The balance of public transfers in Poland, according to the economic size of farms

Transkrypt

1 The balance of public transfers in Poland, according to the economic size of farms Piotr Gołasa WarsawUniversity of Life Science Abstract. The article presents an attempt to calculate the volume of transfers between the public finance sector and farms, depending on the economic size. The study used data from the FADN for the years The calculations take into account the size of transfers resulting from the operation of the CAP instruments to support farm income and taxation of their activities and contributions to social insurance for farmers. Stated a positive balance of transfers (27, zł in 2008 on one farm), which means that they receive much more from the public finance sector than they pay in. This balance is strongly linked to the economic size of farms and grow during this period. Keywords: (support for farms, agricultural taxes, balance transfers) Introduction The agricultural policy is considered to be a part of the food policy. B. Winiarski [Winiarski 2006] defines it as "the practice of socio-economic of political and state authorities for agriculture and rural areas or as a skill (art) of making rational decisions concerning agriculture and rural areas". A very important issue is the legitimacy of state actions in the field of agriculture. This is an issue widely discussed in the literature. However in most works we can find a reference to one of the three classical functions of the state - a redistributive function [RA Musgrave, PB Musgrave, 1989]. JE Stiglitz states that the redistribution of primary incomes generated by the market is the main reason for state intervention in agriculture [JE Stiglitz, 1987]. Similar, although not as far-reaching views shows M. Adamowicz paying attention to the agriculture profitable problems and above all, the need to prevent excessive imbalances [A. Adamowicz, 2009]. Particular attention should be paid to the approach of A. Czyzewski, introducing the concept of input-output flows. According to it, agriculture is depreciated in the flow, which results in that the production is made less than produced. This means that the economic surplus in agriculture developed undeservedly goes to other sectors (processing industry). So the task of the state is to make retransfer of value added, which for various reasons can not be left to return to agriculture [A. Czyzewski 2007]. He introduces the concept of redistribution channels which by means of transfers result in redistribution of agricultural income. Channels are divided into direct and indirect [Czyzewski 2002]. Intermediates include two types of channels:

2 FARMS the consumer / taxpayer state budget farmer market. The instruments used are mainly there to protect their own market and promote exports. These include Customs Tariff, certificates, permits, subsidies of import / export, import restrictions, sanitary regulations the consumer / taxpayer farmer market. Used here the instruments relate to minimum and indicative prices and price guarantees. The last mentioned by Czyżewski channel is a channel of direct redistribution on the line consumer / taxpayer state budget farmer. It means extensification subsidies, subsidies to shift production to surplus articles, production quotas, set-aside land, direct subsidies for agricultural production [Czyzewski, Henisz-Matuszczak 2006]. It should also be noted that the transfers between the public finance sector and the farmers are not only one-sided character. Agriculture, like the rest of the economy has an active part in the creation of these funds as the Polish example shows the graph. Income tax on special branches; VAT Excise Tax The state budget Agricultural tax Forest Tax Others Taxes The budgets of local government units Agricultural Contributions to social insurance Agricultural Social Insurance Fund Fig. 1: Charges of farms to the public finance sector Rys 1: Obciążenia gospodarstw rolnych na rzecz sektora finansów publicznych Source: Przygodzka R., Fiscal instruments for supporting agriculture: the cause of using, mechanisms and effects, ed. Universities in Bialystok, 2006, p 158 Źródło: Przygodzka R., Fiskalne instrumenty wspierania rolnictwa: przyczyny stosowania, mechanizmy i skutki, wyd. Uniwersytety w Białymstoku, 2006, s. 158 So here is formed another channel of redistribution on the line state budget Agriculture agriculture. It can be used to redistribute of incomes between farmers, depending on their incomes earned. As classic examples of such instruments in the literature is given progressive income tax or social security contributions, which are dependent on income. Currently in Poland, farmers are exempt from income tax and the dependence of social security contributions is symbolic, affects a small number of farms. Raises the question whether the state uses the channel of redistribution and, if so, to what extent?

3 The matarial and research methods The purpose of this article is to determine the size of the balance of transfers between the public finance sector and farms during the period considered. Calculations were based on data for individual farms acquired by the Institute of Agricultural and Food Economics - National Research Institute under the FADN for the period from households. Under observation of FADN are commercial farms, located in the producing group in a given region or country at least 90% of the standard gross margin. The lower threshold limit of economic size is determined in such a way that, based on the summation of SGM farms in the national registry of households, starting from the largest to the last, which is taking 90% of the SGM 1. For this reason, the economic thresholds for defining the minimum size of farms included in FADN field of observation are different in each country. In Poland, the limit is 2 ESU. The calculations were made according to the results statement in the FADN: I. The value of production 1. (-) Intermediate consumption 2. (+) The balance of subsidies and taxes a. (+) operating subsidies b (-) Taxes c (+) Balance of tax VAT from operating activities II. = Gross value added 1. (-) Cost of external factors 2. (+) The balance of subsidies and taxes related to investments a (+) Subsidies for investment b (+) Balance of tax VAT from investing activities IV. The income from the family farm [FADN 2005] To calculate the balance transfers, used information about financial instruments in order to transfer the funds to the farms and from farms to the public finance sector. The first group includes instruments of the CAP: direct payments to support the activities in the areas with adverse conditions, semi-subsistence farms, supporting projects agri-environment and animal welfare, afforestation of land, farms adaptation to EU standards, investment in farms, and facilitating young farmers. Transfers of farms, however, are taxes: tax on real estate, agriculture, forestry, transport and the social security of farmers. 1 ESU is established using standard gross margins (SGM) of farm (all activities undertaken on the farm). One ESU corresponds to 1200 euros. Formally regulated by the European Commission Regulation No 730/2004 of 19 April SGM is the average of three years, the production value of the specified agricultural activity reduced by average (over three years) the direct costs incurred in its production.

4 The measure of giving a better understanding of the economic strength of farms than their surface, are European size units (ESU - EuropeanSize Unit). The chart below shows the structure of the economic size of the sample for the Polish FADN. Fig. 2: Structure of the economic size of the research sample FADN in 2004 Rys 2: Struktura wielkości ekonomicznej próby badawczej FADN w 2004 roku Source: Own calculations based on FADN standard results achieved by individual farms leading accounting in 2004, Warsaw, 2005 Source: Own calculations based on FADN standard results achieved by individual farms leading accounting in 2004, Warsaw, 2005 Źródło: Opracowanie własne na podstawie FADN, Wyniki standardowe uzyskane przez indywidualne gospodarstwa rolne prowadzące rachunkowość w 2004 roku, Warszawa, 2005 The largest shares have farms of are 8-16 and 4-8 ESU ESU. The smallest farms, less than 4 ESU this is only 8%. It should be remembered that, as previously stated in the FADN sample are not represented at all farms of less than 2 ESU. The result is that the average FADN economic size is significantly greater than the general population in Poland. Estimation of the balance of public transfers With FADN data on the one hand, the amount of support, transfers and compensation from public funds and on the other hand, the tax burden and social security benefits was calculated balance transfers of funds. Figure 3 shows the results

5 Fig 3: balance transfers, depending on the economic size Rys 3: Saldo transferów w zależności od wielkości ekonomicznej Source: own study based on data from FADN Źródło: opracowanie własne na podstawie danych FADN In , there is a marked increase in transfers to farms, which depends on economic strength, particularly for farms large and very large. In 2004, the farms balance transfers amounted to 8000 zł, and within five years grew to 99,000 zł (for holdings above 100 ESU) and zł (for farms ESU). The tendency of increase in the balance transfer with the increase of economic size is characteristic not only for Poland but also for the EU-12. Fig 4: Balance transfers, depending on the economic forces in the EU-12 Rys 4: Saldo transferów w zależności od siły ekonomicznej gospodarstw w krajach UE-12 Source: T. Sobczynski, changes in the share of subsidies in EU farm incomes in the period [in] Kopcińska D., European Union Politics, Szczecin, 2008, p.46 Źródło: Sobczyński T., Zmiany udziału dopłat w dochodach gospodarstw rolniczych UE w latach [w:] Kopcińska D., Polityka Unii Europejskiej, Szczecin, 2008, s.46

6 This process began in 1993, after the implementation of the CAP reform. In , balance transfers for the largest farms amounted to 50,000 Euro (for farms above 100 ESU) and Euro (for group of farms ESU) [Sobczyński 2009]. Sobczynski on the basis of FADN data from across the EU suggests that the improvement of the agrarian structure, increasing the scale of production is not guaranteed to increase farmers' incomes, as more and less economic surplus left to farmers by other cells agribusiness requires additional redistribution in the form of subsidies. It can be assumed that it is a good idea. Agriculture of the EU-12 is certainly on a higher level of development than the Polish, but support is stronger than the national agriculture because it is not able to provide sufficient income to farmers. Since 2004, the Polish farms have repeated the way that farms from the EU-12 did in (the period of implementation of the reform MacSharrego). During the period there was a sharp increase in transfers to them, related to the functioning of the CAP instruments. It is worth to notice that the disparity between the balance of transfers (Sobczyński describes it as the balance of subsidies and taxes, are not included in the social security contributions of farmers) between farms Polish and EU-12. Despite the strong upward trend in the balance of subsidies and taxes in the economically strongest group Polish farms is twice lower than in the EU-12. In the case of farms economically weaker this disparity also exists, but on a slightly smaller scale. European trend, however, is the same: in Poland and in the EU-12: with the increase of economic size increases balance transfers on their behalf. This means that the picture is not merely the result of Polish regulations on agricultural taxation system or grant support for farms, but the general shape of the CAP. Postulates of increase of the burden in agriculture in order to "bring them up to EU standards" are irrelevant. Polish farms is not enough that they must be upgrading (both in terms of technology and agrarian structure) is a farming system of financial instruments not supported them as farms from the EU-12. Changes resulting in a reduction of the balance transfers on their behalf, will therefore increase meant the difference between Polish agriculture and the "old EU". When considering balance transfers for 1 ha, depending on the economic size (Figure 5) it was found that in all types it is trend upward. In 2008, ranging from zł per hectare for large farms to zł for very small.

7 Fig 5: Balance transfers on 1 hectare, depending on the economic size of farm Rys 5: Saldo transferów na 1 ha w zależności od wielkości ekonomicznej gospodarstwa Source: own study based on data from FADN Źródło: opracowanie własne na podstawie danych FADN The share of income transfers balance (Figure 4) increases in the period considered (with the exception of 2007) and is related to the size of the economy. The most important meaning is for very small farms (40% in 2004 and 76.17% in 2008). With the increase of economic size the share is decreasing (for very large farms 4.8% in 2004 and 30.7% in 2008). Fig. 6: Share of transfers in shaping income of farms, depending on the economic size Rys 6: Udział transferów w kształtowaniu dochodu gospodarstw w zależności od wielkości ekonomicznej Source: own study based on data from FADN Source: opracowanie własne na podstawie danych FADN Within five years after the Polish accession to the EU level of burden of taxes and contributions ASIF changed little (an increase of zł per 1 ha in 2004 to zł for 1 ha in 2008). Have increased dramatically subsidies for farms. This has contributed significantly to the balance transfers between the public and farms (Figure 6)

8 Fig. 7: Balance transfers on farm Rys 7: Saldo transferów na gospodarstwo Source: own study based on data from FADN Źródło: opracowanie własne na podstawie danych FADN Balance transfers per farm increased from zł in 2004 to 24, zł in CONCLUSIONS The information provided leads to the following conclusions: 1. It was found a positive balance of transfers between the public finance sector and farms, growing after Polish accession to the EU from zł in 2004 to 27, zł in 2008 on one farm. This condition persisted throughout the period considered and in all groups of the economic size of farms. 2. There is a strong differentiation balance transfers, depending on the economic strength. The highest balance recorded among the farms strongest economically. 3. There were no major diversity of balance transfers for 1 ha of agricultural land according to economic size. 4. Comparing the share of transfers in the development of farms income in Poland and in the EU-12 [Sobczyński 2009] stated:. Participation of balance transfers in the creation of income farms is similar and, depending on the economic strength is from 32% to 62% of income. In the EU-12 there is no close connection between economic size and participation in shaping the balance of income transfers. The highest share of income transfers for farms are recorded from 0 to 4 ESU, ESU 16-40, and more than 100 ESU and the smallest for 4-8 and 8-16 ESU. REFERENCES

9 1. Skarżyńska A., Goraj L., Ziętek I. Metodologia SGM 2002 dla typologii gospodarstw rolnych w Polsce, IERiGŻ, Warszawa, Ziętek I., Współczynniki standardowej nadwyżki bezpośredniej 2004 dla typologii gospodarstw rolnych w Polsce, IERiGŻ, Warszawa, FADN, Wyniki standardowe uzyskane przez indywidualne gospodarstwa rolne prowadzące rachunkowość w 2004 roku, Warszawa, 2005, s.7 4. Sobczyński T., Zmiany poziomu subsydiów w gospodarstwach rolniczych UE-12 w latach , Journal of Agribusiness and Rural Development, 3(13) 2009, s Winiarski B. (red) Polityka gospodarcza, PWN, Warszawa, 2006, s Czyżewski A., Protekcjonizm w polityce rolnej USA i państw UE wobec procesów globalizacji i integracji, Roczniki Naukowe SERIA, t. IV, z. 1, Warszawa-Bydgoszcz, 2002, s Czyżewski A., Henisz-Matuszczak A., Rolnictwo Unii Europejskiej i Polski. Studium porównawcze struktur wytwórczych i regulatorów rynków rolnych, wyd. Akademio Ekonomicznej w Poznaniu, Poznań, 2006, s Czyżewski A., Makroekonomiczne uwarunkowania rozwoju sektora rolnego, [w:] Czyżewski A., (red), Uniwersalia polityki rolnej w gospodarce rynkowej, ujęcie makro- i mikroekonomiczne, wyd. Akademii Ekonomicznej w Poznaniu, Poznań, Przygodzka R., Fiskalne instrumenty wspierania rolnictwa: przyczyny stosowania, mechanizmy i skutki, wyd. Uniwersytety w Białymstoku, 2006, s Musgrave R.A., Musgrave P.B., Public Finance in Theory and Practice, McGraw-Hill, New York, 1989, s Stiglitz J.E., Some theoretical aspects of agricultural Policies, The World Bank Research Observer, Vol. 2, No 1, 1987, s Adamowicz M., Wymiary i cele interwencjonizmu rolnego w krajach o różnym poziomie rozwoju [w:] Adamowicz M. (red) Wspólna Polityka Rolna Unii Europejskiej, Wydawnictwo SGGW, Warszawa 2009, s. 20 SALDO TRANSFERÓW ŚRODKÓW PUBLICZNYCH W ZALEŻNOŚCI OD WIELKOŚCI EKONOMICZNEJ GOSPODARSTW ROLNYCH Streszczenie: W artykule przedstawiono próbę obliczenia wielkości transferów pomiędzy sektorem finansów publicznych a gospodarstwami rolnymi w zależności od wielkości ekonomicznej gospodarstw. W badaniach wykorzystano dane pochodzące z systemu FADN za lata W obliczeniach uwzględniono wielkości transferów wynikające z funkcjonowania instrumentów WPR wspierających dochody gospodarstw oraz opodatkowanie ich działalności oraz składki na ubezpieczenia społeczne rolników. Stwierdzono dodatnie saldo transferów (27030,32 zł w roku 2008 na jedno gospodarstwo), co oznacza, uzyskują one znacznie więcej z sektora finansów publicznych niż do niego wpłacają. Saldo to jest mocno powiązane z wielkością ekonomiczna gospodarstw i wzrastało w badanym okresie.

10 Słowa kluczowe: wsparcie gospodarstw rolnych, podatki w rolnictwie, saldo transferów Corresponding author Adres do korespondencji: Piotr Gołasa, Szkoła Głowna Gospodarstwa Wiejskiego w Warszawie, Wydział Nauk Ekonomicznych, Katedra Polityki Europejskiej Finansów Publicznych i Marketingu, ul. Nowoursynowska 166, Warszawa, piotr_golasa@sggw.pl