Market integration as a determinant of agricultural prices and economic results of small-scale family farms

Abstract

Due to the specific features of the land factor, under market conditions, there is a tendency towards income deprivation of farms in relation to their surroundings. One way to improve this situation is to create a system of market institutions for farmer-recipient transactions. The issue of the position of the agricultural producer in the food supply chain is widely described in the literature on the subject. Nevertheless, practical analyses showing the real impact of the marketing position on economic results of farm are still rare. Therefore, the aim of this article is to assess the relationship between market integration and agricultural selling prices and, as a consequence, the level of global output and household income. The analysis is based on primary data from surveys of over 700 small-scale family farms in Poland. The choice of small-scale farms was deliberate, as these entities are the most discriminated against in the food supply chain. Explaining this process is key to improving the economic situation of small-scale farming and constitutes a premise for the objectives of agricultural policy and creating business strategy. The results of the research indicate that there is a positive correlation between the level of integration of an agricultural holding and sales prices for selected groups of agricultural products. This, in turn, leads to the improvement of economic condition of farms more closely integrated with the market.