Overinvestment in Polish Agriculture

Zmyślona, Jagoda; Sadowski, Arkadiusz

doi:10.22630/esare.2019.3.19

Cited by 5 publications

(5 citation statements)

References 3 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, this topic still involves considerable discrepancies [50,51], which enables the division of the study areas into regions, some of which may be struggling with agricultural inefficiency. One type of inefficiency is investment inefficiency, which is closely associated with overinvestment, defined as a situation in which the capital-labour ratio increases while labour productivity decreases [52]. Overinvestment in the economy is most simply defined as a situation in which economic units invest more than they should [53].…”

Section: Literature Reviewmentioning

confidence: 99%

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

2021

Self Cite

View full text Add to dashboard Cite

Ensuring adequate profitability of production, which can be ensured by optimal investments, can encourage farmers to be more caring about sustainable development. Several existing studies indicate that technical efficiency in agriculture varies regionally. Investments comprise a basic way to increase efficiency and thus reduce polarisation between regions. However, contrary to established assumptions, not every investment leads to increased efficiency, which entails a phenomenon of overinvestment. Investments should, by definition, be positively correlated with efficiency. However, existing studies indicate the existence of a significant problem of overinvestment, where increased efficiency may not occur. While for about 40% of farms in Poland the scale of investments can be assessed as optimal, more than quarter of farms exhibited absolute overinvestment and nearly one in five farms is underinvested. In response to this problem, this study aimed to identify regional differences in Poland with regard to overinvestment in farms, as well as to determine changes in farm efficiency depending on the region and level of overinvestment. The source material used in the following article consisted of unpublished Farm Accountancy Data Network (FADN) microdata derived from the DG AGRI of the European Commission. The study covered the period 2004–2015. For an original classification of farms according to their level of overinvestment the technical efficiency, using the stochastic frontier analysis approach, was used for determining regional differences that occurred as a result of overinvestment. Stochastic frontier analysis shown noticeable differences in the average technical efficiency for different overinvestment groups. As expected, underinvested farms are the least efficient (general in Poland and in all analyzed regions) and average technical efficiency did not increase. Interestingly, optimally investing farms do not have the highest technical efficiency. Higher efficiency was achieved by both relatively and absolutely overinvested farms. This is due to the fact that in order to produce efficiently in agriculture, it is necessary to at least maintain the level of tangible assets provision, and preferably to increase it as well. In terms of overinvestment levels, farm structure does not differ significantly between individual regions in Poland. However, there are differences between regions in terms of farm efficiency within each group. In all regions, only the underinvested farms did not increase their efficiency over the period under review and the highest efficiency growth rate was in regions where farms were least efficient at baseline.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

2021

Self Cite

View full text Add to dashboard Cite

show abstract

“…not to lead to an overinvestment. [ 31 ] showed that overinvestment, which does occur in Polish agriculture, affects economically weaker farms to a greater extent, thus access criteria for EU funds might mitigate this effect.…”

Section: Discussionmentioning

confidence: 99%

Spatial determinants of farmers’ interest in European Union’s pro-investment programs in Poland

2021

Self Cite

View full text Add to dashboard Cite

The purpose of the paper is to investigate spatial determinants of farmers’ interest in pro-investment programs co-financed by the EU, by identifying and describing the territorial clusters of rural areas in Poland where the applications rates for these programs were above or below the national average. We tested for spatial autocorrelation using Moran’s global spatial autocorrelation index, while the search for clusters was done using a local version of Moran’s statistics. The results show significant regional variation in the farmers’ interest in these programs in Poland. This interest was higher in regions with a greater level of agricultural development and better agrarian structure. In Poland, both of these factors are related not only to natural conditions, but also to strong historical context. We conclude that the pro-investment programs contribute to the deepening of development differences in Polish agriculture in the territorial dimension, which is not in line with the basic assumptions of cohesion policy.

show abstract

“…This process can also be noticed in the agricultural sector and affects specific groups of farms to various degrees. This results in the emergence of what is referred to as overinvestment, i.e., a condition where long-term investments are excessively high compared to the production potential (mainly land resources) and, ultimately, become economically unviable [46]. Optimum investment means a situation where the assets-to-labor ratio (ALR) of a farm grows at the same pace as labor productivity (LP) [47].…”

Section: Introductionmentioning

confidence: 99%

“…Optimum investment means a situation where the assets-to-labor ratio (ALR) of a farm grows at the same pace as labor productivity (LP) [47]. In turn, overinvestment takes place when the assets-to-labor ratio grows while labor productivity declines or remains constant [46]. The inefficiency of investments brings many negative effects to farms.…”

Section: Introductionmentioning

confidence: 99%

Plant Protection and Fertilizer Use Efficiency in Farms in a Context of Overinvestment: A Case Study from Poland

2023

View full text Add to dashboard Cite

The purpose of this study was to determine the relationship between plant protection and fertilizer use efficiency, on one side, and overinvestment in Polish agriculture, on the other. This is an important topic because of a number of essential issues, such as the concern for the environment, the development of sustainable agriculture, or the need to ensure food security which can only be achieved by keeping production volumes at least at the same level. Reconciling these goals often requires investment which, however, involves the risk of overinvesting, i.e., a situation where the value of assets grows without a proportional increment in labor productivity. This paper uses the author’s own method of farm classification by overinvestment level. The study revealed some differences in the cost intensity of fertilizing and using plant-protection products between investment levels. The most rational results were found in farms at optimum investment levels, whereas the greatest cost intensity was recorded in farms affected by overinvestment.

show abstract

Overinvestment in Polish Agriculture

Cited by 5 publications

References 3 publications

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

Spatial determinants of farmers’ interest in European Union’s pro-investment programs in Poland

Plant Protection and Fertilizer Use Efficiency in Farms in a Context of Overinvestment: A Case Study from Poland

Contact Info

Product

Resources

About