Impediments to the Diversification of Rural Economies in Central and Eastern Europe: evidence from small-scale farms in Poland

Most rural economies in Central and Eastern Europe (CEE) suffer from a poorly developed Rural Non-Farm Economy (RNFE) and a lack of alternative economic activities outside of farming. While the diversification of rural economies in CEE away from an over reliance on agriculture has become an important policy goal, little research has been conducted on the impediments to diversification. This paper focuses on the barriers faced by Polish farm households to taking up off-farm employment and establishing new, non-agricultural enterprises. Factor and cluster analysis are applied to a data-set of individual farms in order to identify groups of households facing similar constraints and profile policy measures that are most likely to assist diversification. Diversification is unlikely to expand significantly in the short-term due to a combination of the age of households, a desire to concentrate on farming and remoteness. Those farm households that are most willing to diversify are characterised by the lowest agricultural incomes and suffer from a poor endowment of human and physical capital.