factors contributed to its successful operation, and discusses some of its limitations. Section 6
concludes.
2 Regional background
Rural areas in South-Eastern Poland are currently dominated by small-scale farms who suc-
cessfully resisted several attempts of collectivisation during the socialist period. Peasant farms
have only been slightly affected by the Polish transition to a market system. Deteriorating
agricultural terms of trade and hidden unemployment have conserved farm structures and led
to an increasing income gap between booming urban centres and lagging rural areas, which
makes rural development one of the top political priorities in the region (see Petrick and
Tyran 2003 for a more detailed analysis).
The region of our case study, Dolina Strugu, covers an area of 300 km2 in which approxi-
mately 38,000 inhabitants are living. The region's economy is strongly related to agriculture.
About two thirds of the total working population work on the 8,000 individual farms located
in Dolina Strugu, whereas younger farmers often have a second employment in Rzeszow,
which is the next bigger city. The majority of farmers is between 50 and 70 years old and
used to work in industry companies (mainly mechanic industry) in Rzeszow until the early
1990s. The average farm size is slightly above 3 ha. Soil and climate conditions are moderate
but the cultivation of land is limited by the hilly relief of the landscape. As a result of the lat-
ter nearly the whole area is classified by the EU as "less favoured area". Agricultural produc-
tion is dominated by plant production, predominant are soft fruits, cereals, feed and root
plants. Animal production plays an inferior role, only a few farmers specialised in pig or beef
production. The unemployment rate in Dolina Strugu is about 18.3% (PUP 2005). In 2005,
the Podkarpackie voivodship was the poorest Polish region with an average income per per-
son equal to 81% of the Polish average (CSO 2006). Due to the lack of job opportunities and
the low income many young people already went to bigger cities or abroad.
To gain specific and detailed information about main problems and chances for agriculture in
Dolina Strugu, non-agricultural income opportunities, investment plans of farmers, their con-
tractual arrangements with wholesalers and their ambitions to act collectively on the market,
an in-depth case study research as a qualitative approach was carried out (Yin 2003). The
following analysis is based on active, participative observations as well as on 33 qualitative
interviews with farmers, local leaders, representatives of the local authorities and local entre-
preneurs.
3 Typical constraints to rural collective action in a post-socialist context
A common solution to improve income in rural areas which are based on agriculture is the
cooperation of farmers in cooperatives or producer groups. According to Balint (2004,
p. 247) advantages of a cooperation comprise “the reduction of transaction costs in accessing
input and output markets and strengthening of the negotiation power of the farmers”. In
economies characterized by incomplete markets and a lack of technical knowledge, service
cooperatives are supposed to be most beneficial (Deininger 1995). Escobal et al. (2000)
note that “[...] small farmers lack human and organizational capital embodied in management
skills [and] [t]hat lack creates both production and marketing inefficiencies.” The latter au-
thors regard lower input prices, lower interest rates as a result of group borrowing, higher
producer prices, and the saving of transport costs as important advantages of farmers’ service
cooperatives.
In particular for Polish rural areas, including our case study region, where the agricultural
sector is dominated by small farms, producer groups may provide chances for peasants to
concentrate their production on markets and to increase farm income due to common price
negotiation (Banaszak 2005, p. 3). However, as Zawojska (2006) mentioned, governmental