Variability of the Level of Budget Expenditures on Social Insurance of Farmers in the Agricultural Policy of Poland After Accession to the European Union

Abstract

The purpose of this article was to examine the level and variability of budgetary expenditures directed to the Agricultural Social Insurance Fund (ASIF) in Poland in the form of subsidies to the Farmers’ Pension Fund in the period 2004–2024, i.e., after Poland’s accession to the European Union (EU). The aim of the study was also to determine the share of subsidies to the farmers’ social insurance fund in the total expenditures of the Polish agricultural budget, as well as the relationship of ASIF expenditures to state budget expenditures and GDP dynamics. The authors attempted to estimate the trend function for these time series and the degree of fit of the equations describing them. The formation of the nominal and real level of budget expenditures on the ASIF in 2004–2024 was evaluated. It was assumed that spending on the ASIF is an element of agricultural policy, realising its redistributive and social objectives, but indirectly also pro-development objectives by supporting generational change in agriculture. The research showed that the real level of spending on ASIF declined during Poland’s EU membership, as did the share of this spending in the total agricultural budget. The subsidy to the social security system also did not follow the changes in GDP and state budget expenditure proportionally, showing much less dynamism over the period studied. This means that budget support for farmers’ social security is losing its importance as an instrument of agricultural policy. It has been shown that the economic and social components of agricultural expenditure have not grown in harmony. The changes in the level of spending on the ASIF in the period 2004–2024 were also analysed in relation to demographic changes, i.e., the number of farmers insured in the ASIF and recipients of agricultural pensions. It has been shown that, despite a significant decrease in the number of farmers receiving pensions from the ASIF, there remains a large disparity between the average pension benefits of farmers and those of the general social insurance system (Social Insurance Institution—SII). The reduction in this disparity is not served by a real reduction in subsidies to the ASIF.

1. Introduction

One of the fiscal instruments used in agriculture, which is part of the broader agricultural policy, is the subsidisation of the farmers’ social security system from the state budget. This form of public support for agriculture is used in many economically developed countries. In Poland, it has been implemented since 1991 in the form of a budget subsidy to finance the objectives of the Agricultural Social Insurance Fund (ASIF). This subsidy fulfils one of the three basic functions of state fiscal policy, i.e., the redistributive function towards the population associated with agriculture [1,2]. Within the framework of agricultural policy, redistributive and social spending, which are not quite the same thing, compete with the economic objectives pursued by the other two fiscal functions, i.e., allocative and stabilising [3,4,5,6].

The redistributive function of fiscal policy refers primarily to the secondary distribution of income, which follows the primary distribution by the market mechanism. The premise of secondary income distribution is the demand for social justice. The equalisation of disparities achieved through fiscal policy is expected to lead to a reduction in income and wealth disparities between citizens. This is due to the fact that in the most developed countries there is no socio-political acceptance of the existence of a naturally occurring, deep income gap between farmers and other socio-professional groups [7,8,9,10,11]. European Commission data—for the 27 EU countries—indicate that in the years 2005–2022, the average income from a family farm (per full-time employee) compared to the average salary in the economy ranged from 26.5% to 64% [12]. This indicates the scale of the income disparity of farmers. There is also no consensus on the very high volatility of agricultural incomes, which is indicated by the data cited above. Similarly, there is no acceptance for low profitability of the assets involved in agricultural production, but also the unstable and rising food prices for consumers, which undermine food security [13,14]. Thus, the existing inefficiencies of the market mechanism in agriculture [15,16,17,18,19] are compensated by the use of instruments related to taxes and transfers [20,21,22].

This article examines public expenditure on supporting the functioning of the social insurance system for farmers in Poland for the period 2004–2024. Expenditure in the form of subsidies to the ASIF is financed from the state budget. The level of spending on the ASIF against the background of changes in the level and structure of the total agricultural budget, changes in state budget spending, and the dynamics of GDP indicates changes in the importance of spending on farmers’ social insurance as an instrument of agricultural policy in Poland in the post-accession period.

The empirical research direction outlined above stems from the authors’ theoretical motivation to highlight the article’s innovative contribution to the development of agricultural economic theory. The theoretical aspects of agricultural economic research have already been presented in the literature on the subject [23]. On the other hand, we consider this article as a contribution to the development of the subject of agricultural economics, which is located in the research stream of heterodox economics, or more precisely, in the field of agricultural policy. The problems considered fit with the contemporary research on the agrarian question [24,25,26] and are included in the socioeconomics of agriculture and rural areas in the paradigm of permanently balanced development. It is worth noting here that heterodox schools of thought, along with orthodox (mainstream) economics, form a new, expanded paradigm of economics that takes into account more than a dozen research streams, including those related to social insurance for farmers and their families [24,27,28]. The variability of budget spending on farmers’ social insurance in Polish agricultural policy, discussed below, is part of a broader, systemic problem of farmers’ economic deprivation, expressed in the persistent long-term gap between agricultural and non-agricultural incomes [29,30]. This makes it impossible to pay a sufficiently high insurance premium. As a result, it tends to force increasing subsidies into the state agricultural budget. As this problem affects farmers in many countries, including those in the European Union, it can be considered a widespread problem that requires a systemic solution. This article highlights this problem and thus fills an existing research gap. The authors hope that it will encourage the initiation of research in this area. In the case of Poland, twenty years of EU membership have exacerbated the problem under discussion. This is due to the fact that the past period has created a natural economic space for the reduction in disparities between the level of agricultural and non-agricultural insurance, which is determined, on the one hand, by the increase in the level and dynamics of national income and state budget expenditure in non-agricultural sectors of the economy and, on the other hand, by the decrease in the number of beneficiaries and taxpayers of social insurance in agriculture. This creates the possibility of a significant increase in the level of agricultural pensions and a reduction in their gap with the level of non-agricultural security.

We argue that budget expenditures to support the farmers’ social insurance system are an important tool of agricultural policy that supports the sustainable development of agriculture. The subsidy from the state budget for farmers’ social insurance is a guarantee of stability and an adequate level of pension and disability benefits for farmers and thus contributes to the durability of family farms and supports the processes of succession (generational changes) in agriculture. On the other hand, public support for the farmers’ social insurance system reduces the burdens that agricultural producers would have to bear if the system were fully financed from their contributions. In this way, these expenditures support farmers’ incomes. Furthermore, the application of a progressive scale of burdens from farmers’ pension and disability insurance in relation to the area of agricultural land of the farm, as is the case in Poland, helps reduce income inequalities within the agricultural sector. As a result, public expenditures on the farmers’ social insurance system can support the implementation of economic and social goals on the path of sustainable development of agriculture, and, indirectly, can also contribute to maintaining environmental (ecological) order by strengthening the model of agriculture based on family farms. However, the importance of public expenditure on farmers’ social insurance as an instrument of agricultural policy depends on the scale of this support and its stability.

The purpose of this study is to assess the level and changes in budgetary expenditure directed to the Agricultural Social Insurance Fund (ASIF) in Poland, in the form of a budgetary subsidy to the Farmers’ Pension Fund. The study covers the period 2004–2024, i.e., the period after Poland’s accession to the European Union.

The premise of the research was that in the conditions of a significant lack of parity of agricultural and non-agricultural incomes in Poland, it is important that the redistributive function of the state fiscal policy follows the direction of proportional expenditure on the ASIF, with the level and dynamics of growth of GDP, total state budget expenditure, and national agricultural budget expenditure. The idea is to show to what extent public spending on social security for farmers (pensions) has grown harmoniously (or not) in relation to the above figures over the last two decades. This, in turn, will indicate the importance of spending on farmers’ social security as an instrument of agricultural policy to achieve its redistributive and social objectives.

2. Literature Review

In countries such as the United States, Canada, and the United Kingdom, where the share of the agricultural sector in GDP creation has gradually declined, the extent of government preference for the agricultural population has generally decreased. This relates to the pension systems for farmers. In these countries, the farmers’ pension scheme is part of the general social security system and farmers are treated as entrepreneurs. This does not mean, however, that in some of the countries mentioned above the pension systems for farmers are entirely market-based and not supported by public funds. For example, in the Canadian social security system, farmers are guaranteed a minimum pension based on the concept of a socioeconomic safety net. The solutions adopted in these countries are based on the integration of the pension system with the contributory system, with a strong emphasis on the need to invest savings in financial markets [31,32]. European Union countries where farmers are covered by the universal social security system include Bulgaria, the Czech Republic, Denmark, Estonia, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. In the social security systems of these countries, there is no organisational or structural distinction between the universal and agricultural systems, and the rules for paying contributions and granting benefits to farmers are—in principle—the same as for other occupational and social groups [33]. It should be noted that in Denmark, Estonia, Finland, the Netherlands, and Sweden, the classification of farmers’ social security systems as universal systems refers to the base part of these systems. In these countries, basic social benefits are not related to employment and profession [34]. An example of a solution in which farmers are covered by the general social security system for self-employed entrepreneurs is Belgium. This system is separate from the employee system and has its own administrative structure and separate rules for paying contributions and granting benefits. Farmers participate in this system on exactly the same terms as any other entrepreneur [33,34].

In several EU countries, such as Poland, Austria, Finland, France, Germany, and Greece, the social insurance system for farmers has been separated from the general system and its tasks entrusted to a specialised institution [35,36,37,38]. The insurance institutions of the listed countries form a sectoral organisation representing their interests in the European forum—the European Network of Agricultural Social Protection Systems (ENASP). In aggregate, ENASP represents the interests of over 12.3 million beneficiaries, who annually receive benefits from member institutions at a level of around 46.8 billion EUR [33]. In the above-mentioned countries, public support for the farmers’ social insurance system is used. Three methods of support are used:

• the state supplements the farmers’ contribution to the pension and disability fund in order to ensure its balance (e.g., Germany, Greece);
• some public revenues (e.g., taxes) are transferred by the state to the farmers’ social insurance fund (e.g., France);
• the annual planned deficit of the fund is financed by the state through subsidies (e.g., Poland) [38].

In Poland, since 1991, the institution responsible for the farmers’ social insurance system has been the Agricultural Social Insurance Fund (ASIF), created on the model of the French Mutualité Sociale Agricole (MSA) [39]. The Agricultural Social Insurance Fund (ASIF) is an institution that performs tasks related to the social insurance of farmers, members of their working households, and farm workers [40].

Social insurance systems for farmers implemented within the ASIF are based on various sources of financing, mainly subsidies from the state budget and, to a lesser extent, contributions from the insured (farmers and their household members). This is due to the fact that one of the elements of the stable functioning of social security systems (based on demographic and social conditions) is the social contract, which implies the participation of the state in financing benefits of a pension nature [41].

Public support for the farmers’ pension system is based on the general assumption that farmers’ social insurance should serve both agricultural and social policy objectives [35]. The main reasons for budget support for the farmers’ social insurance system are the same as the reasons for state interventionism in agriculture [42]. They largely boil down to the issue of the permanent problem of income disparity between farmers and other socio-professional groups [11,12]. As a result, farmers as a group do not have the economic base, especially the income, to fully cover all the costs and expenses associated with the functioning of the agricultural social security system. There is an even stronger argument that in many countries, including Poland, the general pension system, which performs tasks for other socio-professional groups, is also subsidised from the state budget [43]. Second, agriculture is a special area of state intervention and European Union regulation due to the functions it performs and the specific risks it poses [44]. These risks arise from the link between agricultural production and natural factors, its high vulnerability to climatic factors, the importance and peculiarity of land as a factor of production, and the strong link between the farm and the household in the dominant model of agriculture based on family farms in many countries. These characteristics define the contemporary agrarian problem [45,46,47,48,49], to which the response is a policy of interventionism in agriculture, including support for the social security system of farmers.

From an economic point of view, budget support for agricultural social security fulfils the objective of redistribution by shifting income from taxpayers to farmers. However, it is not only about supporting the beneficiaries of the social security system, i.e., retired farmers, by providing a source of funding for their benefits. It is also about supporting the income of active farmers who pay social security contributions. In Poland, the share of budget subsidies in the income of the ASIF pension fund (including the subsidy for farmers’ health insurance) was 91–93% in 2004–2022 [40,43,50]. According to M. Podstawka [51], the degree of self-financing of the ASIF in Poland, i.e., from the contributions of insured farmers, was about 9–12% in 2004–2014. These data indicate that in order to cover the full costs of this system, farmers would have to pay 8–10 times higher premiums than they would under the conditions of a system co-financed by the state budget. The ASIF subsidy is therefore a form of income support for farmers, similar in essence to tax credits or exemptions. In the literature, such forms are referred to as tax expenditures [52,53].

In other EU countries that are part of the European Network of Agricultural Social Protection Systems (ENASP), i.e., that have separate social insurance systems for farmers, the degree of state funding of farmers’ pensions varies, for example it reaches about 65% in Germany, while in France it is about 82% [54]. In Austria, the share of public funds in financing farmers’ pensions will be 70.5% in 2020 [36], while in Finland it will be 77% [55].

In terms of its redistributive function, budget support for the social insurance of farmers in Poland is not only aimed at increasing farmers’ incomes (through lower insurance premiums) and thus reducing income disparities between farmers and other socio-professional groups [56]. It is also aimed at reducing excessive income disparities within farm households, which is achieved through the use of progressive farm pension insurance premiums that depend on the agricultural area of the farm. Farms with an area of up to 50 converted hectares pay the lowest premium, while in the following area groups, set at intervals of 50 converted hectares, the premium is higher by the equivalent of 12% of the basic agricultural pension. The last group consists of farms with more than 300 hectares [43]. In addition, farmers engaged in non-agricultural activities pay a premium that is higher than the basic premium. In other countries joining the ENASP network, progressive social insurance premiums are also used, based on flat rates related to the estimated volume of production, the farmer’s income or the area of the farm and, in the case of accident insurance, the risk group related to the type of agricultural activity [37]. Typically, farmers with lower incomes pay proportionally lower premiums, which is the case in Austria and Germany, among others [35,36].

The reason for the adequate design and support of the agricultural social insurance system is its ability to influence the transformation and structural adjustment of agriculture. It is pointed out that the development of farmers’ social insurance should support the objectives of agricultural policy in ensuring generational replacement on farms, thus contributing to the maintenance and development of the economic base of agricultural insurance [57]. Demographic phenomena in rural areas, such as the lack of generational replacement, increasing life expectancy, and the ageing of the population, are important for the functioning and economic equilibrium of the agricultural social insurance system. Through the agricultural pension scheme, the state can influence the structure of agriculture and generational change. The succession of a farm is one of the most important conditions for its survival and development [58,59]. In the process of succession, it is important to provide adequate social protection for farmers of retirement age. This would encourage intergenerational integration and provide an opportunity for successors to take over farms equipped with the skills needed in an era of rapid technological change and new challenges for agriculture. The state can use administrative and legal instruments, but also financial transfers, to provide more or less adequate retirement benefits to farmers who hand over their farms to successors. This aspect of supporting the social security system in agriculture undoubtedly has a social aspect, but it also has an impact on the development of agriculture by supporting generational change. Studies conducted in Europe, the USA, and China indicate the significant importance of the farmers’ pension system in the matter of the intergenerational transfer of agricultural land. It has been proven that access to pension insurance and benefits that farmers can receive has a significant positive impact on the behaviour of older farmers in terms of transferring agricultural land (family farms) to successors [60,61,62,63].

In the literature, the issue of the farmers’ social insurance system focuses mainly on two aspects, i.e.:

-

the characteristics of farmers’ pension and disability insurance (access criteria, insurance scope, sources of financing);

-

the comparison of farmers’ social insurance systems in different countries.

There is a gap in the scope of research on the assessment of the level and stability of public support for the farmers’ pension system as an instrument of agricultural policy. In this context, public support takes the form of subsidies directed to agricultural producers, and at the same time secures the payment of pension and disability benefits for farmers.

3. Materials and Methods

To determine the level and changes in budget expenditure allocated in Poland to supporting the farmers’ social insurance system, time series analysis methods were used, i.e., dynamics analysis (chain dynamics indices) and the trend function. The volume, real dynamics, and structure of budget expenditure on agriculture and the ASIF have been analysed, together with an indication of the relationship between these figures. The relation of these expenditures to the state budget expenditure and to the GDP of Poland was also determined.

The time frame of the analysis covers 21 years. The year 2004 was the time of Poland’s accession to the European Union, and 2024 is the last year for which empirical data on budget expenditure on agriculture in Poland, including expenditure on ASIF, were available.

Budgetary expenditure on agriculture (also referred to as the Polish agricultural budget) includes [64]:

• expenditure from the national budget on agriculture, rural development and agricultural markets, including the ASIF subsidy;
• expenditure from European funds directed to agriculture and rural areas under the instruments of the first and second pillars of the CAP (included in the budget of European measures).

Pearson’s linear correlation analysis was used to determine the relationship between budget expenditure on the ASIF and other national budget expenditure on agriculture and total state budget expenditure. This method was also used to examine the relationship between the dynamics of total agricultural budget expenditures and expenditures on farmers’ social insurance and the dynamics of GDP. To determine the trend of changes in total agricultural budget expenditure and ASIF expenditure in the years 2004–2024, a linear trend function was used, and its fit was assessed using the coefficient of determination R².

The source of the empirical material on agricultural budget expenditure in Poland was data from the Ministry of Agriculture and Rural Development (MARD) in the form of annual information on the draft state budget and the budget of European funds for agriculture, rural development, and agricultural markets. This information was the basis for the opinions on the Budget Act in the part concerning agriculture, rural development, and agricultural markets prepared by A. Czyżewski from 1998 to 2024. In addition, data from the Ministry of Finance on the implementation of the state budget and macroeconomic data from the Central Statistical Office (CSO) on GDP, inflation, and social security (cyclical CSO publications entitled Pensions, from 2009–2023) were used. The study also used open public data from ASIF and the SII for 2017–2023.

The volumes covered in the study were included in nominal values (at current prices) and real values (at constant prices). The consumer price index (CPI) was used as the deflator.

The choice of empirical research methods was determined by the type of empirical materials obtained (budget statistics data) and the length of the data time series.

4. Research Results

The average nominal expenditure for the ASIF from 2004 to 2024 is around PLN 17.5 billion, with the lowest amount in 2005 (PLN 14.5 billion) and the highest in 2024 (i.e., PLN 27.4 billion), but its nominal value exceeds PLN 20 billion only in 2023.

Table 1. Level and structure of expenditure of the total Polish agricultural budget (national and EU funds), including subsidies to ASIF, in 2004–2024 * (at current prices).

Year	Total Agricultural Budget (in Billion PLN)	Including (in Billion PLN):		Structure of Total Agricultural Budget (in %):
		Expenditure on ASIF	EU Funds	Expenditure on ASIF	EU Funds	National Agricultural Budget Expenditure Excluding ASIF
2004	26.7	21.3	5.4	58.5	20.0	21.5
2005	30.2	21.4	8.8	48.1	29.1	22.8
2006	34.1	23.2	10.9	43.8	32.0	24.2
2007	45.4	33.6	11.8	33.3	26.0	40.7
2008	57.2	42.3	14.9	27.6	26.1	46.3
2009	49.1	35.9	13.2	33.8	26.9	39.3
2010	50.6	29.6	21.0	31.9	41.6	26.5
2011	46.7	22.7	24.0	33.8	51.3	14.9
2012	49.7	27.4	22.3	32.0	44.8	23.2
2013	52.5	27.4	25.1	31.4	47.7	20.9
2014	54.2	27.5	26.7	30.8	49.3	20.0
2015	55.2	26.7	28.5	31.8	51.7	16.5
2016	53.7	26.6	27.1	33.9	50.4	15.6
2017	48.4	27.6	20.8	37.0	43.0	20.0
2018	48.7	26.6	21.1	36.8	44.1	18.0
2019	47.4	26.9	20.3	37.3	42.7	19.3
2020	49.5	28.4	21.1	38.2	42.7	19.1
2021	51.2	30.1	21.1	36.9	41.3	20.6
2022	60.6	36.1	24.5	31.6	40.5	26.5
2023	72.4	47.8	24.6	27.8	34.1	32.9
2024	78.1	52.2	25.9	35.1	33.2	31.7
Average:	50.3	30.4	19.8	35.8	39.0	24.8

* assumption based on the adopted budget law for 2024. Source: data from the Ministry of Agriculture and Rural Development from 2024–2024 and [1].

presents data on the nominal level (in current prices) and structure of the Polish agricultural budget during the period of Poland’s EU membership, with a particular emphasis on the funds allocated to the ASIF, and with a breakdown between domestic and EU funding. It can be seen that, during the period under review, the expenditure for the ASIF almost doubled in nominal terms (from the above-mentioned PLN 14.5 billion to PLN 27.4 billion), while the expenditure for the agricultural budget almost tripled in the same period (from PLN 26.7 billion to PLN 78.1 billion), mainly due to the support from the EU resulting from the inclusion of the Polish agricultural sector in the Common Agricultural Policy since 2004. It can therefore be concluded that the economic and social components of expenditure on the agricultural sector did not grow in harmony.

It is also interesting to note the changes in the structure of the total agricultural budget as a result of the inclusion of agriculture in the support of EU funds. During the period of Poland’s EU membership, European funds accounted for between 20% and almost 52% of the total Polish agricultural budget and not only became a significant supplement to domestic transfers to agriculture and rural areas, but to a large extent replaced them. The situation in this respect has changed in recent years (since 2017), since when we have observed a decreasing share of EU funds in Poland’s agricultural budget in favour of domestic funds. In 2024, they will account for only 1/3 of the total of this budget, with a relatively stable share of spending on ASIF (Table 1).

Real expenditure on the ASIF (in constant 2024 prices) was highest in 2004 and 2009. (Figure 1). It can therefore be assumed that expenditure in 2024 will approach, but not yet reach, the highest levels of the period under review. Nevertheless, the amount of ASIF spending over the last eight years (2017–2024) has been successively decreasing in real terms by about 30%, taking into account the cumulative inflation rate. The decrease in the real amount of subsidies has been influenced by both economic (including the inflation rate, restrictions on the valorisation of benefits), demographic (the decreasing number of insured, by about half a million people over the past 20 years), and legal reasons. The year 2024, when ASIF expenditure will increase by almost 30% in real terms compared with the previous year, will mark the reversal of a trend that is partly justified and partly dangerous for social reasons.

The dynamics of real ASIF expenditures from 2004 to 2024 indicates that we are dealing with their relatively low volatility (Figure 2).

At this point, it is worth looking at demographic and social trends as they relate to the farmers’ social insurance system. In the early days of the ASIF, which coincided with the transformation of the Polish economy, the average number of persons covered by the agricultural social insurance system was about 1.75 million. Legislative changes over the years resulted in the number of insured persons falling to 1.39 million, or about 20%, over the next five years. This was due to a number of factors, including: farmers taking up additional work outside agriculture, becoming obliged to join the general insurance scheme (social security), becoming entitled to pension and invalidity benefits, and a change in the legislation allowing redundant farmers with a holding of up to two converted hectares (i.e., physical hectares adjusted for soil quality class) to receive unemployment benefits. This trend was reversed in 1996, when the number of insured persons began to increase, which was linked to the obligation to register for insurance those who started farming by buying farms from, among others, farmers receiving EU structural pensions. Other reasons include the tightening of the criteria for granting temporary agricultural disability pensions and the obligation to insure ASIF beneficiaries until they reach retirement age. It was not until after 2006 that the number of insured persons exceeded the number of ASIF beneficiaries, and this relationship continues, with a marked decrease in the numbers of both observed groups (Figure 3).

During the period under review, the real volume of expenditure on ASIF stagnates significantly and tends to decrease in the final years 2018–2023, while the number of insured persons and beneficiaries declines. However, the fact that real expenditure increases by almost a third in 2024 suggests that the level of ASIF expenditure is still strongly socially determined. It could be assumed that the main reason for the relative stability of the level of ASIF expenditure is the motive to increase the social benefits of the ASIF in order to bring them closer to the level of social security benefits in a situation of significant decline in the number of beneficiaries. Unfortunately, this is not borne out by the statistics of the CSO (Figure 4), which show that there is no convergence in the level of average pensions paid by the SII and the ASIF (the situation is similar for pensions); on the contrary, the ratio of the average SII pension to the average ASIF pension was well over 1.60 in the period under review, reaching 1.96 and 1.92 in 2021 and 2022, respectively, which means that the average SII pension was almost twice as high as the average ASIF pension. This trend changes somewhat in the following years (the ratio is 1.68 in 2024).

The share of domestic expenditure on agriculture, including the ASIF, in the general government budget reached its highest level in the first years of EU membership, averaging almost 12% (11.72%) until 2009, after which it gradually decreased (Figure 5). This initially high share of domestic expenditure in the agricultural sector was due to several reasons, including relatively high expenditure on the Agricultural Social Insurance Fund (ASIF), which was almost twice as high as other expenditure on agriculture and rural development, especially in the first three years of Poland’s EU membership (Figure 6). This may give the impression that ASIF expenditure is excessive in relation to other agricultural expenditure. However, it should be remembered that the problem lies elsewhere—ASIF spending, although gradually ’sealed’, was socially determined and could not be lower. At the same time, the development funds allocated to the agricultural sector prior to EU integration, during the period of economic transition, fell to less than 2% of the total budget expenditure, resulting in a clear marginalisation of agriculture and rural areas, which manifested itself in an avalanche of degrading effects, such as the growing civilisational gap between urban and rural areas, including the level of education of the population, and the deepening of the income gap between farmers and other socio-professional groups.

The significance of ASIF expenditure in Poland’s national agricultural budget is illustrated in Figure 6 (index of the multiple of ASIF expenditure in relation to the expenditure of the national agricultural budget). Changes in this index indicate the competitiveness of social and development objectives in agricultural policy. In 2024, the ratio was 1.36, compared with 1.09 the year before (Figure 6). On average, the ratio of ASIF expenditure to other national expenditure on agriculture (i.e., excluding EU funds) was 1.55 during the period under consideration. Therefore, the planned ASIF expenditure in 2024 can be considered relatively lower than the multiannual average of the ratio analysed. It should be added that the correlation of ASIF expenditure with national expenditure on agriculture, rural development, and agricultural markets remains relatively low at 0.39. The data presented in Figure 6 document a drift, and even a certain degree of trade-off, between budgetary expenditure on ASIF and strictly agricultural expenditure in the long term, regardless of the political option in power. All in all, this points to an unstable long-term social policy towards the countryside and agriculture, implemented within the general economic policy towards this sector.

At the same time, the share of ASIF expenditure in the total government budget during the period under review was highest in the early years (almost 7.8% in 2004), only to gradually decline to less than 3% in 2023 (Figure 6).

This means that over the years considered, the ratio has fallen by more than two and a half times. It should also be noted that after an impressive more than doubling of the share of spending on agriculture, rural development, and agricultural markets in the first years of Poland’s EU membership (from 3.9% in 2004 to 8.6% in 2008), which was largely due to the need for Poland to make its own contribution to CAP instruments (e.g., direct payments), it started to decline steadily to 1.87% in 2020, with an average of 2.44% over the last 10 years (2015–2024). Thus, it can be argued that the stimulation of economic functions in the Polish national agricultural budget, as opposed to social functions, has been going on continuously for more than a dozen years. In the initial period of EU membership, spending on economic functions grew faster than spending on ASIF. In 2009–2015, with a general downward trend in national agricultural budget expenditure, the ratio of ASIF expenditure to other agricultural budget expenditure showed an upward trend. In 2016–2023, however, the ratio showed a downward trend until 2024 (election year). At the same time, as shown earlier (Figure 1), the real amount of subsidies to the Agricultural Social Insurance Fund decreased. These are indications that, over the period under consideration, the socialisation of agricultural budget expenditure has been subject to a gradual reduction in favour of stimulating economic objectives in the agricultural sector.

Looking at the ratio of the Polish agricultural budget with ASIF expenditure to GDP, the downward trend in this ratio does not change until 2024. This is evidenced by the decline in this ratio from almost 3% in 2007–2008 to the lowest level of 1.18% in 2021 and to a level of about 1.3% in 2022–2024 (Figure 7). It is therefore difficult to find the characteristic of harmonious agricultural budget in relation to GDP. This is also confirmed by the analysis of the correlation between the dynamics of total agricultural budget expenditure and the dynamics of GDP (in current prices), which is positive but low (Pearson’s correlation coefficient r_xy is 0.44). Moreover, there is no statistically significant correlation between the dynamics of budget expenditure on ASIF and the dynamics of GDP.

This provides another premise for the thesis that the agricultural sector in Poland has not benefited proportionally, i.e., in a balanced way, from the effects of GDP growth through budget spending. Without the financial support from the budget of the European funds, the sectoral disparities in the distribution of resources from national income would have become even more pronounced. However, the magnitude of the reduction in this share is too large and disproportionate to the effects of real GDP growth, which has been in the range of 3.5–4% for a long time and will also be positive in 2023–2024, although much lower than in previous years (2%).

5. Discussion

The very low degree of self-financing of the agricultural pension system in Poland and the resulting financing of more than 90% of its expenses from budget subsidies have led to its recognition as one of the forms of agricultural support [65,66]. However, budget expenditure to support the farmers’ social insurance system not only pursues social objectives by providing funds for the payment of agricultural pensions, but also supports certain redistributive objectives of agricultural policy. In fact, subsidies to the agricultural social security system are a form of fiscal preference [38,44]. However, their importance in achieving the above-mentioned objectives is determined by the actual amount of funds allocated to support the farmers’ pension fund, and thus by the extent of the reduction in the social security burden on agricultural producers.

Payments to the farmers’ social insurance system are a form of specific subsidies directed to the agricultural sector. In this context, this study fits into the research conducted in European Union countries on the redistribution of agricultural subsidies and their role in supporting the economic efficiency of farms [67,68,69], the stability of farmers’ income [70,71], and the perpetuation of family farms [61,72].

The level of subsidies to the agricultural pension fund in relation to GDP varies from country to country. A study by Giday and Tatay [38] shows that, in the EU countries, the highest level of subsidies in 2021 was in France (0.92%), Spain (0.63%), and Poland (0.75%). However, as this study shows for Poland, this ratio is gradually decreasing.

It should be noted that economic prosperity has a strong impact on agricultural income. On the one hand, in periods of economic downturn, social benefits become an important element of the income of the farming family, which legitimises the redistributive function of the budget through the ASIF subsidy; on the other hand, in the recovery phase, the question arises as to how far farms consume the effects of this growth in relation to other social groups. Unfortunately, the answer to this question is not in favour of the agricultural sector due to its disadvantage in this respect, as mentioned in many other studies [29,30,50].

It should be noted that budget expenditure on the ASIF has a redistributive function in terms of farmers’ income, but more so for those farmers and their families who have small and very small farms. This is due to the progressive mechanism of the burden of pension insurance premiums on farmers described above. Therefore, in most cases, the subsidy to the farmers’ social insurance system is treated as an element of social expenditure within the framework of agricultural policy instruments [1]. These expenditures within the agricultural budgets are in constant competition with the funds allocated for agricultural and farm development purposes, such as those related to their restructuring and modernisation. However, the importance of public support to the social insurance system for farmers should not be overlooked as a fiscal instrument for active farmers and a form of influence on generational change in agriculture [60,63,73].

The level of subsidies to the agricultural social insurance system largely determines the possibility of reducing the disparity between agricultural pensions, i.e., bringing the level of these benefits closer to that of non-agricultural (labour) pensions and annuities, which in Poland are almost twice as high as agricultural pensions. In a broader sense, the level of the budget subsidy to the ASIF is a factor in shaping the relationship between the economic and social objectives of the expenditure of the agricultural social security system. However, it should be emphasised that the farmers’ social insurance system needs to assume the lack of insurance cover in the amount of the premium due to the cumulative effect of the disparity of real agricultural incomes under market conditions in the past period [30,50,74,75]. At the same time, we are aware that the effective protection, as well as the improvement in the level of pensions and farmers’ rent, is determined by the joint impact of social and agricultural policies [2]. At present, it definitely depends more on the amount of the state budget subsidy to the pension fund (the social component of the ASIF) than on the contributory financing (the economic component of the ASIF), apart from the obvious need to increase the efficiency of the expenditure incurred.

6. Conclusions

The data presented above and the analyses carried out on the basis of them indicate that:

• during the period under review, ASIF expenditure almost doubled in nominal terms, while agricultural budget expenditure tripled. This was mainly due to the inclusion of the Polish agricultural sector in the Common Agricultural Policy and the continuous support included in the agricultural budget. It can therefore be concluded that the economic and social components of agricultural expenditure have not grown in a balanced, i.e., harmonious, way;
• the level of ASIF spending has strongly influenced the level of overall spending on the agricultural sector, significantly increasing it, which was particularly noticeable in the first three years of Poland’s EU membership, when spending on social insurance for farmers and their families in the national agricultural budget was almost twice as high as development spending, i.e., spending on agriculture, rural development, and agricultural markets. In the following years, the share of ASIF subsidies in the total agricultural budget decreased, ranging from 27.6% to 38.2%. ASIF expenditure, on the other hand, showed a clear downward trend in relation to total government expenditure (from less than 8% in 2004 to less than 3% in 2023) and in relation to GDP (from 1.76% to 0.67%);
• real expenditure on the ASIF was highest in the early years of Poland’s integration into the EU (2004 and 2009). At the same time, it should be noted that the amount of this expenditure gradually decreased over the period under consideration, reaching a level in real terms (taking into account cumulative inflation) in 2023 that is 24.8% lower than in 2004 (in 2024, the difference is 13.8% lower than in 2004). The reasons for this situation are economic, demographic, and legal. In 2024, expenditure on the ASIF increased significantly compared to the previous year, but this was an election year and the question remains as to how much of this is a permanent change in a trend that has been observed for years;
• the real decrease in ASIF subsidies is part of a general trend of decreasing agricultural budget expenditure in Poland relative to GDP (by almost 60% compared to the first years of Poland’s EU membership). Thus, it can be concluded that the agricultural sector in Poland has not benefited proportionately from the effects of GDP growth through budget expenditure, and the accumulation of the disproportion between the dynamics of these figures would have been much greater had it not been for the significant support for agricultural spending in Poland from the budget of European funds.

The downward trend in the real amount of subsidies to the ASIF and its ratio to state budget expenditure and to GDP testifies to the declining role of this fiscal instrument in the agricultural policy implemented by successive governments in Poland. At the same time, the volatility of the share of ASIF subsidies in the structure of the agricultural budget, with a general downward trend since 2015, testifies on the one hand to the great instability of agricultural policy priorities, and on the other hand to the fact that the economic objectives of this policy have gained the upper hand over redistributive and social objectives in recent years.

In the long term, ensuring relative stability or a slight increase in real expenditure on insurance for farmers and their families (in the form of subsidies to the ASIF) and, on the other hand, a decline in the number of ASIF beneficiaries for demographic and economic reasons, create the conditions for a more pronounced increase in the average level of ASIF benefits. The aim is to reduce the considerable disparity between the average agricultural pension and the average employee pension (from the Social Security Institution).

Agriculture is characterised by low profitability and dependence on support systems. If a farmer with an average level of productive and technological resources can only achieve a low income, he usually has two different alternatives. One is to switch to intensive production methods, and the other is to stop farming. Both alternatives are unfavourable in terms of agricultural sustainability. It is therefore important to use agricultural policy instruments properly to encourage farmers to continue agricultural production, taking into account natural, climatic, and social needs. This requires, however, that agricultural incomes be supported at a level comparable to that of other socio-professional groups. It is also necessary to support generational change, which is a prerequisite for the sustainability of family farms and an accelerator for their potential for progress and innovation. An important, even indispensable role in these processes can be played by a well-designed, stable social security system for farmers. Government action in this area, including subsidies and appropriate regulation, is an important instrument of agricultural policy, not only in its social but also in its economic aspect. In conclusion, it is hoped that this study will inspire similar studies in countries with similar economic conditions to Poland regarding the level and dynamics of social insurance in agriculture and non-agriculture. There is a chance that this will have positive practical effects.

The limitation of this study was the inability to determine the impact of budget subsidies directed to support farmers’ social insurance on the income of agricultural producers as a result of lower contributions to the ASIF (assuming full financing of the system by the insured). In particular, it would be important to determine such a relationship for different area groups of farms. This requires microeconomic research based on agricultural accounting data. This is a challenge for future research.

Future research should also focus on analysing the effectiveness of public support for the farmers’ social insurance system as an instrument of agricultural policy implementing redistributive and pro-development goals. It is also important to seek an answer to the question of to what extent subsidising farmers’ pensions promotes generational changes in the countryside and thus strengthens the processes of sustainable development of agriculture based on family farms.