On Flexibility in the Polish Farming Sector

This paper investigates the flexibility of the Polish farming sector during a transition period. Flexibility is considered to be a farm’s ability to change output by sustaining average costs. We argue that flexibility is a crucial factor in farmers’ competitive advantage, especially under dynamically changing environmental conditions. We propose a flexibility measure that accounts for both input and output flexibility. This measure is used to empirically investigate the magnitude and sources of flexibility in Polish family farming. We also identify the main factors that explain the proposed flexibility indices. The empirical findings reveal that Polish farms use different technologies regarding their input and output flexibility. While small and specialized farms can easily adapt their input structure, the larger and highly diversified producers adjust their output levels according to price changes. Farmers who use more capital-intensive production technologies, i.e. milk producers, are less flexible with regard to input and overall adjustments. Furthermore, access to bank credit increases a farm’s adjustment ability.