the diversity of savings in small farms and the impact of several factors determining their level

Summary

Introduction

Sustainable farm development is a process of structural transformation, changing the relations of production factors within a farm, the structure of economic activity, or the nature of its relations with the market towards achieving a new point of balance at a higher level of economic efficiency in accordance with external conditions, including the need to protect natural resources [1]. Many proponents emphasize the importance of “smallholder farming” or “family farming”, often claiming that smallholders or family farms are responsible for a significant proportion of global food production [5,6] Importantly, these farms carry out agricultural activities using different production methods, and provide numerous public goods and contribute to maintaining the diversity of the landscape.

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