Do Divestments and Investments Determine Farm Development?

1 University of Agriculture in Krakow, Department of Management and Marketing in Agribusiness, 31-120 Krakow, Poland
2 University of Agriculture in Krakow, Institute of Economic and Social Sciences 31-120 Krakow, Poland


SATOLA, L., T. WOJEWODZIC and M. DACKO, 2014. Do divestments and investments determine farm development? Bulg. J. Agric. Sci., 20: 1281-1288


The paper focuses on the role of divestments and investments in the process of shaping the development of agricultural farms. The Farm Accountancy Data Network system data were used in its empirical part. A cost-output rate was estimated for Polish commodity farms, which operated in the year of Poland’s accession to the European Union and continued to operate uninterruptedly for 5 years. From among 6 900 farms a population of 668 was selected whose total costs in 2004 exceeded the value of their output. The reallocation of resources was particularly justified for those farms. As part of research, costs of farmer’s own labor were valued and the cost-output rate was modified. Then changes affecting the rate were examined on selected farms after five years of management. It was found that the improved profitability of the farms was not closely related to investments and/or divestments made by farmers. However, research results confirmed Drucker’s theory of a high cost of idle capacity: a group of farms with idle capacity, i.e. those that did not take any measures with regard to the reallocation of their resources of land and capital, was the least probable to improve the cost-output rate.

Key words: commodity farms, Polish agriculture, development, divestments, investments, costs, output
Abbreviations: ACO R – Adjusted Cost-Output Rate; AWU – Annual Work Unit; CO R – Cost-Output Rate; FAD N - Farm Accountancy Data Network; OLC – Own Labour Cost; TC – Total Costs; TO – Total Output

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