Plowshares into hard drives
Poland's farmers feel neglected by successive governments, and unemployment rates are high in rural areas. Despite the lure of EU funds and the entrepreneurial spirit among rural workers, innovation is low in the sector, but a two-pronged attack, with an emphasis on innovation and internet access for farmers, coupled with the resurrection of Poland's cooperative system, could be the key to success in the sector.
If the government needed proof of farmers' entrepreneurship and innovation, they got it in spades last week.
The Sejm has been working hard on a biofuel law for a number of years and last week another draft was accepted by Kazimierz Marcinkiewicz's cabinet. Never ones to wait idly by, farmers have already taken the initiative and have been producing biofuel in their own backyards using easily available Chinese methanol, Ukrainian plant oil and potassium hydroxide.
Fuel to the fire
This production is, of course, illegal, but that hasn't stopped the farming community filling their tractors and machinery with home-brew biofuel, which costs about zł.2.90 a liter to produce, compared to normal diesel, which sells for roughly zł.3.90 a liter at the pump.
Making biofuel isn't simply a case of mixing some chemicals in a tank, but the machinery and techniques involved are relatively simple. The cheaper and less efficient machines needed to produce biofuel cost around zł.25,000. The more upmarket models come in at zł.60,000, but with a daily productivity of 25,000 liters, the investment can be recouped after just three days of continuous capacity production.
To their credit, farmers say they wanted to legalize the production of biofuel and pay taxes on it, but the tax office has refused to recognize the activity so far, due to a lack of relevant legislation. At the moment the Sejm has several draft bills on biofuel law to deal with, and there is confusion over which bill will be adapted. The current government's proposal, which could come into force next year, will allow a farmer to produce up to 100 liters per hectare per year, but only for farmers' own use. But questions remain over the details of the plan, and for the moment the black market in biofuel is set for serious growth.
Facing the hardships
Fuel costs are just one problem in the onerous lot of the Polish farmer. Statistically, the situation in rural areas is difficult and the standard of living is poor. The latest national census showed that in mid-2002 the number of Poles living in rural areas was 14.6 million, which is 38 percent of the population. According to the Central Statistical Office (GUS) there are more than 2.73 million farms. Of these, about 95 percent are smaller than 20 hectares, only 7,668 farms have more than 100 hectares or more and just 2.29 million people are employed in agriculture.
The number of people without work in the agriculture sector in the first half of 2006 reached 1.09 million, which makes 42.2 percent of all the unemployed. A recent survey by the Institute of International Finances and Banking (IMFiB) reports that over 41 percent of farmers interviewed said they wanted to stop working in agriculture.
The problem of unemployment in rural areas is a challenge for politicians. Most direct investments are located in urban areas and there are far fewer small and medium-sized enterprises (SMEs) in the countryside. According to IMFiB, some 15 percent of the rural unemployed want to start their own businesses, but the existing law isn't helping them to get started. Farmers, particularly those producing and selling biofuel illegally, say politicians are deaf to the needs of countrymen and are killing off their entrepreneurship with bureaucracy.
The 'civilization war'
The problem is not just with the politicos though, and many farmers are not grasping the opportunities available to them. According to the Confederation of Polish Employers (KPP) and the Economy Ministry, not a single micro-company located in the countryside has applied for EU funds nor taken advantage of the innovation law that introduced tax rebates and technological loans seven months ago.
Andrzej Malinowski, the president of KPP, is certain that in 20 years' time the traditional structure will collapse because small farms will not be able to break even and very soon there will be a need to create jobs for an even bigger number of unemployed farm workers. He believes rural areas need to market themselves better and emphasize their competitiveness and cheaper labor costs.
"We should forget the idea of the peaceful and quiet Polish countryside while there is a civilization war going on all over the world. Let's take part in the war, hoping that it will attract the newest high-tech solutions and modern organizational systems to our villages," says Malinowski.
Sowing the seeds
IT and technology also offer solutions for work-hungry farmers. According to the World Economic Forum, the critical factor in creating innovation-friendly conditions is a higher level of modern information technologies. Jarosław Supera, the president of IMFiB, says that in order to develop the industry and increase exports, all the government needs to do is to implement information technology.
IMFiB recently organized a conference on innovation and the growth of competitiveness in rural areas. Representatives from the Agency of Restructuring and Modernization of Agriculture (ARiMR) along with Hewlett Packard presented a system that offers farmers and agricultural institutions electronic access to the agency's information system and databases, which will help them to manage, monitor and audit EU funds' absorption.
Supera says that Poland should follow the examples of Spain and Portugal, where whole rural districts are giving farmers free internet access and training them on how to use it and innovative solutions to enhance their business. "In the Madrid region in Spain, the number of people being trained at a time amounts to 356,000, whereas in the Mazovian voivodship, where the population is similar, there are 10,233 trainees," says Supera.
"Once farmers get connected to the internet they will have direct access to the ARiMR database and will be able to apply for EU funds directly from home, use online consulting services, see what products are available without leaving home, do online courses and finally develop internet services as an alternative to agriculture," says Supera.
Lessons from history
Andrzej Lepper, the Deputy Prime Minister, Agriculture Minister and former pig farmer, says innovation is important and has pledged to simplify access to EU funds and thereby increase the absorption of funds by entrepreneurs in rural areas. However, he takes a more home-spun approach to reviving the sector.
Lepper says Poland needs to come back to the idea of authentic cooperatives. Before the Second World War, Polish cooperatives were commonplace and even after the war each gmina had its own regional cooperatives and cooperative banks and there was also room for individual enterprises.
"Just after 1989 we should have altered the dependence [on the state] and [divided ownership of cooperatives into] shares and continued them in a modern way. The Polish countryside should produce, process and sell the products using its own retail chain," says Lepper.
Looking to the future
KPP's Malinowski takes a different tack, and he says Poland needs an altogether new model for social and economic development that will make room for a change in the economic and professional structure in the country. According to the Ministry of Labor and Social Policy, the main challenge that the Polish agriculture sector faces is restructuring, which comes down to reducing the number of people living on agriculture. This will be achieved by narrowing the number of small farms and enabling families to diversify and earn their income from non-agricultural sources.
Lepper agrees on the direction but says no sudden moves should be made. "Only then can we through evolution lower the number of people employed in agriculture and transfer them to agricultural processing and distribution. Only then can small companies develop and the number of people [working in agriculture] can be steadily lowered," says Lepper.
Word of mouth
Proposals for training are well and good but there appears a palpable reluctance on the farmers' side. Henryk Kowalczyk, Secretary of State at the Agriculture Ministry and the government's plenipotentiary for agrarian reform, says that not everyone is interested in starting training, and many don't have the necessary knowledge about the courses. During the next financial period of 2007 and 2013 EUR 8.1 (zł.33) billion will be spent on human-resources development and training.
"Local authorities play an important role in encouraging people to make use of the training, especially when they are particularly active," says Kowalczyk. "Apart from that, agriculture consulting centers also influence the number of people benefiting from the training. In the fall we are launching an extensive promotional campaign. Each gmina also has consultants and informs farmers about training opportunities. Broadband internet access has to be free, especially at the initial stage. The EU financial phase of 2007-2013 will provide funds for that," he adds.
But will internet access and training solve the problem of high unemployment, and direct people towards new, modern solutions? For Kowalczyk, promotion and word-of-mouth advertising is the key. "We will still have to promote those who have made the decision, taken the risk and succeeded. A good example given by a neighbor is extremely important here. Gmina consultants should look after these entrepreneurial farmers. Then it will bear fruit very quickly," he says. And perhaps they can then concentrate on other innovative farming solutions, and leave the biofuel production to the fuel industry.
