Central Europe Review: politics, society and culture in Central and Eastern Europe
Vol 1, No 10, 30 August 1999

ready to cut anything... except subsidies R U R A L   P O L A N D:
Ready for the Chop
Walking the tightrope between efficiency and social sustainability

Rudolf Hermann

In light of Warsaw's hopes for EU entry, Poland's antiquated and inefficient farming industry urgently needs a drastic overhaul. However, if restructuring is to succeed, then the infrastructure in Poland's rural regions will have to undergo extensive development in order to provide the population with employment alternatives. Not surprisingly, the consensus between political parties that is necessary to implement such a delicate plan is nowhere in sight.

From the air, Poland's national boundary is easily identifiable. During the flight over from the Czech Republic, sprawling expanses of arable land are suddenly replaced by a rag-rug of smaller fields. One of the main problems of Polish agriculture becomes immediately clear: small, carved-up farms can hardy offer an adequate living to the entire one-quarter of the population which, according to official statistics, is employed in the agricultural sector but which brings in only six percent of the country's GDP.

Warsaw's vehement striving for EU entry also brings up another problem, and Poland is lagging strikingly behind in terms of productivity, not only in comparison with the European Union but also with respect to the other transition countries of Central Europe, such as Hungary and the Czech Republic. Little wonder Polish farmers are fighting tooth and nail against increasing pressure to compete with cheap foreign imports and that they occasionally turn to drastic measures; the memory of street blockades from the beginning of this year is still fresh.

The call for subsidies

With the help of January's violent protests, the farmers' unions managed to wrest concessions from the government for more subsidies, which were to be temporarily anchored in a strategy document on agriculture. Since then, the government has reneged on its promise and thereby spurred more protests.

Leader of the Farmers' Circle agriculture union, Wladyslaw Serafin, accuses the government of not releasing enough funds for state purchases, not providing support for agriculture within its economic program and generally running an agricultural policy with no clear principles. Although he does admit in conversation that the Polish agricultural sector is struggling with its own structural problems, such as small farms, lack of mechanization, over-employment and over-production in some areas, he does not want to hear anything about achieving a balance through market forces. He has no time for Finance Minister Leszek Balcerowicz's attempts to force the concentration of agriculture through economic pressure. The magic word that comes across Serafin's lips time and time again is "subsidies."

The cry for more state support and protection against cheap foreign imports is understandable at a time when even Minister of Agriculture Artur Balazs admits that Polish farmers would have great difficulties selling their products at profitable prices on the open market. Thus, Balazs is not averse to an increase in subsidies and stronger protection of domestic farmers, but he admits it could be difficult for him to push these demands through Cabinet.

Meanwhile, commentators point out that it is not financial band-aids that the agriculture industry needs but a sweeping restructuring. More subsidies would only undermine such a step.

A disadvantaged rural population

Politicians across the spectrum agree that a long-term rehabilitation plan should not be based primarily on direct assistance to farmers but rather on a clear improvement of the infrastructure outside the agriculture sector. In an interview with the leading daily, Gazeta Wyborcza, Agriculture Minister Balazs - a former farmer himself - said that the rural population is disadvantaged in two respects: first, there are no equal opportunities when it comes to education. For example, his daughter could not study a foreign language at her rural elementary school, because there were none offered. When it comes to education opportunities, there is too great a difference between city and rural schools, claims Balazs.

Second, the government is currently supporting restructuring of select branches of industry, for instance steel or coal, with significant financial means which makes retraining or early retirement possible. The one million unemployed workers from rural areas, on the other hand, have no such program at their disposal.

According to left-wing politician and former Prime Minister Wlodzimierz Cimoszewicz, who also managed a farmstead before entering high politics, infrastructurally underdeveloped rural regions and an immobile work force are also to blame for the farming industry's current problems. Cimoszewicz points out that, in the first years of reform, farming served as a social buffer: after restructuring was set in motion in industry, a part of the laid-off work force returned to farming, thus exacerbating hidden unemployment.

Generally, family-run farms of three to five hectares were not equipped to cope with such a return migration. Many of the unemployed were not prepared to leave their homes in search of a wage, and, as a result, a large portion of the agrarian sector in Poland does not live exclusively off the land (farming's high share of almost 27% of the total work force must be seen in this light). Farmers often find a sideline in unregistered trade on the numerous markets which thrive on border traffic.

In the already poorly developed eastern region of Poland, a tightening of entry requirements for Russians, Belorusians and Ukrainians has led to a decrease in market activity and a heightening of the problems in the region.

A government under pressure

According to Cimoszewicz, the situation in rural areas can be only partly resolved through state agricultural policy. What is more important is bringing about a general economic upswing which would create new jobs in the service sector in rural regions, thereby enabling a reduction in the number of employees in the agricultural sector and an increase in that sector's efficiency. The former Prime Minister, whose left-wing government was replaced by the current centre-right coalition, implicitly directs all responsibility for the current situation away from himself: between the years 1993 and 1997, under the government of the Left Alliance and the Peasant Party, Poland experienced strong economic growth, which laid the ground work for a general development of the rural regions.

Not surprisingly, Cimoszewicz criticizes today's government, saying it has made cuts in the budget for agriculture and thereby did not adequately respond to last year's crisis in Russia. Russia is an important market for Poland, particularly in the area of food exports, and thus the crisis left its mark on this sector.

That the development of the rural regions is currently Poland's greatest political, economic and social challenge is uncontested by both coalition and opposition politicians; President Aleksander Kwasniewski has long been calling for a cross-party dialog and consensus on the issue. What's disconcerting is that although this matter is much discussed, so far there have been few tangible results.

There are two plausible explanations for this. First, in the last ten years, Poland had to work through a mountain of reforms, which could not all be tackled at once. Jerzy Buzek's ruling coalition itself provides proof of this in that it is currently implementing reforms in the areas of social security, health care and education and has recently completed a reorganization of state and regional administration. The second reason why rural development has thus far always found itself off the reform agenda is that it is an issue on which any government will get burned.

Nevertheless, the Solidarity Election Action-led cabinet is under pressure to succeed, primarily because Solidarity owes its 1997 election victory to the strong gains it made in the rural regions. Were it now to disappoint the hopes invested in it, it could very well lose this significant segment of the electorate come the next election.

Rudolf Hermann, 30 August 1999

This article originally appeared in Neue Zuercher Zeitung.




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