What is an agricultural production cooperative (spółdzielnia produkcji rolnej)?
An agricultural production cooperative is a type of cooperative that operates a common farm and activities for the benefit of the individual farms of the members of the cooperative. Such a cooperative may also carry out other economic activities.
It is also distinguished from other cooperatives by the fact that its members are obliged to work in the cooperative. The founders of an agricultural production cooperative may stipulate in the statutes that a member who owns agricultural land is obliged to contribute all or part of it as a land contribution to the cooperative. The cooperative uses this land in return for a fee according to the rules established in the statutes.
Unlike commercial companies, the cooperative’s assets are privately owned by the cooperative members.
The law provides for two types of agricultural production cooperatives. Firstly, there are agricultural production cooperatives, whose members can only be natural persons. Secondly, other cooperatives engaged in agricultural production may be formed. The primary activity of such cooperatives must be the operation of a collective farm. Importantly, their members may also be legal persons (e.g. commercial companies, registered associations, foundations). Cooperatives whose only members are legal persons are also allowed.
Who can acquire agricultural property?
Pursuant to Article 2a(1) of the Act on the Formation of the Agricultural System (UKUR), only an individual farmer may be the purchaser of agricultural property.
An individual farmer is considered to be a natural person who is the owner, perpetual usufructuary, sole proprietor or tenant of an agricultural property, the total area of which does not exceed 300 hectares, who is agriculturally qualified and who has lived for at least 5 years in the municipality in the area of which one of the agricultural properties constituting the agricultural holding is located and who has personally run the holding for that period.
The area of the property to be acquired, together with the area of the agricultural property forming part of the purchaser’s family holding, must not exceed an area of 300 ha of agricultural land.
There are numerous exceptions to these rules. By way of example, they do not apply to the acquisition of agricultural property:
- by a relative,
- of an area of less than 1 hectare,
- by inheritance,
- as a result of the liquidation of joint ownership, the division of joint property after the cessation of marriage and the division of the inheritance.
The purchaser of agricultural real estate shall be obliged to maintain the farm comprising the acquired agricultural real estate for a period of at least 5 years from the date of his acquisition of the real estate and, in the case of a natural person, also to maintain this farm personally. He may also not sell or give possession of the property to other persons during this period.
These obligations can be waived after obtaining a decision from the Director General of the National Agricultural Support Centre.
Exceptions provided for agricultural production cooperatives
From 5 October 2023, agricultural properties with a farmland area of more than 300 hectares can also be acquired by agricultural production cooperatives.
A member of an agricultural production cooperative who has made a land contribution to the cooperative may also purchase the agricultural property constituting the land contribution from another member of the cooperative. In such a case, he or she is not bound by the limit of 300 hectares of agricultural land. In this case, the National Agricultural Support Centre (KOWR) does not have the right to acquire the real estate against payment of a price.
If an agricultural property, owned by a farmer-member of a cooperative, is given to an agricultural production cooperative as a land contribution, its owner does not have to farm for a period of 5 years from the date of acquisition of the property.
In addition, if an agricultural production cooperative acquires an agricultural property by exercising its own pre-emptive right or acquires a land contribution from a cooperative member, the KOWR has no pre-emptive right.
The recent changes to the UKUR therefore make the acquisition of agricultural property by agricultural production cooperatives much easier. They allow the creation of larger farms by groups of farmers or their associations. The new provisions are part of a broader trend to promote cooperatives in agriculture. This trend is also reflected in tax incentives or subsidy funds for newly established cooperatives.
