A bountiful EU is delaying farm reform
MACIEJ KARCZEWSKI loves his job as an apple farmer in Lower Silesia, near Wroclaw. On a sunny spring day he is out in his orchard of 40 hectares (100 acres), proudly showing off row after row of blossoming apple trees, separated by dandelion-dotted grass.
Mr Karczewski’s father started growing apples 25 years ago. The son trained in nurseries in Britain and studied horticulture at the University of Minnesota but always knew he was going to return to his family’s fruit trees. The farm employs five people all year long, ten in the pruning seasons and 30 for the harvest. For the peak harvest season in September and October Mr Karczewski hires Ukrainians, as local labour is expensive and hard to find.
Apples are one of Poland’s most successful exports. Last year the country overtook China as the world’s biggest apple exporter. One-third of Poland’s crop, or about 1.2m tonnes, went abroad, with Russia taking 57% of the total. Poland’s entire farm sector, from cereals to meat production, is surging ahead. Last year agri-food exports were worth 85 billion zloty ($27 billion), an 11.5% increase on 2012.
Agriculture is probably the biggest single beneficiary of Poland’s membership of the EU. Farmers had initially been among the staunchest opponents of EU entry; not long before Poland joined, the Polish Peasants’ Party (PSL) predicted that only 600,000 of the country’s 2m farms would survive entry. They were in for a happy surprise when the money started rolling in: Polish agriculture received a bountiful €40 billion ($55 billion) in 2007-13 and will get another €42.4 billion between now and 2020.
Thanks to those EU funds, farmers’ incomes have, on average, tripled since entry, with half of the money coming from direct cash payments, regardless of need. Bigger farms have modernised and become more efficient. Over the past ten years Poland has doubled its poultry production and become Europe’s leading producer of soft fruit and cultivated mushrooms.
Yet in the longer run agricultural subsidies are a mixed blessing, even for the farmers. “EU membership has slowed the reform of the agricultural sector,” says Krzysztof Mularczyk of Compassion in World Farming, a lobby group. Polish agriculture remains highly fragmented. It accounts for only 3.4% of GDP but 12.4% of employment. Half the farms are just subsistence plots, and 92% of them run to less than 20 hectares. In a recent report on Poland the OECD was especially critical of the highly favourable social-security system for farmers, KRUS, as well as some of the tax advantages they enjoy. Many farmers hold on to tiny plots of land just to remain eligible for KRUS.
Farmers are an important political constituency. The rural population makes up around 39% of the total. PSL, the farmers’ party, is in a coalition with the ruling Civic Platform, and Janusz Piechocinski, the PSL’s leader, is deputy prime minister. His party is weak and divided and might miss the 5% threshold for getting seats in parliament in next year’s national elections, but until then the chances of reform are negligible.
Polish farmers’ most immediate worry is about the Ukrainian crisis. Exporters of apples and meat in particular are vulnerable to Russian import bans, and most farmers depend on Ukrainian workers during the harvest. Mr Karczewski is now doing the paperwork for his Ukrainians’ work permits and visas—and hoping for the best.