Territorial differences in agricultural investments co-financed by the European Union in Poland

Sadowski, Arkadiusz; Wojcieszak, Monika; Beba, Patrycja

doi:10.1016/j.landusepol.2020.104934

Cited by 15 publications

(13 citation statements)

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“…Agriculture is a fundamental branch of any economy, as it provides food security [22] through cultivation and breeding [23]. Agricultural development is necessary to maintain a safe level of nutrition amid an ever-increasing world population, which is estimated to reach 9.7 billion in 2050 [24].…”

Section: Literature Reviewmentioning

confidence: 99%

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

2021

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Ensuring adequate profitability of production, which can be ensured by optimal investments, can encourage farmers to be more caring about sustainable development. Several existing studies indicate that technical efficiency in agriculture varies regionally. Investments comprise a basic way to increase efficiency and thus reduce polarisation between regions. However, contrary to established assumptions, not every investment leads to increased efficiency, which entails a phenomenon of overinvestment. Investments should, by definition, be positively correlated with efficiency. However, existing studies indicate the existence of a significant problem of overinvestment, where increased efficiency may not occur. While for about 40% of farms in Poland the scale of investments can be assessed as optimal, more than quarter of farms exhibited absolute overinvestment and nearly one in five farms is underinvested. In response to this problem, this study aimed to identify regional differences in Poland with regard to overinvestment in farms, as well as to determine changes in farm efficiency depending on the region and level of overinvestment. The source material used in the following article consisted of unpublished Farm Accountancy Data Network (FADN) microdata derived from the DG AGRI of the European Commission. The study covered the period 2004–2015. For an original classification of farms according to their level of overinvestment the technical efficiency, using the stochastic frontier analysis approach, was used for determining regional differences that occurred as a result of overinvestment. Stochastic frontier analysis shown noticeable differences in the average technical efficiency for different overinvestment groups. As expected, underinvested farms are the least efficient (general in Poland and in all analyzed regions) and average technical efficiency did not increase. Interestingly, optimally investing farms do not have the highest technical efficiency. Higher efficiency was achieved by both relatively and absolutely overinvested farms. This is due to the fact that in order to produce efficiently in agriculture, it is necessary to at least maintain the level of tangible assets provision, and preferably to increase it as well. In terms of overinvestment levels, farm structure does not differ significantly between individual regions in Poland. However, there are differences between regions in terms of farm efficiency within each group. In all regions, only the underinvested farms did not increase their efficiency over the period under review and the highest efficiency growth rate was in regions where farms were least efficient at baseline.

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Section: Literature Reviewmentioning

confidence: 99%

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

2021

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“…In both the first and the last year of analysis, the same territorial units were leaders, including mainly rural municipalities adjacent to large urban centres (Table 2). A meaningful role can be attributed in this process to the growing revenues to budgets of municipalities and skillful use of European funds, including those dedicated to these areas increasing (see: OP Development of Eastern Poland, Sadowski et al 2021) For this reason, the highest level of living, assessed based on the synthetic measure value in 2018, was recorded for Stawiguda, Dywity, Gietrzwałd, and Jonkowo municipalities, which are the backbone of the capital of the region and Province -Olsztyn. Next in the list were the units in an analogous situation (rural municipalities: Giżycko, Ełk, Purda, Jedwabno), i.e., located in the immediate vicinity of large population centres.…”

Section: Resultsmentioning

confidence: 99%

The standard of living and its spatial differentation among rural municipalities in Warmia-Masuria province

Janusz

2020

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This manuscript presents the results of the research on the spatial differentiation of the level of living among the rural municipalities of the Warmia-Masuria Province in the years 2005 and 2018. The rural areas are currently undergoing many changes, including sub-urbanisation processes and a departure from their monofunctional perception. The multi-dimensional analysis (Hellwig’s development pattern method) was used to measure the level of living in selected rural municipalities, which were then assigned to four clusters based on the synthetic measure value. Then, the Ward’s method was employed to identify the similarities in the level of living in these territorial units. The results indicate a significantly higher level of living established based on the synthetic measure value in the municipalities adjacent to the leading urban centres of the region, i.e., Stawiguda, Dywity, Gietrzwałd, Jonkowo, or Giżycko. In turn, the relatively lowest living standards were demonstrated in the municipalities bordering the Russian Federation, i.e., Budry, Górowo Iławeckie, Lelkowo, and Braniewo. Strong spatial dispersion of this phenomenon, combined with the petrification of the positions at the top and at the bottom of the ranking, indicates the need to implement a different development strategy for these specific units.

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“…Every investment comes with a certain amount of risk [ 89 ], especially in agriculture. The investment in agriculture is partially financed by public funds often which lowers the risk score of the investment but don’t doesn’t reduce it entirely [ 90 ].…”

Section: Discussionmentioning

confidence: 99%

Overinvestment in selected Central and Eastern European countries: Production and economic effects

et al. 2021

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Farms need to invest in order to earn incomes and maintain their competitive edge. However, the scale and extent of investments must be aligned with resources of other productive inputs, primarily including land, because otherwise there is risk of overinvestment. Since 2004, Central and Eastern European countries have been provided with access to investment support programs; these are non-repayable aid funds which can potentially lead to overinvestment issues. Therefore, this paper attempts to answer the question on the scale of overinvestment in the countries covered. This is all the more important since that problem has rarely been addressed in economic and agricultural research. The study presented in this paper is unique in that the research tasks are based on unpublished Farm Accountancy Data Network (FADN) microdata for 5839 selected Central and Eastern European farms provided by the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI). Based on variables relating to the amount of productive inputs and production volumes, the authors developed their own typology of farms which includes the following categories: optimum investment levels (the growth rate of labor productivity is greater than growth in the assets-to-land ratio); relative overinvestment (while labor productivity grows, it does so at a slower rate than the assets-to-land ratio); absolute overinvestment (labor productivity declines while the assets-to-land ratio grows); underinvestment (decline in both labor productivity and the assets-to-land ratio). The authors demonstrated that members of the ‘absolute overinvestment’ group made flagrant mistakes in investment planning and implementation, whereas members of the ‘relative overinvestment’ group did record an improvement in labor productivity which ultimately can be considered a positive outcome. Underinvested farms were a very small minority in each country. In addition to filling a gap in the methodology for determining agricultural overinvestment, this paper also indicates the scale of that issue in Central and Eastern European countries. This study may be of importance both to farms (as guidelines for investment planning) and to agricultural policymakers who develop investment support programs.

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Territorial differences in agricultural investments co-financed by the European Union in Poland

Cited by 15 publications

References 32 publications

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

The standard of living and its spatial differentation among rural municipalities in Warmia-Masuria province

Overinvestment in selected Central and Eastern European countries: Production and economic effects

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