The Weakness of Polish Agriculture in the Face of the Grain Market Collapse

W-MOSZCZYNSKI PS 3-24

External EU subsidies for agriculture are a form of financial support primarily aimed at improving the economic and social situation of farmers. These subsidies include direct payments, subsidies for rural areas, subsidies for rural development, subsidies for environmental and climate protection, subsidies for organic production, and subsidies for young farmers. EU subsidies make up a significant part of farmers’ income in Poland. But is this support beneficial for agriculture? Let’s look at it from the perspective of classical economic theory. Do we remember what interventionism is? It’s a form of state assistance directed toward selected industries and sectors of the economy. History has shown that such a stance weakens competitiveness and the efficiency of entities. A stark example of this phenomenon is „zombification” (from the English term zombification), which refers to artificially keeping failing enterprises alive. In Poland, an example of this phenomenon is the maintenance of certain mines; this phenomenon is widespread in the Greek economy.

What Are the Effects of Subsidies on Polish Agriculture?

One of the main criticisms of external EU subsidies for agriculture is that they distort the market and influence farmer behavior. External EU subsidies can be seen as artificial support, that is, interventionism, which weakens the motivation to improve the quality of products and services, to innovate, and to seek new markets. Farmers who receive such support may become dependent on it and not take steps to increase their own profitability and competitiveness. External EU subsidies may also create market imbalances, favoring certain types of production over others that lack access to such support. This can lead to disruptions in competition and the elimination of producers or entire sectors of agricultural economies in other countries. Sectors abroad, such as grain producers in countries like Ukraine or Moldova, which don’t have subsidies or border protection against foreign grain, are rare cases. They must strive harder and work on improving the competitiveness of their production.

The Weakness of Polish Agriculture in the Face of a Grain Market Crisis

Our farmers have it harder; they must comply with regulations and fill out documents.

EU subsidies come with additional costs and burdensome obligations for farmers. External EU subsidies are often conditional and require meeting specific criteria, such as achieving certain goals, employing a specified number of workers, maintaining a certain turnover level, or complying with specific standards. Farmers who want to take advantage of this support must bear the costs associated with preparing applications, documentation, reports, audits, and inspections. Furthermore, farmers receiving external EU subsidies face the risk of them being withdrawn or reduced due to changes in economic, political, or legal circumstances. Farms relying on EU subsidies may face liquidity or even bankruptcy if they are suspended.

Noble Protection of a National Resource or Another Indian Reservation?

Let’s listen to the popular arguments for protecting Polish agriculture.

Agriculture is the foundation of all economies. Farmers produce food, there’s something called national food security, and farmers feed us and provide us with energy for work. Therefore, it’s the most important sector of the economy and must be protected at all costs. Thus, if farmers overproduce something, the government will conduct an intervention purchase, with prices much higher than market prices.

A farmer must receive a subsidy per hectare, as their work and the income they can achieve don’t reflect the costs they incur in agricultural production. This is what proponents of the special role of the agricultural economy say. A farmer does not have to look for cheaper solutions because they are covered by subsidies, which comfortably cover all cost needs.

If a farm is small, the farmer must have a similar tractor, infrastructure, and machinery as a large one, even if it’s only 40 hectares. A farmer from a small farm must carry out all tasks much more expensively than one from a large farm, as they can’t use the benefits of scale.

Is EU Funding an Enemy of Polish Agriculture?

An excellent example of the destructive force of subsidies, grants, and free money is the situation of Native Americans in reservations, sustained by the US government. They often fall into complete stagnation, with social structures disintegrating, and a rise in alcoholism and violence. Many African leaders have repeatedly mentioned that free money, grants, and external aid often have a destructive and demotivating effect on their local communities. An influx of subsidies and government support for Greek enterprises has led to their widespread zombification.

Let’s imagine a simulation. What would happen if the state provided special protection for, say, the footwear industry? Intervention purchases of shoes that no one wanted to buy would appear, subsidies for school shoes, or aid for producers affected by the surge in leather prices on global markets. The industry would consist of small shoe factories with low economic production efficiency. The government, protecting the industry, would introduce tariffs on foreign footwear imports. Shoe prices would be high, as would employment in the footwear industry. Holiday and industry traditions like St. Barbara’s Day in the mining sector would be celebrated. Shoe manufacturers would proudly run their small workshops and factories, passing them down from generation to generation. It would soon turn out that the footwear industry was backward and uneconomical. In the hypothetical case of cutting it off from state support, the entire industry would face annihilation. Poles would be left without footwear in the case of the footwear industry’s collapse, reinforcing everyone’s belief that the national footwear industry, obviously of strategic importance (soldiers need shoes too), must be preserved at all costs.

Is Poland a European Grain Production Powerhouse?

There’s a principle: if we don’t stand in the truth, we will always live in a lie. It is said that the truth will set us free. So what is the truth? Truth can be different, depending on people’s emotions and experiences. Truth can depend on one’s point of view and level of grievances. Those who shout louder, are more convincing, or play on emotions can convince others of their version of the truth. Perception depends on beliefs, values, and finding the truth is quite challenging and debatable. There are sensitive arguments, extreme examples, and emotions like “farmers have always had it hard,” “Polish farmers are patriots,” “who will feed us if not them?”

However, we can reach the truth quickly, relatively easily—just look at the numbers.

As we can see, we’re not the largest grain producer in Europe. Nevertheless, we hold an important position, which means we should be efficient in this sector. Further statistical facts allow us to better understand the position of the Polish grain production industry.

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