ENGINEERING FOR RURAL DEVELOPMENT Jelgava, 24.-26.05.2017. 1509 INVESTMENTS IN AGRICULTURE – CASE OF POLAND Zofia Koloszko-Chomentowska 1 , Leszek Sieczko 2 1 Bialystok University of Technology, Poland; 2 Warsaw University of Life Sciences – SGGW, Poland z.koloszko@pb.edu.pl, leszek_sieczko@sggw.pl Abstract. This paper analyzes the value of investments and their impact on fixed-asset reproduction in agricultural holdings depending on the profile of production. The time of analysis spanned the years 2009 and 2014, and data originated from the FADN system. The analysis accounts for the value and structure of assets as well as changes over time, net investment values, the fixed-asset turnover ratio and debt ratio. Improvement of the fixed assets to total assets ratio occurred in all holdings, which contributed to improving their competitiveness. Growth effects did not occur in all holdings, however. Only pig holdings were characterized by the capability of reproducing assets. In other holding types, despite investment in fixed assets, the net investment value and asset reproduction rate were negative. The results of management are certainly dependent on economic circumstances, and these were variable. Regardless of the results obtained, undertaken investment activity should be evaluated positively, as it indicates that current variability of production conditions is not a limitation in long- term planning of an agricultural holding’s development. Keywords: agricultural holdings, fixed assets, investments, modernization. Introduction The development of agriculture is related to the introduction of modern technologies into the production process. The agricultural holding is the basic organizational unit in agriculture, and as an entity operating in the economy, it faces competition. Agricultural holdings undertake modernization as part of their adaptation to a variable market environment. Modernization is linked to investments, and is conducive to improving production efficiency and creating competitive advantages. Innovations, in a broad sense, are a factor that initiates modernization. They lead to so-called creative destruction, which results in modernization of production facilities and improvement of the quality of goods and services. Innovations are linked to investments. This is significant from the perspective of rational farm management [1]. However investments require large financial outlays, and not every holding can afford such undertakings. State funds stimulate the process of farms’ modernization. These include both funds from the EU budget and domestic funds, which mainly consist of preferential credit programs. This instrument enjoys the greatest interest among farmers [2]. State funds allow for faster absorption of new technologies. This is confirmed by the results of studies conducted in India, where government subsidies contributed to the growth of investment in agriculture and reduced rural poverty [3]. Since Poland entered the EU, farmers’ investment activity has intensified. Investment outlays in Polish agriculture increased from PLN 2398M in 2005 to PLN 6083M in 2015 [4]. Investments vary in nature, but they usually contribute to growth of the fixed assets to total assets ratio of agricultural holdings. Machinery and equipment had a relatively large share in total assets (31.4 % growth). This is the result of facilitated access to EU funds for investment [5]. Studies indicate that growth effects did not occur in all holdings, despite support with public funds [6-8]. Larger, economically stronger holdings were the most active in reconstructing fixed assets. These analyses usually concern assessment of changes in investment values over time. The influence of investment on fixed asset reproduction capabilities of holdings with different production profiles is less well-identified. Answering the question of whether investment processes contributed to fixed asset reproduction in agricultural holdings and whether they were dependent on the type of production was set as the goal of this work. Materials and methods The research problem was addressed on the basis of data found in the FADN system. This analysis covers the years 2009-2014, because is was intended to investigate whether farmers’ investment decisions are dependent on economic conditions. Changes in the fixed assets to total assets ratio are the result of investment activity. Analysis accounted for the value and structure of assets as well as changes over time. Selected methods of financial analysis were also applied [9]. One method of evaluating fixed asset reproduction and development of farms is the fixed asset reproduction rate. DOI: 10.22616/ERDev2017.16.N340