Polish agriculture was unique in the Soviet bloc in that private farms accounted for most of total output. Most of those private farms continue to be smaller than 12 acres (5 hectares). In postcommunist Poland farm incomes declined rapidly in real terms as the prices of industrial products rose, and imported processed foods from western Europe competed strongly with lower-quality Polish products. Many state farms collapsed after 1989, as did the system of state purchase upon which much of the private sector had relied. Throughout the 1990s the percentage of people employed in agriculture declined each year, owing in part to the liquidation of state farms, the aging of agricultural workers, and the drought of the early 1990s.
Nevertheless, Poland remains one of the world’s leading producers of rye and potatoes. Other principal crops include wheat and sugar beets. Poland’s largest fertile areas are Lower Silesia, the Little Poland Lowlands, the Kujawy, the Vistula delta, and the Lublin area. Soil quality varies, and the soil is somewhat poorer in large parts of central and northern Poland. Most farming is mixed, and beef cattle, dairy cows, and pigs are raised throughout the country. As Poland became increasingly integrated into the global economy during the mid-1990s, about half its agricultural exports went to the EU.
Although timberland and fisheries still struggle with a legacy of environmental damage, improvements in natural resources could be seen throughout the 1990s. At the beginning of the 21st century, almost one-third of Polish tree stands still had defoliation of more than 25 percent, exceeding the levels of many of Poland’s European neighbours. Some four-fifths of the country’s wooded land is occupied by coniferous trees, with pine, larch, and spruce the most economically important. About 1.5 billion cubic feet (42 million cubic metres) of roundwood was produced in 2015. The fishing industry in Poland is small, and the total fish catch is between 200,000 and 300,000 metric tons per year. Resources and power Minerals
Poland is relatively well endowed with natural resources. Its principal mineral asset is bituminous coal, although brown coal is mined as well. Most of the bituminous output is derived from the rich Upper Silesian coalfield. During the late 20th century, however, extraction costs in many mines began to exceed profits. Falling prices and the challenges of privatization have slowed production levels. Other fuel resources include small amounts of petroleum and moderately large deposits of natural gas.
The historic salt mine at Wieliczka, Pol.© Jacek Sopotnicki/Dreamstime.com
Sulfur is Poland’s second most important mineral, and the republic ranks among the world leaders in both reserves and production. Other important nonmetallic minerals include barite, salt, kaolin, limestone, chalk, gypsum, and marble. The historic salt mine in Wieliczka, near Kraków, has been in continuous use since the 13th century; in 1978 it was among the first places to be named a UNESCO World Heritage site. Poland also has important deposits of metallic minerals such as zinc and is a major world producer of copper and silver.
Energy
In the 2010s nearly nine-tenths of Poland’s energy was provided by thermal plants fired by bituminous coal and lignite. Renewable sources contributed about another one-tenth of the country’s energy output. Natural gas has largely replaced manufactured gas. Poland imports almost all of its petroleum and petroleum products. In the early 21st century, mineral fuels and lubricants constituted between one-twentieth and one-tenth of all imports. On the other hand, about one-fifteenth of electricity generated in Poland was exported. The bulk of the country’s hydroelectricity comes from the Carpathians, the Sudeten region, and the Brda and Vistula rivers. Manufacturing
During the period of communist rule, remarkable advances in industrial production were overshadowed to some extent by shortcomings in quality and by problems of organization. Moreover, industrial production in Poland—governed almost solely by quantitative requirements and dependent on inexpensive raw materials provided through Comecon—was largely inefficient and poorly prepared to compete in the global marketplace. Industrial output fell dramatically after the demise of communism, especially during the first years of shock therapy. There were declines of one-third or more in almost all areas of manufacturing and mining following the freeing of prices and the collapse of Comecon.
As Polish industry began to downsize, however, production improved, and by the mid-1990s manufacturing accounted for about two-fifths of GDP. As other sectors grew more quickly, manufacturing totaled about one-fifth of GDP by the end of the decade, and by the 2010s it had decreased to between one-fifth and one-tenth of GDP. The principal branches of the manufacturing sector are machinery and transport equipment, food products, metals and metal products, chemicals, beverages, tobacco, and textiles and clothing. Finance
During the communist era, all financial institutions were owned by the state beginning in 1944–45 and formed an integral part of centralized economic planning after 1949. The National Bank of Poland (Narodowy Bank Polski) acted as the main agent of the government’s financial policy, managing everything from the currency and money supply to wages and prices, credit, investment, and the detailed business of all state enterprises. In the late 1980s and early ’90s, the banking industry was reorganized. The National Bank became an independent central bank, with responsibility for regulating the banking sector and the currency. By 2000 there were about 75 private banks, though the state retained the controlling interest in about one-tenth of them.
Until 1990, internal monetary operations were conducted in inconvertible local currency, while external operations were conducted either in foreign currency, especially U.S. dollars, or, for the Soviet bloc, in special units of account such as convertible rubles. Exchange rates against foreign hard currency were flexible according to the needs of the state bank. In 1990, as part of a government program to move the Polish economy toward a free-market system, the exchange rate of the złoty, Poland’s currency, was allowed to be set freely on the international currency markets. In 1995 a new, devalued złoty was introduced; it equaled 10,000 of the old złotys. After joining the EU in 2004, Poland prepared to enter the EU’s economic zone and to adopt the euro as its currency. However, into the 2010s the Law and Justice party continued to work against Poland’s adopting the euro, arguing that the country’s standard of living was not yet comparable to that of the zone’s strongest members and that Poland was better served by maintaining its own currency, the złoty.
Poland established a stock exchange in 1991 in Warsaw, and by the end of 2001 some 230 companies were listed on it. A derivatives market was begun in 1998. At the turn of the century, more than 50 insurance companies were in operation, the largest of which was Polish National Insurance (Powszechny Zakład Ubezpieczeń). In the first decade of the postcommunist era, Poland received more foreign direct investment than any other former socialist country of Europe, rising from $89 million in 1990 to $10.6 billion in 2000. Trade
The fall of communism greatly affected Poland’s trade, which prior to the demise of the Soviet bloc had been conducted within Comecon, including the export of coal and machinery to the Soviet Union and eastern Europe. In 1990, however, Germany edged out the Soviet Union as Poland’s primary trading partner, and by 2001 Germany accounted for one-fourth of Poland’s imports and one-third of its exports. By the 2010s about one-fourth of Poland’s imports continued to come from Germany, but Germany’s share of Polish exports dropped to about one-fourth. China, Italy, France, the United Kingdom, the Czech Republic, Russia, and the Netherlands are also important to Polish trade.