AGRICULTURAL STRUCTURE MANAGEMENT IN POLAND - LEGAL REGULATIONS AND PRACTICE

Bożena Tańska-Hus, Marcin Orlewski
Department of Economics and Organization of Agriculture, Agricultural University of Wrocław, Poland

ABSTRACT

Family-owned farms constitute a fundamental unit of Polish agricultural structure. However, it is necessary to improve the area structure of Polish agriculture. It is supposed to be achieved with the help of the Agricultural Structure Management Act of 11.04.2003 which introduces certain restrictions in agricultural real-property trade. The responsibilities include a duty to inform the Agricultural Property Agency on concluding contracts of right transfer of these real-properties. The Agency has the right to dissolve the contract and purchase the agricultural real-property for the Treasury paying less for the property than its value estimated by the contracting parties.

Key words: agricultural structure management, farm, agricultural real property trade.

HISTORICAL EVOLUTION OF LEGAL INSTRUMENTS IN THE DEVELOPMENT OF THE AGRICULTURAL MANAGEMENT IN POLAND

Poland, in the period of the 2^nd Republic (1918-1939) was a rural-industrial country, where 75% of people lived in the countryside and 25% in the cities. Despite the rural features of the country, Polish agriculture struggled with numerous problems, of which the most important were an unfavorable agrarian structure, overpopulation and poverty in the countryside. On one hand, there were large-size farms (over 100,000 ha - 247,105.38 ac) that constituted only 0.5% of all the contemporary agricultural farms, but covered 30% of agricultural land. On the other hand, there were small farms that covered 45% of agricultural land. Due to such an agrarian structure, Polish rural areas suffered from huge overpopulation, which in turn resulted in a poor economy and low production efficiency.

In the attempt to improve this situation, 15.07.1920 the Parliament passed a bill on agricultural reform [3]. Land surpluses over 180.00 ha (444.79 ac) were obligatorily parceled out. This resulted in only small alterations in some regions of Poland. The agricultural reform was to be performed by adequate state authorities with the refund being only one half of the market price of the estate. The obtained land was then supposed to be sold to farmers assisted by low-rate loans. It is vital to notice, that church properties were also broken out. However, the act execution was stopped because its regulations were in conflict with Poland's contemporary constitution of 1921. Art. 99 of the Constitution secured the property allowing expropriation only with a full refund. Thus, it was necessary to prepare a new act of law that would change unfavorable agricultural management. In 1926, another act was passed on the agricultural reform [2]. Parceling was supposed to be voluntary with a full refund of the market prices. Therefore, only rich farmers with large farms had actual access to the real estate. Eventually by the year 1939, 2,500,000 ha (6,177,634.54 ac) of land were parceled. The problem of a wrong agrarian structure returned again after the 2^nd World War. It is important to remember that Polish borders changed after the war. Poland lost land in the east and regained some old territories in the west.

The period 1944-1949 considerably affected agricultural land partitioning in Poland. The decree had of 6.09.1944 the most important effect on the agricultural reform [6]. It was passed based on the act of law of 15.08.1944 on a temporary mode of issuing decrees with the power of an act of law [5]. This act defined particular rules of passing decrees that had a legal power of an act because of the ongoing war in Poland, and hence difficulties in legislature functioning.

According to the decree, the agricultural reform in Poland was an economic and political necessity. It was to be executed with the contribution of a social factor as stated in the Manifesto of the Polish Committee for National Liberation. The agricultural system in Poland should be based on strong and production efficient farms owned by the farmers. Due to the fact that a considerable part of Poland was still occupied by the enemy, it was possible to parcel out only a part of the land in the freed territories. The reform was to be based on four main aspects:

1) adjusting the existing farms with an area under five ha of arable land to the area norm;
2) establishing new independent farms for landless farmers, rural workers and small leaseholders;
3) establishing horticultural farms, housing colonies, and workers' vegetable plots close to the cities and industrial centers;
4) granting appropriate land for schools and agricultural, breeding and agro-industrial centers supervised by the state or local authorities.

Art. 2 defined the origin of the real property encompassed by the agricultural reform. First, these were agricultural real properties owned by the Treasury. Secondly, the land on the regained western territories, which was the land taken over from their owners due to different reasons, in particular due to a valid sentence for treason or help for the occupants against the Polish state or the local people. The reform also affected private owners because the state decided to parcel out private agricultural real estate parcels if their combined area was under 100 ha of total propriety area or 50 ha of agricultural land. The expropriation was not refunded. Thus, the owners were deprived fully of their real properties without any refunds. Moreover, the Treasury did not take any responsibility for liabilities of the confiscated real estate nor even for mortgages. All those liabilities expired with the expropriation based on the decree in question. The State Land Fund was established to manage the confiscated proprieties.

The decree's regulations on the area of the newly established and enlarged farms were unfavorable for the agrarian structure. The area of those farms should not exceed five ha (12.36 ac) of medium quality soil, and for horticultural farms - two ha (4.94 ac). The land owners also had limited freedom to manage their land, so that the farms could not be divided, leased or sold - completely or partially.

The reform led to quite favorable conditions for purchase of agricultural real properties. The price of the land was established based on the mean soil fertility on the area.

The purchasers had to pay only 10% of the price and the rest was divided in to payments for 10 years (small farmers) or 20 years (landless farmers). In the latter case it was possible to postpone paying of the first payment for three years.

Since the owners of the expropriated agricultural estates did not receive any refund, they could obtain a farm according to the rules applied for the landless farmers - up to five ha (12.36 ac). The farm could not be located on the area of their former real estate. When they did not use this opportunity, the State paid them monthly financial assistance equal to the salary of a low category clerk.

Shortly after the decree came in force, its regulations concerting agricultural reform were slightly modified [7]. According to the new regulations, the reform consisted of:

1) adjusting the existing dwarfed, small and medium-sized farms to the area norm;
2) establishing new, independent agricultural farms for the landless farmers, rural workers and small leaseholders;
3) establishing horticultural farms, colonies, and workers' vegetable plots close to the cities and industrial centers;
4) granting appropriate land for schools and agricultural, breeding and agro-industrial centers supervised by the state or local authorities;
5) reserving appropriate areas for the development of cities, housing colonies and vegetable plots and the areas for military purposes, public transport and melioration.

Some land was also gained for the reform based on the decree of 28.11.1945 on takeover of certain real estate for the purpose of the agricultural and settlement reform [8]. First, the State Land Fund could gain land from the people migrating to the USSR, but the decree did not solve the problem of refunding. The financial equivalent for the property was granted to those owners who voluntarily subdued their land to the reform or whose real estate had been parceled out by 01.08.1945. However, this equivalent, in the form of real property of the same value, was only given to the owners whose properties had not been encompassed by the decree of 1944 of the agricultural reform.

It is worth mentioning, that all the liabilities of the overtaken properties remained in effect and were binding on the new, equivalent real estate purchased.

Another act of law of great importance for agricultural structure management in Poland was the decree of 06.09.1946 on the agricultural system and settlement on the area of the Regained Territories and the former free city of Gdansk. According to this decree, all the agricultural real properties on these lands that were not private-owned at that time were devoted to establish and enlarge agricultural farms. The decree was not applied to the forests and forestry land of over 25 ha (61.78). The decree defined maximal area norms for the established or enlarged farms. Basically, the area of such a farm must have been between seven and 15 ha (17.30 - 37.07 ac) depending on the soil and weather conditions. In case of animal breeding farms the limit was 20 ha (49.42 ac). The animal breeding farms were those where 30% of the area was covered by pastures [9]. The newly established or enlarged horticultural farms in the area could not exceed five ha (12.36 ac), and seed production and nursery garden farms had a limit of 20 ha (49.42 ac). The purchasers of these partitioned lands were the citizens of Poland who arrived at the Regained Territory or The free City of Gdansk due to the settlement campaign supervised by state institutions or Poles who had already been running farms on this terrain with the consent of the appropriate authorities. Only one farm could be purchased by one person and a married couple was considered a single person by the decree. The candidates for the purchase had to present practical agricultural qualifications, such as former work in agriculture or theoretical knowledge that is relevant agricultural education. The price of the land was calculated based on the mean fertility on the given area. It was necessary to pay on account for the purchase, before the property right transfer of a farm was possible. The rest of the price must be paid, according to the decree, in 20 years. The payment could be done in nature (rye) or with money. The purchasers could benefit from various discounts, e.g. when buying an agricultural farm without buildings. People who owned a farm on the Polish territory before WW 2 and lost it after the war due to border changes could then include the farm's value in the price of a new purchase.

As it is presented here, in the post-war period, Polish authorities preferred small family-owned farms based mainly on the work of a farmer and his immediate family. However, these farms were economically inefficient, had a low level of production and mechanization. The production was mostly used by the farm owners themselves. The extreme restrictions on large-size farms had a negative effect on the agrarian structure of Polish agriculture because it both eliminated large and strong farms and introduced small-size area norms for the purchased land. The regulations discussed here above had the greatest importance in the first years after WW 2. In the following years, no land was available for parceling out and western territories were populated. The legislature had to face the problem of the secondary trade of agricultural real properties that would match the State's agricultural policy and so develop the agricultural management system assumed by the state.

The first complex regulations on agricultural real property trade can be found in the act of law of 13.07.1957 [10]. This act defined an agricultural real property as real estate located in a village (Contemporary name - clusters), that was used for agricultural production or it was devoted for production according to the environmental engineering plans. The act obliged the purchaser to have professional or theoretical qualifications in agriculture. The restriction was not applied when the real property was inherited, it was transferred inter vivos from a spouse or descendants, or in case of a purchase of a plot of over 5,000 m² (1.24 ac), if the purchaser did not have land for building in the village/town. At the beginning the inheritance of an agricultural farm was not restricted in any way. Later, in 1963, the restrictions were introduced, as discussed later in the present article.

In case of legal persons, in order to buy or exchange such a real property, it was necessary to obtain the consent of a state institution at the province level. Only certain legal persons were freed form this obligation. These were mainly state organizations, agricultural co-operatives, and other forms of socialized agriculture. Theoretically, there were no limits for the purchase of agricultural real property by legal persons in other ways than selling or exchanging.

The act also defined maximal area norms for the purchased land. The maximal size of the real estate depended on the type of purchase. In the case of inheritance, it was 100 ha (241.11 ac), but it also included the area of the land already owned by the purchaser. Therefore, a natural person having 50 ha could only buy up to 50 ha. This restriction was also valid in any case of a land purchase form a spouse or descendants.

All the other cases of land purchase were subject to greater restrictions since the area norm there was 15 ha (altogether of already owned and newly purchased lands) and 20 ha for animal breeding farms. Only due to inheritance or purchase from a close family member was it possible to obtain a very large sized farm. It was impossible in other cases. It is important to remember here, that if someone bought property of a larger area than was allowed, the whole surplus was taken over by the State without any refund. This sort of expropriation required a decision form a state institution at the district authority level. In case the of legal persons, actual restrictions in land purchase resulted from the necessity to obtain consent, so the maximal size of the property was defined by the administrative authorities.

The act of law of 1957 specified trade outside the state. Later, similar restrictions were introduced for agricultural real property purchase from the state that modified considerably the regulations defined by the decrees. The basic act of law in the matter was the act of 12.03.1958 on the sale of state owned agricultural real properties and regulating certain issues concerning the execution of the agricultural and settlement reform. The problem of agricultural qualifications was regarded similar as in the act of 1957. Certainly, there was no exemption from inheritance or the purchase from a family member, because the act of 1958 specified the purchase from the state. The regulations did not refer to a building plot over 5000 m². It was thought that the agricultural real properties could be bought from the state, apart from natural persons, only by agricultural, social or co-operative organizations. The act also defined the circle of entities that were privileged to purchase the real property and the graduation of this priority. In general, this right was beneficial for agricultural laborers, small farmers and agricultural co-operatives. The Poles repatriated from USSR were also privileged. In this act as well, the area norms were 15 and 20 ha, calculated the same way as in the previously discussed act on agricultural real property trade.

As seen from above, the state policy still tended to create small family-owned farms. The large-size farms were reserved for the socialized and state-owned forms of agriculture. But the economic efficiency of those small farms had been very low from the start and continued to deteriorate due to various events in the lives of their owners, such as land distribution among the successors or a sale to other farmers. It is vital to point out that in this period of time the individual farmers were a social group without any social security. People working on the state-owned farms obtained full social security in 1946-1953. Later, the security also covered the members of the agricultural co-ops. The lack of social security for the individual farmers forced this group of people to work until they became elderly in order to provide means for living. The transfer of the farm to its successors did not give any right for pension, thus the elderly were at the mercy of the others. This resulted in a constant diminution of the farms area, since the old farmers were not able to cope with the full size of the property, and therefore the mean age of the working farmers was increasing. The program of social insurance and its regulations clearly indicate the concept of rural area collectivization launched by the Polish government in those times [24].

As far as real property trade is concerned, an attempt was made to solve the problem of unfavorable agrarian structure by introducing the act of law of 29.06.1963 on limiting the division of agricultural farms [11]. The agricultural farm could be parceled out when a part of the farm was sold, the inherited farm was divided, or co-ownership was terminated, but only if the divided parts or those together with other land of their owner, met the requirements of the area norms. The farm could also be divided if a purchaser of a part of the land to be sold, of which the co-property is cancelled, owns a farm that corresponds to the minimal area norms and the purchased land becomes a part of this farm, providing that:

1) the rest of the divided farm preserves the basic area norms; or
2) the area of the divided farm is smaller than the minimal area norms, or
3) the area of the divided farm is smaller than the minimal area norms, but due to the division, the purchaser's farm will be larger than the farm that is to be divided or the latter will be liquidated.

The act of law on limiting the partitioning of farms' introduced also specific rules for inheriting of agricultural farms. These regulations were later included in the Civil Code (10th part) and were in force almost unchanged until 2001 when they were regarded as inconsistent with the Constitution of the Republic of Poland from 1997, and they lost validity based on the decree of the Constitutional Tribunal [17].

The agricultural farm being a part of an inheritance could be purchased by inheritors who fulfilled one of the following conditions:

1) directly before opening of succession, they were working on this farm continuously for at least one year,
2) at the moment of the opening of succession, they were running another individual farm or were working on the farm of a spouse or parents-in-law,
3) at the moment of the opening of succession, they were a minor or they were students training for a profession, learning at secondary school, or studying at high schools,
4) at the moment of the opening of succession, they were permanently unfit for work.

If none of the inheritors met the above requirements, the legislator allowed inheriting the farm if sufficient qualifications for running the farm were proved. A person who wanted to purchase such an inheritance was additionally obliged to certify within six months readiness to run an agricultural business. In other cases, the farm became the property of the Treasury as a legislative inheritor. Special rules giving privileges to the farmers were also applied when dividing the inheritance. When the act of 23.04.1964 - Civil Code [12] came into force, it regulated the agricultural real property trade both inter vivos and mortis causa. In the beginning of the act execution, the regulations on inheriting were identical with those applied in that matter according to the act on limiting the dividing of agricultural farms. They were only slightly modified until the time they were abolished. The restrictions of agricultural real property partitioning were regulated in a similar way.

The Civil Code also regulated the activities regarding agricultural real properties inter vivos (Art. 160-161). An agricultural real property could only be purchased by a person having practical (work experience in a farm in a given time) or theoretical qualifications for running the farm. This was not applied in the case of ownership right transfer of a building plot if the purchaser had not owned such a plot in this village/town. The legal person could only buy an agricultural real property with the consent of adequate state authorities, with the exception of socialized forms of agriculture. Apart form these restrictions, area norms were established. The area of a purchased property, when bought by a natural person, together with the area of the already owned real estate of the buyer or the area of co-owned property could not exceed 15 ha. And if the real property was classified as an animal breeding farm, its area could be up to 20 ha. If the norm was exceeded, the land surplus could have been taken over by the State without a refund, free from liabilities, except from liabilities resulting from land servitude. In inter vivos activities, the obligation of agricultural qualifications was annulated with the act of 28.07.1990 on the modification of the Civil Code [13. This situation lasted until the current act on the agricultural management system was introduced. In case of inheriting, as mentioned above, the special rules were abolished by the Constitutional Tribunal in 2001.

MAIN FEATURES OF AGRICULTURE STRUCTURE MANAGEMENT IN POLAND

According to article 3 of the Constitution, family farms constitute the basis for agricultural structure in Poland. Two sorts of agricultural farms emerge, i.e. family farms and non-family farms. In other European countries such a division can also be found. On one hand, these are farms established on great production areas, mainly observed in Anglo-Saxon countries, and on the other hand, farms of a considerably smaller size run by farmers and their families, mostly in Germanic and Romanic countries. Within the group of family farms, a significant diversity can be noticed, from peasant farms (Poland) to production farms in Western Europe [25].

Nowadays, both EU law-making and the inner legislation of the member countries have clearly chosen a family owned farm model for a basic production entity in agriculture [21]. So has Poland. Supporters of the family-owned farm model underline that such a farm is less susceptible to changing of emblements prices, its production is flexible and relatively protecting natural environment.

Moreover, the support for propagation and development of family-owned farms is a cheaper, less socially contested and much simpler process than an attempt to establish agriculture enterprises that are supposed to improve the economic situation of Polish agriculture [22].

The new Agricultural Structure Management Act of 11.04.2003 [19] based on previous intensive legislative works, regulates land trade in Poland. The lack of legal restrictions for agricultural land partition and in agrarian land trade (except for regulations concerning foreigners) has led to an excessive dispersion of agricultural farms. As a result of this negative phenomenon, Polish agriculture has become less competitive compared to EU agriculture.

According to the above Act, the agricultural structure is to be developed by the improvement of farms area structure, opposing excessive concentration of agricultural real properties and assuring that agricultural business is carried out by the people having relevant qualifications. To achieve these aims certain measures are introduced. These are among others restrictions in agricultural property trade, i.e. granting the Agricultural Property Agency (hereafter referred to as the Agency) pre-emption right for agricultural property, and in the case of contracts of property right transfer, other than contracts of sale, giving the Agency an unspecified right to purchase these real properties from the vendee. Restrictions in the management of such properties are not new. They have been used since England in 16^th c. and later have been spread to other countries. They also have been included in Polish legislation [23]. The Agricultural Property Agency, apart from activities specified by the regulations on the agricultural system, according to the Act of 19.10.1991 on Treasury agricultural property management [14], should undertake measures resulting from the state policy such as:

• establishing and improving the structure of family-owned farms;

• providing favorable conditions for rational use of production potential of Treasury Agricultural Property Resources;

• restructuring and privatizing treasury property used for agriculture;

• trade and agricultural use of real property and other property owned by the Treasury;

• administrative managing of Treasury properties for agricultural use;

• securing Treasury properties;

• initiating agricultural works on Treasury lands and supporting establishment of agricultural farms on these lands;

• creating new work places resulting from restructuring of the state agricultural economy;

• supporting measures that aim to help former workers of the state-owned agricultural enterprises and their families to overcome a difficult life situation (granting scholarships for ex-workers' children studying at high schools and universities);

• undertaking other activities specified in separate regulations.

The regulations of the Agricultural Structure Management Act are applied in case of agricultural property trade being the property of the ordering agent. Thus the trade of properties being hereditary usufruct or on the basis of other legal claims, as well as those in autonomous possession without legal claim for real property. According to art. 2 p. 1 of the Act, an agricultural property defined in the Civil Code is a property that is or may be used for agricultural production activity within plant and animal production, including horticulture and fishery, however, excluding properties localized on the areas planned for non-agricultural land management. Hence, a forest property is now an agricultural property. According to article 4 and 6 of the Land Management Act of 27.03.2003 [20], decisions on the land management plan establish with other regulations the execution of the real property right. The local land management plan defines the land purpose, localization of public edifices investments, the land management methods and build-up conditions. If such a plan is lacking, the conditions of land management and area development are specified in the decision on built-up conditions and land management.

An agricultural real property may consist of one or many geodesic plots, and because of overruling article 163 of the Civil Code, such partition does not require administration decision accepting the partition project. The real property for non-agricultural and non-forestry use may be partitioned if it is selected geodesicly as a separate plot, or plots and a decision of the authorities (mayor, president of the city) shall accept the partition project (art. 96 of the Real Estate Trade Act of 21.08.1997).

To sum up, it is necessary to stress that as for trade of real properties of which part (even a small one) is located on the area that in the land management plan is meant for agricultural purposes, regulations of the Agricultural Structure Management Act shall be applied concerning pre-emption right of the leaseholder or pre-emption and buy-out right of the Agency. The regulations are not applied in case of alternative use of the whole real property e.g. habitat development (agricultural use) or one-family house building (non-agricultural use).

If the land management plan is lacking, the decisive factor for qualifying the real property as agricultural for Act uses, shall be use or the possibility to use it for agricultural production within plant and animal production including horticulutre and fruit-growing and fishery taking into account land register data. One must be prepared that if the real property management is intended, housing real-estate [16] and other non-agricultural real properties excluded, a notary shall demand for the notary act the documents drawn up by the relevant authorities and allowing to qualify the use of the real property, specified in the local land management plan, and if this is lacking, in the land and buildings register or in the decision on ground development conditions and land management.

A family-owned farm is an agricultural farm run by an individual farmer and where the total agricultural land area covers over 300 ha.

According to the Agricultural Structure Management Act, an agricultural farm is a farm (acc. art. 553 Civil Code) with arable land and forestry land with buildings, their parts, improvements and animal stock if they constitute or may constitute an organized economic unit, and with regulations of agricultural farm running, and of at least 1 ha of agricultural land (art. 2, p. 2.). Agricultural land is arable land, orchard, pastures, meadows, built up arable land, ponds land, row land.

An individual farmer is a natural person, being an owner or a leaseholder of agricultural real property with a total area under 300 ha, running an agricultural farm individually, having agricultural qualifications, and living in a commune in the area of which one of their agricultural properties included in the farm is located. Based on this regulation, the farmer, may but does not have to live on the farm he/she is running. But the distance between the place of living and the farm must be short enough to enable work appropriate to the type of the agricultural business. The Act states that the person runs personally the agricultural farm if he or she makes all the decisions regarding agricultural activities in this farm, that is, he/she signs all the documents and is in charge of all the legal activities regarding the agricultural business. This includes contracts with deliverers, customers, insurance institutions, loans etc.

As far as the qualifications are concerned, it is distinguished in the Act as follows: theoretical qualifications (secondary or high education in agriculture) or practical qualifications (running or working on an agricultural farm for at least 5 years). An individual farmer may be recognized based on one of the above qualifications.

The theoretical qualifications must be confirmed with a certificate or a diploma of school graduation with a professional degree or a diploma certifying professional qualifications. The practical qualifications, in turn, are confirmed with a relevant statement certified by an administrator of a group of villages (mayor, or president of the city) or work attestation.

According to the Agricultural Structure Management Act, in case of sale of an agricultural real property by a natural person or legal entity other than the Agency, its leaseholder has the pre-emption right, if the lease contract was established in a written form and has a secure date and has been executed for at least 3 years since that date, as well as if the purchased real property belongs to the leaseholder's family-owned farm or is leased by an agricultural production co-operative. This also is applied to a sale of a share in a co-ownership of the agricultural real property. If a transfer of right of an agricultural real property results in obtaining structural pension, one may benefit from the pre-emption right if the farm's area after enlarging it by the newly purchased real property is not smaller than 15 ha (Agricultural Structure Management Act, article 3, par. 6 in connection with the Act on structural pensions in agriculture of 26.04.2001 [18].

Furthermore, the person selling a real property is obliged to inform the leaseholder (if he/she has the pre-emption right), in any case, about the contract content. In that case the sale contract for the third person shall be concluded under liability to resolving the contract, that the rightholder executes pre-emption right. Legal activity executed without informing the leaseholder, as well as under no conditions is not in force. The leaseholder with a pre-emption right for agricultural real property executes his/her right through a unilateral declaration in the form of a notary act presented to the vendor [1] (Art. 597 § 2).

According to the Act, if the price of the real property to be sold is much different from its market value, the pre-emption rightholder may within 14 days from declaration on pre-emption execution, address the court to define the price of the real property. The court shall define this price based on the previously established Act on real property economy. A notary should include an instruction of this content in a notary act to the conditional contract of sale. It seems that this regulation aims to prevent a situation where sale contract parties present in the notary act a fictional and overestimated price of sale in order to indispose the rightholder to executing the pre-emption right. On the other hand, it is possible that the price of sale is actually much higher than the property's market value because of some particular features of the area the vendee is interested in, which is not specified in the Act. In that case, it will affect negatively both the vendor who might sell the property for a higher price and the vendee for whom the property might have some special meaning. This regulation is, thus, very restrictive. It is vital to add here that according to the Civil Code, art. 600 § 1 v. 2, all other decisions of the sale contract in question aiming to frustrate the pre-emption right are void towards the rightholder. It also should be stressed that the pre-emption right may be only executed on the conditions specified in the conditional sale contract, while the right previously established in the Act is executed only at court.

At this point it is important to add that in the above situation only the Agricultural Structure Management Act regulations are applied. If there is no leaseholder of the agricultural real property with the pre-emption right or if he/she does not use this right, the pre-emption right goes to the Agricultural Property Agency acting on behalf of the Treasury according to the Act. As far as informing the Agency on the sale contract content, consequences of not informing it, its pre-emption execution, and demand for defining the real property price by the court, the above information on pre-emption right of the leaseholder are relevant.

The Agency does not have the pre-emption right if the purchase of the agricultural real property results in increasing the area of the family-owned farm of the vendee up to 300 ha of agricultural land, and the purchased real property is located in the commune where the vendee lives or in a neighboring commune. The Agency can not purchase agricultural real properties that might constitute with the vendee's current farm an organized economical entity for agricultural production. In that case the regulation seems fair. It is however controversial that this regulation is not applied when a purchase of the agricultural real property is to establish a farm and not to enlarge its size. Moreover, as stated in the regulation, in case the vendee already owns agricultural land of a total area of at least 1 ha (which means that it can be treated as an agricultural farm according to the Agricultural Structure Management Act art. 2 par. 2) but he/she has not started any agricultural production before the purchase of a new agricultural real property, this situation does not allow to omit the Agricultural Property Agency's pre-emption right. One should also remember that in order to apply this exclusion of the purchased real property must be used for enlarging the vendee's family-owned farm and not any vendee's farm, and thus, it must meet the above requirements from the Act.

If the pre-emption right is attributed to both the leaseholder and the Agency, a notary shall produce a contract of sale instantly under two resolving conditions of pre-emption execution in the order defined by the Act. The Agency should be informed no sooner than after the leaseholder's pre-emption right expiry or after the leaseholder has declared not to execute his/her pre-emption. According to the Act neither leaseholder nor the Agency has pre-emption right if the vendee of the real property is an agricultural co-operative, the vendor being its member and the property being a land contribution into this co-operative. Apart from this situation, the leaseholder and the Agency do not have pre-emption right if the vendee of the agricultural real property is closely related to the vendor according to article 4 point 13 of the previously mentioned Real Property Economy Act.

Agricultural Structure Management Act provides the Agricultural Property Agency with the right called "by-out right", which means that if the transfer of an agricultural property right is concluded based on a contract other than a sale contract, the Agency acting on behalf of the Treasury may declare purchase of this property with an equivalent monetary payment. This regulation is also applied when a co-ownership share of the agricultural property is transferred resulting from a conclusion of relevant contracts.

It is important to add that if the Agency is not informed about concluding the legal act defined in the article 4 § 1 of the Act, this act is not valid. Moreover, the "by-out" right may be executed in any sort of property purchase. This also applies in case of properties contributed as apport to capital partnership, with a contract of trade-off, renewal, or jointure [1] (art. 231).

The Agricultural Property Agency cannot use the above right if a transfer of right of an agricultural property results in enlarging a family-owned farm's area up to 300 ha of agricultural land, and if the right is transferred to the person closely related with the vendor according to the real-estate economy law, or to an agricultural co-operative when it is land owned by the co-op's member. The "buy-out" right is also excluded in contracts with a successor concluded in the course of the Farmers Social Security Act article 84 of 20.12.1990 [15].

CONCLUSIONS

The aim of the Agricultural Structure Management Act is to improve area structure of Polish farms by regulating agricultural real-property trade. However, the assumed/undertaken measures for achieving these goals are insufficient. The Act introduces only restrictions in real-property right transfer, which are moreover difficult to finance. The Agency would have to cover high expenses in order to use its right for real- property transfer. On the other hand, without undertaking widespread action, the objectives of the Act will just remain wishful thinking. Furthermore, the practical application of the Act prolongs barely the tome needed for concluding the contracts of sale. It is necessary first to conclude a conditional contract, wait the period of time when the Agency presents its declaration, and then, return to a notary and conclude another contract - an unconditional property transfer. In case of contracts other than a contract of sale, the Act has no effect on the procedure of the transaction. The other fact that deserves criticizing is the possibility of the Agency to purchase the real-property for a price other than agreed to by the parties of the contract. It is doubtful if the Agency that benefits from the large competence granted by the Act, would indeed help to improve farms area structure. The dispersed farms need support from the State, among others, by cheaper loans, employing some farmers is non-agricultural branch and increasing export of good and cheap food.

Family-owned farms constitute a fundamental unit of Polish agricultural structure. However, it is necessary to improve the area structure of Polish agriculture. It is supposed to be achieved with the help of the Agricultural Structure Management Act of 11.04.2003 which introduces certain restrictions in agricultural real-property trade. The responsibilities include a duty to inform the Agricultural Property Agency on concluding contracts of right transfer of real-properties. The Agency has the right to dissolve the contract and purchase the agricultural real-property for the Treasury paying less for the property than its value estimated by the contracting parties.

REFERENCES

1. Kodeks Prawa Cywilnego [Civil Code] [in Polish].

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