The local institutions and transaction costs of public aid in the process of agriculture modernisation

The main goal of the paper was to determine local institutions (organizations) and assessment of the level of private transaction costs incurred by beneficiaries of public aid related to the modernization of farms. The research was held in 2012 among 129 farms, which in 2004-2011 benefited from public financial aid in their investment activity. The selected farms were researched with the use of interview questionnaire concerning organisation of farms, obtained economic results, assessment of executed investments and relations of farmers with local institutions of the agricultural environment and the level of transaction costs. An estimation of the level of private transaction costs related to the public aid received in the investment activity was mad, on the basis of information obtained from farmers as part of the interview conducted using the questionnaire. It was found that for farmers the most important in the modernization process of farms were the Centre for Advisory Agricultural Service (CASS) and The Agency for Restructuring and Modernization of Agriculture (ARMA). According to the farmers’ opinion, the main barriers to cooperation with local organizations were the high costs of using their services and the difficult access to the institutions. The estimated level of private transaction costs incurred by the beneficiaries in relation to the acquired investment subsidies was low and should not constitute a barrier to obtaining public aid in the process of modernization of farms. On farms characterized by a lower value of investment outlays, the level of private transaction costs in relation to the acquired investment subsidies was higher than in other groups of farms. The largest share in the structure of estimated private transaction costs was related to the costs of collecting documentation and filling in applications.