22 October 1999

Bureaucracy &red tape were the hard part

FINDING a Polish farm to invest in was the easy part. Dealing with the paperwork and negotiating with a bureaucracy in transition has been the real challenge, according to Allan Mellor, who has just completed his first full year managing a 540ha (1330 acre) arable unit in the north of the country.

"Sometimes the simplest things are the hardest," he says. "For example, when I tried to open a bank account in the nearest town, (Elblag), the contract was over a metre long!

"Every transaction we do is swamped in paperwork. Even writing a cheque involves filling out a payment order four times over. And instead of returning an annual census form, we have to do it monthly!"

By comparison, renting the land was straightforward. "Every month the Agricultural Property Agency in Warsaw publishes a list of farms available to rent or buy," explains Mr Mellor. "If you are interested, you have to pay a deposit before you tender, though this is refundable if your bid fails."

The deposit is put at 20%….. "though in Poland, everything is negotiable".

Mr Mellor first visited the farm at Stare Pole in 1998. "I was surprised. Id expected some differences from the UK, but nothing so extreme."

Apart from the sight of horses and carts in the village square, the farm had a major couch grass problem, the soil was rock hard and the machinery – based around a fleet of low powered Zetor and Ursus tractors – was in a state of dilapidation.

Despite this, soil fertility was high, the location – just one hour from the Baltic port of Gdansk – was good and potential production costs were low.

As such, Mr Mellor and his two partners tendered in the summer of 1998 and won the lease on a 15-year-term, with pre-emption rights should the farm become available to buy. Rent is just 3.3 quintals (330kg) of wheat per ha, equivalent to 139 zloty/ha (£23/ha), though this varies each year, depending on crop value. (In years when the price of rye is higher than wheat, then rent is based on rye.)

The first task was to spray with Roundup to hit the couch grass. Then, using a locally-sourced Case Magnum 7220 tractor, everything was sub-soiled. "According to our oldest tractor driver – who has been here for 30 years – sub-soiling has never been done on this farm before," says Mr Mellor.

"The locals call this one minute soil," he goes on. "Thats because they plough it, and one minute later its rock hard. The Polish farmers in this area tend to plough behind the combine, then wait for rain before drilling, in a bid to reduce production costs.

"But we try to drill it before it goes hard. We plough, then go in with a Kuhn power harrow and a Reco Sulke drill."

Using this technique, the aim has been to consolidate the cropping plan. As a former research station, the farm at Stare Pole had a history of growing a wide variety of crops, including mixed cereals, pulses and vegetables grown as a combined fodder crop.

"Our aim is to focus on cereals and do all we can to lift yields," says Mr Mellor.

This year wheat came off at 5.5t/ha (2.2t/acre), in line with the historic average. A good spring was followed by a scorching hot June, in which everything burnt off, putting pay to any hopes of a decent crop. "But once we have eliminated couch grass, and given better weather, there is no reason why we shouldnt improve yields considerably."

Mr Mellor has also changed varieties, using German wheats Mikon and Eleanor to lift output, while still meeting Polish milling and intervention standards. Seed was supplied by Dalgety, which has a significant presence in Poland, for 800 zloty a tonne (£143/t), cleaned and dressed.

The farm has on-floor storage for 3000t and so far the marketing strategy has been to sell as much as possible into a government scheme, designed to spread grain deliveries over a three month period.

This was introduced in response to a number of violent farmer protests this year, triggered by falling prices and rising fuel costs. It sets the basic price at 450 zloty a tonne (£76/t), with monthly premiums of 50 zloty (£8/t), 70 zloty (£12/t) and 90 zloty (£15/t).

"If we can get between 500 zloty and 540 zloty a tonne for our wheat, it will be the best price we get all season," says Mr Mellor. "There is a limit on the tonnage the government will take and, when that is used up, prices will revert to 440 zloty.

"Traditionally the Polish grain trade has worked in isolation, but now it is becoming much more influenced by the world market," he adds.

Most inputs are readily available, both through Dalgety and other local merchants, and there is a fully functioning cash economy – though some deals still involve barter. "For example, we paid our local agri-chemical supplier in wheat this season," recalls Mr Mellor.

Russian fertiliser, by contrast, was paid for in cash, at just 310 zloty a tonne, (£53/t), delivered. "The quality was good. The only problem was getting the bag size right and persuading them to put it on pallets. Having invested in kit to lift pallets, I at least want to be able to use it."

Reliability is sometimes a problem, as is staff management. The farm at Stare Pole used to employ 300 people, though this had been reduced to just 30 by the former Polish manager before it was put up for tender.

Now it employs just 15 full timers, though persuading them to work nights and weekends has been a struggle. "Its hard to motivate people when they have had no motivation for over 20 years. Some have responded well – especially when they calculate the overtime pay – but others have been more problematic." The ex-tractor driver who drained his tank of diesel, sold it and took off for Elblag for a three day drinking spree leaps to mind.

But overall Mr Mellor remains positive. "The land is fertile, I can now speak the language – or a form of it – and there is also the prospect of Poland joining the EU which should give farming a real boost."

Above this, however, farming in Poland provides the opportunity to expand – "something I could never hope for in the UK". Although outright land ownership by foreigners is still forbidden, (and that should change with EU accession), the land laws are more relaxed than in some CEECs.

It is possible for westerners to establish a 49% stake in a Polish company and purchase land that way. So when another 135ha (333 acres) came up for sale on a neighbouring farm earlier this year, Mr Mellor and his partners snapped it up. It is unlikely to be the last such acquisition.

Stare Pole 1999/2000 cropping plan

ha

First wheat 279

Second wheat 190

Malting barley 20

Sugar beet 39

Oilseed rape 30

Forage maize 52

Grassland 50

Lucerne 12

Total 672