Significance of Production Diversification in Ensuring Financial Security of Farms in Poland

Abstract

The purpose of the present study is to defi ne, based on a theoretical identifi cation, the signifi cance of production diversifi cation in ensuring fi nancial security of agricultural farms and a presentation of the specifi city of multi-directional farms in Poland. The entities included in the research were the ones conducting agricultural activity of a mixed type: "mixed cropping and mixed crops-livestock" in 2007-2013. The analysis was carried out based on data obtained from the statistical publications of the Central Statistical Offi ce. The size of agriculturally utilized area and its use, economic size, the type and structure of plantation, as well as the species and number of farm animals were all taken into consideration in the analysis. Based on the theoretical considerations presented, it is evident that production diversifi cation plays an important role in the reduction of the agricultural activity risk, and thus it contributes to maintaining stability and thereby preserving the fi nancial security of farms. The results of empirical research prove that the farms that diversify their production are mainly those of small economic size, producing for their own use. Diversifi cation acts as a safety buff er in the case of these farms. It ensures self-suffi ciency in terms of consumption and fodder production as well as small income. In the case of farms with bigger UAA it ensures proper functioning and survival on the market.

Subsidization of Entrepreneurship in Rural Areas in Poland: Scale, Effects and Regional Diversity

“…Involvement in non-agricultural activities, in addition to its contribution to the absorption of surplus labor in rural areas, can enable a reduction in income uncertainty, increase in agricultural productivity, and also be one of the possible strategies for adaptation to climate change (Kurdyś-Kujawska, 2016;Kurdyś-Kujawska et al, 2018). In addition, the abandonment of agriculture as the only function of rural areas has, in many cases, enabled the maintenance of the basic form of activity, which is agriculture, especially in areas characterized by high agrarian fragmentation (Bogusz, 2018).…”

Determinants of Financial Security of European Union Farms—A Factor Analysis Model Approach

“…Financial security can be defined as the ongoing process of reducing and eliminating monetary risks to ensure capital adequacy according to the risk and preference profile of the subject [5]. The results of studies presented in the literature show that diversification of production, among other things, plays an important role in reducing the risk of agricultural activities and thus increasing the financial security of farms [6,7]. An essential concern within the discussed scope is the identification of factors affecting the financial security of farms, including those related to the financial resources of a particular entity.…”