Prices of Means of Production in Agriculture and Agricultural Prices and Income in Poland During the COVID-19 Pandemic

Abstract

Theoretical background: Agriculture is an input-intensive sector of the economy. The sector of means of production in agriculture is one of the three basic components of the food economy. The prices of agricultural inputs shape the operational costs of farms and significantly affect their income situation. Key agricultural inputs represent fertilizers, plant protection products, seeds, energy and labour force. The COVID-19 pandemic has affected the functioning of food systems all over the world, including in Poland. The agricultural sector in Poland faced several challenges, including the surge in prices of means of production in agriculture. Purpose of the article: The study aims to identify and assess changes in the prices of means of production in agriculture and the impact of changes in these prices on the dynamics of selling prices of agricultural products and the income situation of farms in Poland during the COVID-19 pandemic. Research methods: The study employs various research methods, including critical literature analysis, the descriptive approach, the comparative method, verbal logic, and descriptive statistical methods. Moreover, we utilize a standardised questionnaire method utilising the CATI (computer-assisted telephone interviewing) technique, targeting 50 experts in the field of agricultural economics, to gather their perspectives on the possibility of transferring the rise in agricultural production costs to the pricing of products sold during the COVID-19 pandemic. The secondary data come from the Statistics Poland, the Agency for Restructuring and Modernization of Agriculture (ARMA), and the National Bank of Poland (NBP). The research period covers the years 2017–2021, with particular emphasis on the years 2020–2021, i.e., the period of the COVID-19 pandemic. Main findings: Research results show that only in 2020, the prices of goods purchased for current agricultural production decreased. However, in 2021, the costs of materials and services and other costs in agriculture, including wages, increased at a record pace. The demand-side causes of such cost increases were increases in money supply and agricultural income. Supply-side causes were shaped by commodity prices and wages. In Poland, the prices of goods and services purchased by farms were less variable than the prices of goods sold. The data analysis did not reveal significant relationships regarding the dynamics of the prices discussed. Such a conclusion is also confirmed by the results of a questionnaire survey directed to experts in agricultural economics. The responses concerning the possibility of transferring the increase in production costs to the prices of sold products during the pandemic years varied. In the years 2017–2021, the income situation of Polish farms was variable. In 2020, increases in income from production factors, operating surplus, and farmer’s income, and their decreases in 2021, were inversely correlated with changes in production costs in agriculture.

Instruments Mitigating the Negative Effects of the Covid-19 Pandemic in Agriculture

“…Agriculture, a cornerstone of global food security and a major economic driver in many countries, was not immune to these disruptions. COVID-19 has had a significant impact on agriculture and food systems, affecting aspects ranging from production and production costs to food security [Siche 2020, Jędruchniewicz andWielechowski 2023].…”