NON-AGRICULTURAL ACTIVITY OF RURAL FAMILIES IN POLAND

Alicja Stolarska
Department of Agricultural Economics and International Economic Relations, Warsaw Agricultural University, Poland

ABSTRACT

The paper presents characteristics of non-agricultural economic activities run by rural families in Poland in years of 1996–2000. The identification of particular forms of activities showed that they were often treated as additional activities and were not registered. Only 61% of respondents started running their enterprises after its registration in economic activity register. Moreover, selected factors deciding on setting up non-agricultural activity and possibilities of its further development were emphasized. Increase of the activity importance in creation of questioned farms general income was stressed as essential as well. Furthermore, impact of non-agricultural activity on the farms and their environment was defined, presenting rural areas development opportunities according to the activity.

Key words: non-agricultural activity, rural areas, rural family.

INTRODUCTION

System changes in Poland after 1989 left farms in very quality-new situation. Within numerous problems, limitation of possibilities of appropriate incomes from agricultural production occurred to be the most essential one. It made farmers search for other, non-agricultural sources of income. According to the Central Statistical Office (GUS) data, non-agricultural activity¹ has been important source of income in Polish farms and its importance has been increasing. While the activity was run by 8.1% of farms in 1996, there were 12.4% (363.4 thousand) of them in 2002 [4]. In 2002, incomes from non-agricultural economic activity were main source of living for 6% private farms. In comparison to 1996, number of the farms increased considerably by 80 percentage points. It should be also emphasized that the greatest interest in non-agricultural activity dominated within multi-area farms. In 1996 as well as in 2002 the greatest percentage of farms running non-agricultural activity (about 46% in 1996 and more than 48% in 2002) was registered in group of farms of area larger than 200 ha UR.

AIM AND METHOD OF RESEARCH

The subject of research was a group of 36 private farms, which run accountancy under the². Apart from agricultural production, users of the farms and members of their families, staying in a common household, run non-agricultural economic activity. The analysis was based on results of survey carried out in the farms (with an interview questionnaires) and as a supplement were used selected statistics which come from agricultural accountancy³.

FORMS OF ADDITIONAL ACTIVITY

More than 61% of respondents run registered activity (enter to the economic activity register). The others (about 39%) declared that it was only a farm’s secondary activity, which does not need to be registered. Among activities services dominated (more than 68%), trade (more than 42%) and production (about 20%)⁴. Most of service activities concerned transport (27%). Car and agricultural machines services were also common. An important role in trade played production means trade as well as consumption articles trade. Wood processing dominated in non-agricultural production activity (table 1).

In the years of the research interest in all types of secondary activity increased especially non-agricultural services (by more than 17 percentage points). Percentage of farms running trade enterprises increased by more than 6 percentage points, whereas farms running production activity – by 2.5 percentage points.

Farmers preferred such types of non-agricultural activity, which did not required too large expenditure of capital and – at the same time – brought relatively high incomes in a short time. According to that, the smallest importance was noted for production activity taken up usually by farmers of the largest-area farms. It should be expected that service activity would be rapidly developing, with more and more interesting proposals⁶. In several selected regions (with favourable location), there is possible domination of trade activity. More than 94% respondents declared that they would continue non-agricultural activity. About 55% of them wanted to extend its range (averagely by 24%).

FACTORS INFLUENCING TAKING UP NON-AGRICULTURAL ACTIVITY

Taking up and running non-agricultural activity is determined by external as well as internal conditions. According to the external conditions, 36% of respondents took up additional activity because they were persuaded by members of their families and friends or because of good practise seen in the nearest neighbourhood. Among the internal factors, there should be pointed such traits of people taking up additional activity as age and education level as well as dissimilarity of farms run by them. To confirm the fact that age has an impact on decisions on taking up non-agricultural activity, the comparison analysis of the farms running activity and others, which did not run any activity. Tests of Kolmogorow-Smirnow (K-S = 2.37; p-value = 0.000026)⁷, as well as Mann-Whitney (Wilcoxon) (W = 369; p-value = 0.0000051)⁸ allow to state that there were essential differences of the farms managers’ age in comparison to the farms’ owners who did not take up non-agricultural activity. More than 35% of respondents were younger than 39. Therefore, the activity was taken up by young people, what confirms value of Spearman’s rank correlation rate on the level of 0.39⁹.

Managers of the analysed farms were not only younger, but better educated and had better professional experience. More than 73% of respondents had agricultural education, while among other farms running agricultural accountancy – about 60% of respondents only. According to the education level, managers, who graduated from vocational schools, dominate in both groups. However, these farms which members run non-agricultural activity, were characterized by higher percentage of mangers with higher or secondary education – and there was only small percentage of people with primary education only. There were essential differences in education of both groups of farmers, confirmed by tests of Kolmogorow-Smirnow (K-S = 1.797; p-value = 0.0031) and Mann-Whitney (Wilcoxon) (W = 49; p-value = 0.00024). On the other hand, value of Spearman's rank correlation rate amounted 0.46 on significity level coming to α = 0.1 indicates the essential correlation between education and taking up activity.

The farms, where people take up non-agricultural economic activity, differ from an average Polish farm in many issues. First, they are much grater in area. Their average agricultural land area in 1996-2000 years came to 44.65 ha¹⁰ and increased during the period by more than 17%. Farms running agricultural accountancy, where inhabitants did not take up any additional (supplementary) activity, were characterized by only average agricultural land area of less than 24 ha.

Additional activities were taken up by farms well equipped with fixed assets. In 2000 its average value (without land) came to 410.5 thousand PLN, whereas in other farms (without non-agricultural activity) – a bit more than 262.5 thousand PLN. In 1996-2000, the average advantage in that case was greater than 51% and had continuous upward tendency. The examined farms had also advantage in value of buildings, machines and tools, which percentage in fixed assets structure was on average 30% larger.

The population was characterised by lower level of organization and production intensity, and the additional activity caused extensification of organization, especially in animal production. In extreme cases farmers resigned from animal production (10%). As a major reason they pointed out allocation of labour expenses to non-agricultural activity. In plant production dominated cereals (more than 78%), whereas vegetables came to 0.5% only.

Members of farms of relatively high incomes took up additional activity, even though 97% of them declared taking up the activity for increasing their incomes. Personal income per a farm was there by 42% higher than in other farms running accountancy, but not running additional activity.

What is more, amount of financial means in a farm strongly determines taking up non-agricultural activity and lack of them is a key barrier of its development (in opinion of 44% respondents). They listed also other barriers, such as inaccessible credits (about 30%), difficulties in working in a farm and off-agricultural activity at the same time (36%), lack of entrepreneurial experience or insufficient information about the market (19% each). The research has also shown imperfection of legal articles in this case. For more than 8% respondents it was a major barrier in taking up additional economic activity. Another important reason of taking up off-agricultural activity – in opinion of 30% respondents – was their wish that their dreams and ambitions would come true. Furthermore, almost 6% respondents wanted to sell products from their farms.

ECONOMIC AND SOCIAL ASPECTS OF NON-AGRICULTURAL ACTIVITY

A key effect of non-agricultural activity, in the respondents’ opinion, was significant improvement of their income situation. The incomes gained from the additional activity amounted more than 22% of personal income. At the same time for about 25% families, they were main source of living. More than 60% respondents declared that it was second source of income in range of amount. Average off-agricultural in the farms came to about 1570 PLN per person in 2000 (table 2). In comparison to 1996, small increase was observed (about 1.8 percentage points)¹¹. They were especially important when agricultural incomes were falling because they reduced the regress.

In the research period, incomes from non-agricultural activity came averagely to above 17% of general income of the farms. There was more than twice increase of the percentage what proves that a role of the activity in structure of Polish rural families’ income has been rising (graph 1).

As more than half of the respondents declared considerable increase of size of the non-agricultural activity, it must become more and more important source of their living. Apart from increase of consumption and life-standard, incomes gained from the activity allow rural areas inhabitants to believe in themselves. At the same time, they encourage farmers to give up traditional agricultural production for off-agricultural production. As a result, there has been partial or sometimes total abandon of the production (about 1.5% of respondents). At the same time, it gives other farms, which do not run any additional activity, opportunity to enlarge their area, what leads to changes in agrarian area of Polish countryside. Entrepreneurship development causes also change of socio-professional structure of rural population. In further perspective, it leads to infrastructure improvement and rural areas modernization. As a very important aspect of non-agricultural entrepreneurship’s development, there is decrease of unemployment. More than 40% respondents employed one person in additional activity, 11% – of them – two persons and more (maximum 14 persons). Moreover, more than half of the respondents declared to enlarge their activities (averagely by 24%) and it allows suspecting increase of its role. Furthermore, about 8% of respondents took up the off-agricultural activity because they had observed its development and good practises in local areas. According to that, the activity causes social changes in rural areas.

CONCLUSIONS

Results of the research allow formulating following conclusions.

1. Non-agricultural activity is usually taken up by younger and better-educated persons.

2. The farms, where people take up non-agricultural activity, are larger, better equipped with fixed assets and gain higher incomes, which allow them to invest mote in new activity.

3. About 39% of respondents did not register their additional activity.

4. The largest percentage of the respondents run off-agricultural services (68%) and trade (42%). They did not limit themselves to one type of non-agricultural activity only.

5. Off-agricultural economic activity was taken up for additional incomes by 97% of the respondents. Off-agricultural income came to above 17% of general income of the farms and for ¼ of them it was main source of living.

6. Non-agricultural activity caused extensification of organization in the farms – especially in animal production (10% of the respondents gave it up). The respondents resigned mainly from activities, where necessary was large labour expenditure and moved it to the additional activity.

7. More than 51% of the respondents employed additional workers in non-agricultural enterprises (maximum 14 employees), what is a great opportunity of unemployment reduction in rural areas.

REFERENCES

1. Dobosz M., 2001: Wspomagana komputerowo statystyczna analiza wyników badań. [Computer-supported statistics analysis of data] Akademicka Oficyna Wydawnicza Exit, Warsaw [in Polish].

2. Józwiak W., 2004: Strategie postępowania posiadaczy gospodarstw rolnych i ich pozarolnicze formy aktywnosci gospodarczej w latach 1996-2002 [Farm owners strategies and their non-agricultural forms of economic activity in years 1996-2002]. Roczniki Naukowe SERiA, Tom VI, Zeszyt 3. Wies Jutra, Warsaw [in Polish].

3. Powszechny Spis Rolny 2002 [Agricultural Census 2002]. GUS, Warsaw 2003 [in Polish].

4. Pozarolnicza działalnosc gospodarstw rolnych [Non-agricultural activity in farms]. GUS, Warsaw 2003 [in Polish].

5. Rocznik Statystyczny 2001 [Statistics Yearbook 2001]. GUS, Warsaw 2001 [in Polish].

FOOTNOTES

¹ Being self-employed outside a farm (i.e. own factories, craft, trade and service enterprises, employing or not employing hired workers) [4].
² The analysis did not cover next years because of a further change of agricultural accountancy system in Poland, adjusted to the European Union standards.
³ Agricultural accountancy data covered only general information on non-agricultural economic activity of farms running agricultural accountancy books. However, they presented so-called secondary activity (using a farm’s resources, i.e. agricultural services), but it was not a subject of the paper.
⁴ Some farms run more than 1 type of non-agricultural activity.
⁵ Sum does not equal 100, because some farms run more than 1 type of activity. According to the Agricultural Census of 2002 data, about 93.2% farmers which declared running non-agricultural activity in 2002, run it within one section of activity. Two types of additional activity were run by 6.2% by farmers, and three and more – by 0.6% [3].
⁶ Some research emphasize wider and wider assortment of farms’ services. As interesting there were listed: organization of language courses or debts vindication [2].
⁷ If the test statistics’ value is large enough that its probability is lower than the defined significity level, the hypothesis on layout conformity of both samples ought to be rejected [1].
⁸ The test compares medians of both samples; if the final level of probability is lower than the previously estimated one, the hypothesis on lack of differences between medians can be rejected [1].
⁹ Calculated to find correlation between ages and taking up non-agricultural activity. It’s a non-parametrical correlation rate. It is estimated like Pearson’s correlation rate, by using ranks assigned to variables [1]. The lowest range was assigned to the youngest managers.
¹⁰ Average area of AL private farms in Poland came to 7 ha in 1996 and 7.2 ha in 2000[5].
¹¹ In the research period, there was a light decrease of number of family members. At the same time, farms increased considerably their area and decrease of non-agricultural income per 1 farm.

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