2004-06-10

Agricultural Producer Groups in Poland

Ilona Banaszak

IDARI project

Humboldt University Berlin

2004-06-10

Structure of the presentation:

1. Background;

2. Research questions;

3. Theoretical foundations;

4. Methodology.

2004-06-10

Background (1):

The term ‘producer group’ - any particular legal form, an organisation whose main aim is to introduce agricultural output produced by individual farmers to the market;

PGs can be only established by producers;

Such groups can function as:i. An informal, oral agreement between farmers;ii. Formal, legal agreement. Such PGs have to be officially

registered in court, as a co-operative, association, union or a commercial company;

Groups which fulfil certain conditions can obtain additional support from the province’s government or from the EU.

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Background (2): Main benefits which potentially can be reaped by

members of producer groups:

better market position and higher prices of output;

lower prices of means of production;

easier and cheaper access to information about the market;

lower investments costs and better opportunities for capital obtaining;

saving of time spent for supplies and sales;

higher efficiency and better use of knowledge and skills of associated farmers;

lower business-related risk;

avoiding of unnecessary competitiveness.

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Background (3): Costs of cooperation:

Loosing independence;

Higher uncertainty (enterprise and partners’ behaviour);

Necessity of investments.

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Background (4):

Producers groups in numbers:

Currently about 700 PGs in Poland;

Wilekopolska province:- 7 groups of informal character – not registered in court;- 53 groups registered in court (26 as associations, 16 as unions, 9 as

limited liability companies, 1 as a joint stock company and 1 as a registered partnership);

- 5 groups registered in the province’s government office (2 as unions, 3 as limited liability companies).

Most PGs: pork (54%), vegetables (9.8%), pork and cattle (6.5%) and fruits (4.9%). Average number of members - 66;

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Background (5): Problems with PGs in Poland:

PGs in Poland still have marginal share - considering both the number of associated farmers and share in production. There are less and less PGs (in 2003 about 25 less than in 2001 in Wielkopolska). Only a few of them have applied for government subsidies (2 for 60);

Law regulations – often not compatible with polish circumstances;

History of cooperatives in Poland: introduced by force by the communistic state;

cooperation, common action badly associated by farmers.

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Research question: What are determinants of failure and success of producer groups in Poland?:

1. How does the process of formation of producer groups occur, what are the motives and determinants of framers’ cooperation?

2. How producer groups function, how the decisions are made, how do they act on the market?

3. To which extend informal and formal institutional environment influences or determines formation, functioning and achieving success by producer groups?

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Hypotheses (1):

Individual choice level: H1. Formation of a producer group is determined by possibility and intensity of

preplay contacts between actors. The more contacts the highest possibility of creation of a producer group;

H2. Formation of a producer group is determined by size and modification of a certain set of players. The less modification of the certain set of players the highest possibility of formation of a producer group;

H3. Formation of a producer group is determined by history of previous games. The more successful and satisfactory joint ventures in the past the highest possibility of formation of a producer group;

H4: Existence of a certain level of social capital is correlated with density of producer groups in one area;

H5. Decreasing of transaction costs is a motive for setting up a PG;

H6. Informal institutional environment influences evaluation of costs and benefits of cooperation;

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Hypotheses (2):

Functioning as a group: H7: Formal institutional environment influences legal form of

cooperation;

H8: Informal institutional environment influences choosing a certain type of decision making process;

H9: Legal form of a group is correlated with successes;

H10 Type of output is correlated with success;

H11: Homogeneity of members is correlated with success;

H12. Personal attitudes of the group leader are correlated with successful functioning;

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Hypotheses (3):

Functioning as a group (2): H13: Certain marketing strategies determine success;

H12: Involvement in the decision making process is correlated with positive evaluation of the cooperation;

H14: Working out certain tacit rules of cooperation and its sanctioning within the group determines success;

H15: Ability of learning is correlated with success;

H16: Innovating is correlated with success.

H+: Possession of the group is correlated with success;

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Theoretical frameworks: Choice theories (game theory, rational choice theory, exchange

theory);

Interaction theories (exchange theory);

Informal and formal institutional constraints as evolving from regularities in interactions and structuring interactions (NIE: North, Williamson, Economics of Conventions);

Cooperation (Game theory, social capital);

Contracts, horizontal integration.

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Theoretical model:

Individual choices: internal norms, discount rate

Form ulation, adjudication, modification : constitutional choice

Choice of strategies

Policy-making, management : collective choice

Monitoring, enforcement : operational choice

Establishing of a PG

Success

Failure

Performance

Expected costs

Expected benefits

Produc er group

Learning

Learning

Embeddedness, informal institutions (customs, traditions, norms)

Institutional environment, formal rules of the game

External world

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Methods of the research: Regions

Producer groups Farmers

Population Sample Population Sample Population

Targeted

Full

Targeted

Full

Sampling Selection

17 ± 700 PGs

Wielkopolska 60(3934)+9(361) PGs

60+9

60+9

3+1

Unknown ( ± 40 per PG)

Technique semi -structured interviews with civil servants dealing with PGs on the country and voivodship level

structured interviews with group leaders

semi -structured interviews with group leaders, observation

structured interviews with members and non -members from the municipality producing similar type of output

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Thank you!

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Choice tree:

No Oth er forms of cooperation

As a PG

As an informal PG

As a PG of formal character

Cooperative

Association

Union

Commercial companies

Limited liability company

Cooperation

Non -profit

Profit

Joint stock company

Registered partnership