Despite changes in political system after WW II, a salient feature of Polish agriculture was a role of family farms. In contrast to other central and eastern countries in Europe, the state sector of Polish agriculture occupied an area not exceeding one-fourth of agricultural land.

Following legislative works initiated by the government, the parliament adopted on October 19, 1991 the Act on Management of Agricultural Property of the State Treasury (uniformed text in Journal of Laws, No.208/2004 item 2128). The Act entrusted restructuring and privatization of State agriculture to Agricultural Property Agency of the State Treasury (presently named as Agricultural Property Agency - APA). APA, as a State legal person, exercises, on behalf of the State Treasury, property rights and other rights in agricultural State property. The property entrusted to APA creates Agricultural Property Stock of the State Treasury (hereinafter APS). Almost 80% of the APS comes from liquidated State farms.

On July 16, 2003 the Act of 11th April 2003 on the Formation of Agricultural System (Journal of Laws, No.6/2003, item 592) came into force. The provisions of that Act enable APA to counteract excessive concentration of agricultural property and ensure to manage of agricultural holdings by farmers with appropriate vocational qualifications or experiences. Furthermore, APA has pre-emption (sale contract) or buyout right (other contracts transferring the ownership rights) for purchase of agricultural land on private market.
Added to which, APA performs ownership rights in crop and animal breeding companies established on the basis of APS and acknowledged by the Ministry of Agriculture and Rural Development as particularly important for national economy. Currently, APA exercises ownership rights from shares/stakes in relation to 59 such companies. Twenty one companies have dairy cattle and pigs herds. The same number of companies deals with horse breeding. The APA Horse Stud Farms have the most valuable genetic material of Purebred Arabian Horse and other horses. The genetic material of cereals, leguminous plants, grasses, sugar and fodder beets and potato is held by 11 plant breeding companies, while six horticultural plant breeding companies keep genetic material of vegetables, flower and decorative plants.

APA operates on self-financing basis and performs its tasks running separate finances through its President’s Office in Warsaw, 11 Regional Branches and 5 Subsidiary Offices. Some of Regional Branches have also set up smaller field units.
Since 1992 up to the end of 2005 APA took over into APS 4,715 thousand ha of land. From that area 1,586 thousand ha have been sold and further 330 thousand ha distributed by gratuitous transfer to authorized institutions (local authorities, State Forest Organization, Polish Academy of Sciences, Agricultural Chambers, State Universities, other Research and Development Institutions).
The sale is treated as final form of land privatization. In 1992 -2005 APA has signed totally 177.8 of sale contracts for the land (excluding transactions related to land under buildings, separate facilities, ground under water and non agricultural land). Nearly half of sale contracts (83.5 thousand – 47.1%) were signed for sale of property with area of up to 1 ha, while the next 69.2 contracts (38.9%) for sale of property with area ranging from 1 to 10 ha. The average area of sold land amounted to 8.6 ha per contract. The purchasers of land included both individuals and legal persons but only 2.5% of them were legal persons interested in larger property
The 2005 average price per 1 ha of APS land was 5,607 PLN, while in 2004 – 4,682 PLN, 2003 – 3,736 PLN and in 2002 – 3,438 PLN. According to data reported by Central Statistical Office the average prices for agricultural land on private market amounted to in 2005 from 5,843 PLN/ha for the land with low quality to 11,101 PLN/ha for the land with good quality. In 2004 those prices amounted to 4,194 PLN/ha and 9,040 PLN/ha respectively.

At the end of 2005 there were still 2,795 thousand ha in APS, of which 2,206 thousand ha leased. The next 454 thousand ha, largely of little agricultural usability, are still foreseen for further distribution.
The property taken over to APS also includes objects of a special character such as food processing plants, manor houses, palaces and park complexes. Most of them have been sold or rented till now. APA took over 336 thousand of apartments of which 313 thousand have been distributed primarily via sales to their tenants. Totally, besides the land, it has been taken over other assets with net book value of 8.6 billion Polish Zlotys (PLN), and former State farms liabilities in amount to 2 billion PLN. It should be mentioned that all liabilities of former State farms have been repaid by APA.

APA can sell the property if - as a result of transaction - total area of agricultural land being in purchaser’s ownership does not exceed 500 ha. APA has also the right to re-purchase (buyout) the property on the benefit of the State Treasury in the period of five years, counted from the day of its purchase from APS (it does not concern the property located on the area of special economic zones). APA has also the pre-emption right to buy a property re-sold by purchaser, within five years since the date of its acquisition from APS.

The predominant method of APS distribution is lease and sale of property through oral public open auctions or public auctions of written offers. APA has also a right to organize non-open (restricted) tenders for specific target group of bidders such as individual farmers, former workers of state farms, members of liquidated land co-operatives, repatriates and farmers participating in APA settlement program. Public open auction (oral bidding) for sale and lease of property is the basic form of APS distribution. APA uses this form of tender when offered price or leasehold rent is only one decisive factor for selection of buyer or leaseholder. The public auction of written offers is managed in cases justified by social and economic circumstances e. g. when tendered property is operated by the workers.

The lease is relatively accessible method of acquiring of APS land. By the end of 2005 APA offered for lease more than 7 million ha of land (some properties were offered for lease more than once) but at the end of 2005 “in the state of leasing” there were 2,206 thousand ha . In terms of structure of leased agricultural land most of transactions involved plots under 1 ha (46% of contracts) and from 1 to 10 ha (41% of contracts). It can be estimated that on the end of 2005 the foreigners leased about 118 thousand ha of APS land and Polish companies with foreign participation about 56 thousand ha.

As a principle, the APA lease contracts are concluded for 10 years with the option of prolongation for longer period (maximum up to 30 years). The initial leasehold rent is determined by the quality of soil, location of land and local demand for the land in the region. The land of class VI (the lowest quality) is statutory exempted from leasehold rent. The volume of leasehold rent is proposed by the leaseholder in his/her oral or written offer and fixed as the final result of the tender.

The annual leasehold rent is determined in a lease contract and expressed in cash or as the monetary equivalent of the relevant amount of wheat (in dt of wheat/ha, where 1 dt = 100 kg). The leasehold rent determined in cash is subject of valorization commencing from the second period of payment made on the basis of indexes reflecting the changes in purchasing prices of basic agricultural products (grain of wheat and rye, slaughtered cattle, pigs and poultry as well as cow’s milk). The leasehold rent determined as a cash equivalent of relevant quantity of wheat is calculated on the basis of country average purchase price of wheat in a half-year of the calendar year preceding the date of payment. The prices of wheat and valorization indexes are published by Central Statistical Office.

The annual leasehold rent determined in equivalent of wheat was stable over the years and fluctuated around 2 dt/ha resulting from changing economic conditions, different quality and location of land and varying level of local land demand. At the end of 2005 the average leasehold rent was 2.35 dt of wheat/ ha. According to preliminary data of Central Statistical Office the country average purchase price of wheat in first half of 2006 amounted to 39.56 PLN/dt.

The leaseholder pay the leasehold rent for land, perennial plants, forests, buildings and constructions. The remaining inter-related assets i.e. working assets (livestock, stocks, ongoing production) as well as movable (machines, devices) are subject to purchase. The terms of payment for lease inter-related assets is proposed by bidders in their offers.

In the case of sale the initial (opening, floor) price of property is determined by licensed experts taking into account prices of similar real estate on the local market including costs of transaction (assessment of property value, costs of geodesy works and documentation). If the land has no other components (buildings, standing timber) and is assigned for agricultural or forestry utilization, the initial price of land may be determined by the rates and price of rye fixed according to the regulations on agricultural tax. This method of land value assessment is usually used in the case of in real estates seized less than 1 ha when evaluation costs are expected to be higher in relation to the value of the land in question. In cases justified by socio-economic reasons, especially when a real estate is purchased in order to establish a new farm or expand an existing farm, and also when new jobs are provided the payment can be made into installment payment scheme. The individual or legal person interested in purchase of real estate entered into register of monuments has to have program of monument usability approved by Voivodship Conservator of Monuments.

In virtue of the Act of 24 March, 1920 - on the Acquisition of Real Estate by Foreigners the acquisition of real estate in Poland by a foreigner requires a permit. The permit is issued by the Minister of Internal Affairs and Administration, with consent of the Minister of National Defense, and in the case of agricultural real estate, also with consent of Minister of Agriculture and Rural Development. As far as acquisition of agricultural real estate is concerned the Act of April 11, 2003 on Formation of the Agricultural System (Journal of Laws No 64, item 592) shall be applied respectively. The foreigners being citizens or businessmen from States which are the party to the European Economic Area Agreement (EEC) are obliged to obtain the permit for acquisition of agricultural and forest real estate, during the period of 12 years of the Poland’s Accession to the European Union. It is not obligatory to obtain a permit by foreigners being citizens of member States of EEC in case of acquisition of agricultural real estate after 7 or 3 years since the date of concluding the lease contract, if during that period they conducted agricultural activity in person and legally dwelled on the territory of Poland. The period of lease contract duration depends on the location of agricultural real estate.

Until 2005, APA sold to foreigners 1,108 ha of land on the basis of 146 contracts. The largest area of land has been bought by German, Dutch, Finish and Danish investors. Moreover, the legal persons with foreign participation but without dominant position of foreign shareholders have bought about 40 thousand ha of APS land.

The results of APA activity show that APA distributes APS property mainly for enlargement of Polish farms. It can be estimated that owners and leaseholder of properties with the size under 100 ha had used, at the end of 2005, 1,518 thousand ha of APS land on the basis of 312 thousand contracts (4.9 ha per contract on the average). At the same time APS was also the source for establishment of larger farms. Their owners or leaseholders had used 1,930 thousand ha on the basis of 5.2 thousand contracts (368 ha per contract on the average).

Prepared by
Dr Andrzej Zadura