Poland-Postcommunist Restructuring

Because of the predominance of private farms in communist Poland, privatization of agriculture was not a major necessity during the reform period, as it was in the other postcommunist countries. Excessively large state farms were to be split into more efficient units and sold; some state farms would be converted into modern agrobusinesses operating as limited stock companies; and a certain number were to be retained as state experimental farms. In all cases, however, rapid modernization and improvement in agrotechnology were urgent requirements.

The streamlining of agriculture faced serious obstacles in the early 1990s, notably because of the existing agrarian structure. Private farm size had to increase to provide farmers a satisfactory level of income and investment. Drastic reduction in the agricultural labor force also was needed. Because unemployment outside agriculture rose in 1991 and 1992, however, only gradual reductions were possible. A satisfactory social safety net and retraining programs for displaced agricultural workers were prerequisites for further reductions in labor. Experts estimated that unemployment on former state farms would reach 70 to 80 percent, meaning about 400,000 lost jobs, once the farms were privatized and streamlined.

Considerable investment is needed to provide adequate agricultural infrastructure, including road improvement, telecommunications, water supply, housing, and amenities. Especially important is establishment of a well-developed, competitive network of suppliers of materials and equipment necessary for modern agricultural production. Equally necessary are commercial firms to purchase agricultural products and provide transportation and storage facilities. In particular, expansion and modernization of the food-processing industry are necessary to strengthen and stabilize demand for agricultural products. The first postcommunist governments prepared agricultural modernization programs, and some financial help was obtained from the World Bank and Western governments for this purpose. Modernization was expected to require several decades, however.

By 1992 nearly all the 3,000 remaining state farms had substantial unpaid bank loans and other liabilities. For this reason, and because the government had not devised usable privatization plans at that point, the Farm Ownership Agency of the State Treasury was authorized to take over all the state farms in 1992. The agency was authorized to lease state farm lands to either Polish or foreign renters, as a temporary measure to ensure continued productivity.

Data as of October 1992