DO DIVESTMENTS AND INVESTMENTS DETERMINE FARM DEVELOPMENT?

Abstract

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.