Transformation of the Rural Cooperative Sector in Poland. Its contribution towards sustainable development

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Transformation of the Rural Cooperative Sector in
Poland. Its contribution towards sustainable
development

• Ilona Banaszak
• Environmental and Resource Economics II

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Purpose of the presentation

• To discuss
• History of rural cooperatives in Poland.
  Influence of ideology on economic and social
  life, how changing ideology has been influening
  attitudes towards cooperatives
• To which extend the cooperative movement may help
  to achieve the path of sustainable development by
  polish rural areas

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Theoretical background (1)Sustainable
development

• Sustainable development is the management
  and conservation of the natural resource base,
  and the orientation of technological and
  institutional change in such a manner as to
  ensure the attainment and continued satisfaction
  of human needs for present and future
  generations. Such sustainable development (in the
  agriculture, forestry and fishery sectors)
  conserves land, preserves water, plant and animal
  genetic resources, in environmentally
  non-degrading, technically appropriate,
  economically viable and socially acceptable
• (FAO 1994)

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Theoretical background (2)6 dimensions of
sustainability in agriculture and horticulture

• Ethic dimension
• Ecological dimension
• Global dimension
• Retinity dimension
• Economic dimension securing commercial viability
  of farms, improving on-farm employment
  opportunities, being responsible for food
  security and food quality, contributing to gross
  national product
• Social dimension developing the rural social
  capital, stimulating participation of the rural
  population, improving the living and working
  conditions of the rural population, developing
  social infrastructure and social security
  services (Hagedorn 2004).

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Theoretical background (3) Social capital

• Mutual trust and how effectively people work
  together, e.g. transaction costs are lowered
  because informal self-enforcement of contracts
  can take place without third party enforcement
  since agents can save monitoring and transaction
  costs, social capital may also be regarded as a
  new production factor alongside the traditional
  ones of human and physical capital
• (Coleman 1988)
• Social capital can be measured by (1) membership
  in voluntary organisations (e.g. a cooperative),
  (2) trust, (3) civic participation (Paldam 2000,
  Chloupkova et al. 2003).

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Theoretical background (4)Cooperatives

• Cooperative movement aiming in achieving certain
  economic goals by less powerful (/poor) economic
  groups, based on cooperation and reciprocal aid
• Cooperation must be conscious, voluntary and
  based mainly on resources of the associated
  self-aid and self organisation principles
  (Brzozowski 1998)
• Cooperative main form of the cooperative
  movement
• Cooperative autonomous union of people who
  voluntary join together in order to fulfil
  certain economic, cultural and social needs by
  establishment of a common and democratically
  govern enterprise (ibid.)

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Cooperatives and sustainable development

• Cooperative movement aims in improving economic
  and social situation of underprivileged social
  groups
• Participation in cooperatives strengths social
  capital
• Cooperatives may contribute towards more rational
  using of means of production (e.g. shared
  machinery) and more rational production methods
  (e.g. diffusion of knowledge), creation of on-
  and off-farm employment, development of the
  whole local community

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Rural cooperatives in Polandbefore the 1st
world war

• 1816 1st coop, established by a nobleman and
  politician S. Staszic for peasants Hrubieszów
  Agricultural Association of Mutual Help in
  Misfortune on a part of land offered by Staszic
  joint farming a fund from income and taxes spent
  on help for members, schools, scholarships
• In the part under Prussia and Austrian regime
  from 1860s agricultural and trade, dairy,
  savings and loans coops mainly to support Polish
  peasants oppressed by the authorities.

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Rural cooperatives in Poland Between the Wars
1918 - 1939

• Cooperative movement propagated by F. Stefczyk
  he aimed in gaining by peasants profits taken by
  middlemen, industrialisation of agricultural
  production, higher profitability of farms
• The most frequent saving-credit cooperatives
  simple forms, acting within parishes and based on
  trust between creditors and borrowers
• Other forms
• agricultural-trade coops (rather big, associating
  rich peasants)
• dairy coops (organising purchase of milk, eggs,
  also simple processing of milk and butter
  production, exporting to the Western Europe)
• consumer coops (usually based on one shop within
  a village providing basic products)
• Retreat from 1935-1936 as a result of the
  international crisis
• In 1937 11 of the inhabitants of Poland
  (including also minorities) were members of
  cooperatives

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Number of cooperatives and their members in 1937
Coops type No. of coops No. of members (thous.)
Loan 5 517 1 515
Dairy 1 408 543
Consumer 1 808 366
Agricultural-consumer 2 973 353
Agricultural-trade 410 22
Housing 252 58
Other 496 76
Total 12 860 2 933
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Rural cooperatives in Poland After the 2nd
World War

• First coops voluntary formed to govern and farm
  former German holdings (in 1948 91 such coops
  with 2 300 member)
• Reactivated coops connected with non-communistic
  part of the peasant movement or politically
  neutral
• From Dec. 1944 efforts of the authorities to
  subordinate the cooperative movement

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Rural cooperatives in Poland After 1948
communism

• Abolition of most of voluntary, not subordinated
  to the states control cooperatives (e.g. in
  dairy, gardening and credits)
• Political, administration and economic pressure
  on farmers to joint cooperatives
• Cooperatives subjected to the state introduction
  of control mechanisms, centralised and
  bureaucratised planning
• Due to strong resistance of farmers and not
  sufficient financial incentives in 1955
  cooperatives associated only 10 of the
  agricultural land and 8 of peasant families

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Rural cooperatives in Poland After 1956
destalinisation

• In 1956 after the destalinisation and
  neglecting Stalinist ideology, mass abandonment
  of cooperatives by peasants 85 of cooperatives
  split, also these functioning well
• As the result of the process of democratisation
  and decentralisation some local reactivation of
  dairy, gardening and saving-consumer cooperatives
  and rural cooperatives based on providing
  equipment for farmers nevertheless still under
  the states control

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1960 - 1989

• New forms of cooperation introduced, e.g. a
  collective farm associated with a few individual
  farms, in 70s around 200 such cooperatives,
  nevertheless, most of them collapsed till 1980
• In 70s and 80s the state more and more intervened
  in cooperatives production and decision making
• Number of cooperatives was slightly increasing,
  but no. of members decreasing (in 1985 8 382
  rural coops, 7 000 urban)

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Polish rural cooperative movement 1988
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Rural cooperatives in Poland After 1989 -
transformation

• In 1989 the cooperative sector associated several
  millions of people, was rather good economically
  developed controlled but in a privileged
  position (legal aid, better access to the means
  of production, financial support, etc.)
• Due to transformation the situation of the sector
  changed for the worse
• - in contradiction to the Constitution
  functioning of unions of cooperatives was
  abolished, their assets were sold below the
  value
• subventions, funds and other aid was stopped
• inspecting the cooperatives by the state stopped,
  cultural, training, publishing activities of
  cooperatives abolished
• taxes even higher that for the private sector
• opening the market for foreign agricultural and
  other goods
• neglecting achievements of the cooperatives also
  neglecting economic and social benefits that may
  be achieved by cooperatives

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Cooperatives in 90s

• Share of cooperative sector decline
  dramatically
• From 9.5 share in GDP in 1989 to 2.4 share in
  1994
• From 12.8 share in employment in 1989 to 4.8 in
  1994 and to 3.5 in 1996

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Rural cooperatives in Poland Presence

• Come back of the idea of cooperatives, new form
  e.g. agricultural producer groups promoted by
  the government seen as a chance for Polish
  agriculture
• Till presence reluctance and aversion of farmers
  towards cooperatives.

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Conclusions

• Before the 2nd WW the cooperative organisations
  grew up bottom-up as local and regional peasants
  movement against economic threats from other
  social classes or foreign powers
• They strengthened economic and social power of
  peasants A substantial level of social capital
  on rural areas was achieved
• These networks, social capital and trust
  destroyed by socialism obligatory
  participation, state intervention, central
  planning
• Nevertheless, the cooperative sector was present
  and active in some areas before 1989 (e.g. dairy,
  agriculture machinery)
• Transformation denied these achievements,
  annihilated the cooperative movement
  Double disaster
• Now how to build a bridge between pre-socialism
  practise and presence?

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Thank you!