Act of On September 16, 2011, amending the Act on the management of agricultural real estate of the State Treasury and amending certain acts, overnight presented land tenants with a critical dilemma. Within three months, they were to decide what to do next with their estates. The areas concerned are long-term leases of former state farms, which were liquidated at the threshold of transformation by the Act of October 19, 1991 on the management of agricultural properties of the State Treasury.
Tenants could either exclude 30 percent. managed land, continue their production and count on the possibility and priority of purchase after the end of the lease agreement, or terminate the lease and lose the right to continue management and purchase of land.
It is worth noting that the 2011 Act was passed literally at once during the last session of the Sejm of the Republic of Poland, when the coalition government of Prime Minister Donald Tusk, i.e. the Civic Platform and the Polish People's Party, was in power. Marek Sawicki was then the Minister of Agriculture and Rural Development. Parliamentary elections were already held in October 2011. And PO and PSL retained power.
At that time, more than half of the tenants decided to submit to inclusion, even though they had not been idle in this matter until 2011. The rest did not recognize these changes, questioning the constitutionality of the act, arguing that it was retroactive, destroying the trust of citizens and entrepreneurs in the state and its bodies, contributing to social tensions, and also adversely affecting the level of agricultural production in the country.
These are just a few of the arguments that tenants have been presenting for years. In practice, the matter is still not fully settled. Even those who have submitted to statutory exemptions have no guarantee today what their future management will look like. The purchase of land from the Agricultural Property Resource of the State Treasury in 2016 was suspended for five years, then extended until 2026. Therefore, it is not possible to purchase land after the lease agreement has ended. Are there still negotiations or another tender for the lease, how long, or the entire lease, or maybe another lease with another exclusion? These questions remain without a clear solution today, and the situation varies across regions.
On the other hand, the tenants who opposed the regulations still want to farm in the centers they have created over the years, often counting on the 2011 Act to be undermined, as indicated by many legal opinions. They are ready for compromise and conversation, exclusion of land and establishing further conditions of cooperation with both state authorities and the local community.
The peak of expiry of long-term contracts in which tenants did not exclude the statutory 30 percent. land falls in the years 2023-2025, the last leases expire in 2033. After almost 13 years, it would be appropriate to finally reach an agreement on the further operation of large-scale farms.
Grzegorz Brodziak, president of the management board of Goodvalley Agro SA and president of the Polish Agricultural Federation, comments on the matter for the rancher.pl editorial team.
– This is a very complex topic. The discussion about this act from 2011 has been with us since the very beginning of its creation. To put it briefly, I can say that it is a terrible document that has caused conflict in the agricultural community and has had and will continue to have an impact. At that time, the Act affected over 1,000 lease agreements from the State Treasury, those covering more than 428 ha. The famous 300 ha was to remain the preferred form of running a family farm. If you had 428 ha or more, you were obliged to exclude 30 percent. Over 1,000 lease agreements, several hundred tenants faced a dilemma, and a decision had to be made within three months. The offer from the then Agricultural Property Agency was as follows: tenant or you exclude 30 percent. arable land from your leased resources of the State Treasury in the coming years, or you will irrevocably and forever lose the right to extend this lease agreement and the right of priority to purchase the leased property. And what is important, the exclusions you made before the Act came into force do not count. In many cases, tenants, through social dialogue and local arrangements, excluded 20 – 25 percent. land – he explains in the interview.
Grzegorz Brodziak emphasizes that for farms with animal production, exemptions meant being or not being there for the herd of animals.
– Additionally, in the case of animal production, it threatened the maintenance of the feed base for the herd. The matter also becomes more complicated in terms of the management of waste from production. In particular, when breeding pigs, it is an obligation to own, in the form of ownership or lease, 70% of the land necessary to manage the natural fertilizer produced in these commercial pig farms. The lack of leased land in this case automatically resulted in the loss of the right to breed – says the president of Goodvalley and PFR.
Examination of the constitutionality of the act
When the act was introduced in 2011-2012, organizations bringing together tenants filed a complaint to the Constitutional Tribunal to examine the constitutionality of the introduced provisions.
– Unfortunately, the Tribunal rejected both complaints, citing what we would call today "formal considerations". Claiming that the organizations did not have a mandate to represent the environment in this respect, the Tribunal did not consider these complaints substantively. I will add that this year, one of the companies finally managed to bring about a situation in a common court in which the common court sent an inquiry to the Constitutional Tribunal. In short, stating that the act is unconstitutional and violates acquired rights. The Tribunal is considering this complaint, and what is important for us, as an environment, the Ombudsman joined this inquiry and proceedings in the Constitutional Tribunal, who in his official statements expressed the opinion that, in his opinion, this act is clearly not constitutional. This also applies to the Act of 2019, which accompanies this whole issue of expiring leases and the release or unleased property. The 2019 regulation introduced an incredibly disproportionate penalty for the lessee for failing to hand over the property after the end of the lease period. By increasing the rent payment from five times the amount specified in the contract to thirty times the rent that the National Support Center for Agriculture could now potentially obtain for these lands. In the opinion of the Commissioner for Human Rights, this is also a very unconstitutional regulation and he expressed this in his official opinion, so we are at a time when more than 12 years have passed since the entry into force of the Act and we are only just reaching the substantive consideration of this Act by the Constitutional Tribunal – he explains.
A compromise proposal
The tenants, as entities interested in the case, have been trying to find a systemic solution to this matter for years. As Grzegorz Brodziak emphasizes, taking into account the social side and local conditions.
– The result of these activities was the adoption of a new regulation under the Act on shaping the agricultural system in 2019, which then enabled the National Center for Agricultural Support, which was a party to these leases, to create agricultural production centers. What is this? If the lessee has not excluded 30%. land in 2011-12, and his contract comes to an end, then at his request or at the request of KOWR, restructuring may be carried out. In practice, it involves separating approximately half of the land from such an agreement for the purpose of expanding individual farms in accordance with the Act on shaping the agricultural system, i.e. these are plots of approximately 20 ha. As a rule, the opportunity to participate in such tenders is only available to individual local farmers or farmers from neighboring communes. However, the remaining 50 percent land and habitat, usually together with animal production, create this so-called agricultural production center, which is subject to unlimited leasing for the next period under an open tender. The period for which is still to be determined. This creates, above all, an opportunity to preserve this production, often specialized animal, plant and livestock production, for the next period. It also allows for increased cooperation with farmers who will be new users of this 50%. land. This is still a difficult task. First of all, it must be prepared sensibly and still under great pressure from agricultural organizations, which must be said clearly, who do not seem to see the need to maintain this production, also to their own benefit. Their family members often work on these farms, and they often cooperate with these farms as centers of knowledge and know-how. These are very specialized farms, there is often a lot of pressure. This means that KOWR's local branches are quite slow in developing agricultural production centers, but it is happening. This process and the procedures for the centers that are to be subject to the new lease were facilitated by the regulation signed by the Minister of Agriculture and Rural Development in June this year. A regulation defining the criteria to be assessed when submitting a written offer for the lease of such an agricultural production center. These are four criteria that are intended to eliminate random bidders from this process, because these are large, complex, specialized farms and it cannot be allowed, also in the interest of the State Treasury, which is the owner of these properties and in the social, economic and local interest, for anyone to with insufficient competences and financial, substantive and even equipment resources, he was to undertake this with the risk that the farm would be liquidated in a year, two, or three. The criteria, of course, include, apart from the rent, the issue of experience in running this type of farms, the possession of machines, devices and other mechanical means to conduct this production, and an important criterion of cooperation with universities, agricultural schools or other institutions.
You can find more about the situation of large-scale farms run by tenants in the video.
