Scale and Determinants of Non-Agricultural Business Activity Among Farmers in Poland

Abstract

Non-agricultural business activity of farmers is crucial not only for stabilizing farm income but also for the multifunctional development of rural areas. Capturing changes in the level and nature of this activity supports the development of sustainable agricultural and rural policy. In this context, this study aimed to identify the scale and types of non-agricultural business activity and to recognize the main determinants of such business activities undertaken by farmers in Poland between 2002 and 2022. Sectoral-level data from the Agricultural Censuses and cyclical studies of the structure of farms and household budgets were used to approximate underlying motivations for running non-agricultural business (opportunity vs. necessity entrepreneurship). The findings indicate that, in Poland, the impact of regressive factors remains strong, pushing farmers to take on additional business activity due to the large share of small and very small farms. However, during the 21st century, a gradual spread of opportunity entrepreneurship among Polish farmers has been observed. This study highlights the rationale for supporting non-agriculture business activity motivated by progressive factors to increase the income resilience of farmer households and the sustainable development of agriculture. The article indicates the need for further research on the motives for undertaking non-agricultural economic activities by farmers and the impact of this activity on the allocation of farm resources.

1. Introduction

Agriculture has rarely served as an empirical setting for mainstream entrepreneurship research [1,2]. More frequently, farmers’ business activity was captured from the perspective of the response to the low level and high variability of agricultural income [3]. However, the main focus of income diversification strategies is usually on other non-agricultural sources of farmer income, such as budget transfers to agriculture or employment [4,5,6]. Relatively less attention is paid to the mechanisms behind the additional non-agricultural business activity of farmers. Meanwhile, appropriate stimulation of non-agricultural business activity can be an interesting complementary policy measure to stabilize farmers’ income, the advantage of which is the market nature rather than the transfer nature of financial flows.

Non-agricultural business has also been recognized as a factor that triggers the multifunctional development of rural areas and agriculture [7,8] according to the European Model of Agriculture (EMA) [9,10,11,12]. In this context, research on farmer entrepreneurship is particularly important in countries such as Poland, where small family farms still dominate. Under such conditions, non-agricultural activities can mitigate the negative effects of deagrarianization by using resources released from agriculture for the market. It can be perceived as an intermediate stage in changing the profile of small farms, which leads to structural changes in rural areas and agriculture in the long term.

Non-agricultural business is any activity (manufacturing, construction, trading, service) that does not qualify as an agricultural activity included in Section A, NACE Rev. 2. It may involve the use of farm resources (machinery, equipment, labor), but it may also be completely independent of the farm and its resources [13]. It can be driven by external factors, such as emerging market niches or changes in the economic and social environment [14,15], or it can result from endogenous determinants. In the latter case, the economic potential of the farm, the profitability of agricultural production, the personal characteristics of the farmer as an entrepreneur, and many other factors may play a role [16,17,18].

Identifying these factors and their impact on farmers’ venturing, survival rate, and added value of non-agricultural business activity still requires empirical research. Such research should consider the specific structural characteristics of agriculture and the dominant farm model in a given country or even region [19,20]. The economic conditions of a given country (or region) can stimulate the development of farmers’ non-agricultural entrepreneurship or, conversely, constitute a barrier to it. The variety of endogenous and exogenous factors that influence the scale and dynamics of farmers’ non-agricultural business activity makes this issue both important and complex.

Entrepreneurship in agriculture is systematically gaining more attention as a response to the call for a more contextual, sectoral approach to entrepreneurial activity [1,2].

Researchers are seeking to understand what motivates farmers to adopt entrepreneurial mindsets, expand their agricultural operations, and engage in additional business activities. However, existing studies have focused primarily on non-agricultural activities as a homogeneous group, without distinguishing between whether they involve farm resources or not, with more attention paid to farm-based entrepreneurship [3,20,21]. Meanwhile, in the context of the ongoing process of deagrarianization, which is observed especially in rural areas located near urban agglomerations and industrial centers, non-agricultural business activities unrelated to farm resources are becoming increasingly relevant [17].

Monitoring changes in the level and nature of farmers’ non-farm entrepreneurship is essential for providing the information necessary to shape agricultural and rural policy—not only in terms of stabilizing farmers’ incomes but also in the context of sustainable and multifunctional rural and agricultural development. Starting and conducting non-agricultural business at the level of a single farm leads to strengthening the multifunctionality of the entire agricultural sector and rural areas. Therefore, non-farm entrepreneurship is one of the important elements of the sustainable development of rural areas.

Nevertheless, instruments designed to support non-agricultural business activity may not only promote agricultural development but may also lead to unintended or adverse consequences. Functional transformations within agricultural holdings carry the risk of increasing land-use conflicts, accelerating suburbanization and deagrarianization processes [22,23], intensifying climate-related risks and environmental pressures [24,25], marginalizing agricultural production, eroding the identity and unique culture of rural communities, and creating additional challenges to ensuring food security [26]. Recognizing the motivations behind farmers’ entrepreneurship can be used to more effectively shape appropriate linkages between agricultural and non-agricultural activities in rural areas.

In light of the above, the aim of this study was to identify the scale and types of non-agricultural business activity and to recognize the main determinants of such business activities undertaken by farmers in Poland between 2002 and 2022. Achieving this research objective requires addressing the following research steps:

• Identifying changes that have occurred since 2002 in the scale and structure of non-agricultural business activity among farmers in Poland;
• Investigating links between agricultural and non-agricultural activities and selected farm characteristics;
• Exploring to what extent the engagement in non-agricultural business activity has been driven by necessity or motivated by market opportunities.

To deepen the discussion, an attempt was made to link the characteristics of farms conducting non-agricultural activities with the farmers’ motivation to engage in additional business activities. By examining the motives of non-agriculture business activity, this paper emphasizes their role in the transformation of agriculture and rural areas, providing policy-relevant insight into strategic intervention.

Identifying the motivations behind farmers’ engagement in non-agricultural entrepreneurship (necessity vs. market opportunity) expands the scope of research on the determinants of income resilience of farmer households. By overlapping the sectoral factors with the distinction between opportunity and necessity entrepreneurship, and acknowledging the heterogeneity of non-farm entrepreneurship, this paper makes a contribution to agricultural economics and the discussion on non-agriculture business activity of farmers.

The analysis drew on data from the Agricultural Censuses (ACs) conducted in 2002, 2010, and 2020 [27,28,29], as well as from periodic surveys by the Central Statistical Office (CSO): Characteristics of Agricultural Holdings for the years 2004–2016 [30,31] and Household Budgets for the years 2002–2023 [32,33]. The sectoral-level data were used to approximate underlying motivations for running non-agricultural business (opportunity vs. necessity entrepreneurship). The research procedure primarily used the qualitative comparative and cause-and-effect analysis methods.

In the structure of this study, the next section presents existing research findings on the main motives and determinants of farmers’ engagement in non-agricultural business activities. The following section discusses the research methodology and data sources. Subsequently, the scale of non-agricultural business activity among Polish farmers after 2002 is illustrated, along with the characteristics of farming households engaged in such activity. Based on this, conclusions are drawn regarding the motives for farmers’ non-agricultural business activity (opportunity vs. necessity entrepreneurship), and policy recommendations are proposed for the development of agriculture and rural areas.

2. Literature Review

Non-agricultural business activity is defined by the law and is also specified for the purposes of economic statistics. In both approaches, non-agricultural activity is identified by reference to agricultural activities. It encompasses any activity (manufacturing, construction, trade, or services) other than farming or agricultural production (beyond Section A, according to NACE Rev. 2). Legally, in Poland, non-agricultural activities are subject to the Act on Freedom of Economic Activity. This act does not apply to agricultural activities [34] (art. 2–3). For statistical purposes (agricultural censuses), non-agricultural economic activity is further classified into two groups: directly related to the farm (utilizing the resources of the farm, such as agritourism, handicrafts, processing of agricultural products) or unrelated to the agricultural holding (e.g., hairdressing services, trade in non-farm goods) [35] (p. 34).

The literature has identified various determinants of farmers’ engagement in additional business activity. In general, they can be divided into three groups [36,37]: individual characteristics of the farmer (e.g., age, gender, education, experience, risk tolerance), sectoral factors related to agricultural holding (e.g., farm size, economic size, production profile, location, level and structure of income) [14,16,17,18], and those associated with the broader farming context (macroeconomic, socioeconomic, and institutional factors) [15,20]. Among these, this study focused on sectoral determinants related to farm characteristics.

Another interesting dimension in recognizing determinants of farmers’ new business ventures outside of agriculture is the distinction based on the motives to perform business activity. Conventionally, these motives may result from necessity, e.g., from a lack of income (regressive factors, push motivations) or from the ability to perceive and use market opportunities (progressive factors, pull motivations) [14,38,39]. Progressive (pull) factors drive opportunity entrepreneurship, whereas regressive (push) motivations induce necessity entrepreneurship [40]. The search for a deeper understanding of these factors constitutes an important field of research in the mainstream entrepreneurship literature. This is because opportunity entrepreneurs are recognized as having a greater impact on economic dynamics, innovation, and employment compared with other types of business [41]. The distinction between opportunity and necessity entrepreneurship can also be applied to farmers’ non-agricultural activities. According to Brünjes and Revilla Diez [42], the first category of entrepreneurs includes farmers who have business experience, recognize market opportunities in other sectors of the economy, and seek to take advantage of them. In contrast, farmers who engage in non-agricultural activities due to insufficient income are considered necessity entrepreneurs [43,44].

To deepen the discussion on the determinants of farmers’ engagement in non-agricultural business activity, in our study, we propose to overlap the sectoral factors with the distinction between opportunity and necessity entrepreneurship. In the case of the agricultural sector, some of its inherent characteristics make farmers more exposed to push motivations and necessity entrepreneurship. First, the agricultural sector is characterized by a low capacity to absorb surplus labor, which determines the establishment of non-agricultural businesses in rural areas, particularly strongly in developing countries [14]. Second, the agricultural sector, compared with other types of economic activity, is perceived as the most exposed to the problem of seasonality of production, and the impact of natural factors such as climate, weather, and biology [45,46,47,48,49]. Income uncertainty and instability constitute one of the central challenges of the economic resilience and sustainable development of the agricultural sector [50,51]. Therefore, diversification and stabilization of income sources are important motivations pushing farmers toward additional business activity. For farmer households, not only unstable income but also insufficient farm income remains a key problem [50]. Thus, farmers who start non-agricultural business activities are assumed to be primarily motivated by the need to generate additional income; in other words, to increase the disposable income available to the farming household [48,52].

The income level generated by the family farm can, therefore, serve as a sectoral determinant of non-agricultural business activity and as a proxy in distinguishing the motivations behind such economic engagement. Determinants related to household budgeting may reflect both opportunity-driven motives (e.g., increasing income through market opportunities) and necessity-driven pressures resulting from insufficient income generated by agriculture. Higher agricultural productivity and income may reduce the likelihood that farmers engage in non-agricultural business activities out of necessity. A stronger agricultural holding may view non-agricultural business activity as an opportunity to improve the efficiency of its available resources [53] or as a strategy to diversify production [1].

The propensity to engage in non-agricultural activity may also be influenced by the size of the agricultural holding (the area of utilized agricultural land). Small family farms in particular tend to expand their income base beyond the agricultural holding [54]. However, their non-agricultural business activities are mainly triggered by push factors and serve as a survival strategy for the low profitability of farmers’ production [14]. Moreover, in their case, this often leads to abandoning agriculture and reallocating agricultural land for other purposes [23,55,56]. The likelihood of leaving agriculture increases when the non-agricultural activity is not related to the farm [37].

The sectoral approach does not fully enable us to recognize factors determining the type of non-agricultural business activities. Following existing research findings, it can be stated that push determinants are typical for easy-to-enter businesses with low capital and knowledge requirements, such as wholesale and retail trade or low-knowledge services [57,58,59]. The type of non-agricultural business activity also depends on the quality of the economic, production, and technical factors within the farm, including the education and previous professional experience of farm members [14]. Small farms with limited resources are prone to starting a business that is not related to agriculture. Economically stronger agricultural holdings generate a higher demand for production inputs and agricultural services, promoting the development of additional business activities related to farming, such as the sale of plant protection products, fertilizers, animal feed, and agricultural machinery, as well as machinery-related services [60].

From the point of view of the sustainable development of agriculture and rural communities, moving away from monofunctional rural development brings many benefits [61]. However, it is also necessary to consider the threats that may result from excessive, uncontrolled development of farmers’ non-agricultural business activities. One of them is rural deagrarianization and its unfavorable economic and social consequences, including those related to ensuring food security [26,62]. Non-agricultural activities can induce conflict over resources needed to fulfill the agricultural function of rural areas. For example, higher wages in non-agricultural sectors may lead to excessive ‘draining’ of labor resources from agriculture. Other risks are associated with the impact of non-agricultural business activity on the natural environment. The structure and scale of this activity can generate unfavorable ecological and climate externalities [26]. From the perspective of agricultural policy and economic policy more broadly, it is, therefore, important not only to support the development of farmers’ non-agricultural economic activity but also to manage it to limit its potential negative impact on agriculture and nature.

In this context, incorporating motivational aspects (necessity or opportunity entrepreneurship) into research on farmers’ entrepreneurship can support a better understanding and more effective shaping of desirable linkages between agricultural and non-agricultural activities in rural areas. It is particularly important to identify internal factors and exogenous conditions that foster opportunity-driven entrepreneurship. Progressive motivations tend to be accompanied by the complementary relationship between agricultural and non-agricultural activities when one activity serves the other [8,17]. The outcomes of non-agricultural activities can be used to support the development of innovative and sustainable agricultural operations or to accelerate transformation processes in agriculture and rural areas [63]. Non-agricultural activity developed mainly as a response to low agricultural income may not only be of lower added value, temporary, and more unstable, but could also uncontrollably accelerate deagrarianization processes [17,23,56].

3. Materials and Methods

The primary analysis unit in this study was the farming household, which is considered the fundamental production and organizational unit in agriculture [3]. Data about this population were obtained mainly from the Agricultural Censuses (ACs) conducted every 10 years (2002, 2010, 2020) [27,28,29]. The ACs cover the entire country and all agricultural holdings in Poland: households with a farm user (private family farm, managed and operated by a household), agricultural holdings operated by unit with legal personality or by organizational entity without legal personality. These are farms conducting agricultural activities, including growing crops, raising and breeding animals, and maintaining agricultural land no longer used for production purposes, in accordance with the principles of good agricultural practice [35]. This study focused on the largest group (99.4%), that is, households with a farm user. According to AC data, the number of such agricultural holdings in Poland (in thousands) was in 2002, 2174.0; in 2010, 1886.9; and in 2020, 1309.9. Within this population, the main focus was on farming households with a farm user who obtains income from non-agricultural business activities. The Agricultural Census (AC) distinguishes between two types of non-agricultural business activity: one directly related to agricultural production (i.e., utilizing the resources of the farm) and the other unrelated to the agricultural holding. However, a detailed breakdown by type of non-agricultural activity is provided only for the first of them, which limits the scope of our study.

In the ACs, data are collected using a questionnaire survey (in 2020 CAPI, CATI, and CAWI) [35]. The results are presented in various reports, however, without the possibility of breaking it down to individual data. This way of presenting data allows for a sectoral approach to analysis, which was applied in this study. Within this approach, the following AC data were used:

(a)

To illustrate what changes have occurred in Poland since 2002, in the scale and structure of non-agricultural business activity:

• Number and share of farms with non-agricultural economic activity (in all farms);
• Structure of farms with non-agricultural economic activity by type of business activity;

(b)

To approximate motivations (opportunity vs. necessity entrepreneurship) behind non-agriculture business activity of farmers:

• Share of income from agricultural and non-agricultural activity in total household income;
• Percentage of agricultural holdings whose primary source of livelihood is non-agricultural business activity;
• Selected characteristics of farming households engaged in non-agricultural business activities (e.g., the size of the farm both in economic terms and in terms of the utilized agricultural area, the relationship between the additional business activity and agricultural production).

The research procedure primarily used qualitative comparative and cause-and-effect analysis methods. Conclusions were also drawn based on observing changes over time in the indicators selected above (2002–2022).

During the research process, a key limitation was encountered in the form of data availability and inconsistent approaches to the aggregation and presentation of source data across successive agricultural censuses. For this reason, an attempt was made to compile data from various sources. A supplementary source of data comes from the farm structure surveys [30,31] and the cyclical Household Budget Surveys conducted by the Central Statistical Office (CSO) [32,33]. However, the latter encompasses only farming households whose main source of income comes from operating an individual agricultural holding. In addition, income from non-agricultural business activity is classified as self-employment income, without specifying the type of activity.

The sectoral approach also has some other limitations. In reality, on the micro-level, different (opportunity and necessity) entrepreneurial motivations are simultaneously at play [64]. Sectoral analysis indirectly provides information on the prevailing motivations and emerging trends in this regard from the perspective of the entire agricultural sector.

4. Results and Discussion

4.1. Scale and Profile of Non-Agricultural Business Activity Among Farmers in Poland

Information on the overall population of agricultural holdings engaged in non-agricultural business activity between 2002 and 2020 is provided by the Agricultural Censuses (ACs). The data show that in 2002, 363,400 agricultural holdings were engaged in non-agricultural business activities, accounting for 11.8% of all agricultural holdings in Poland. In relation to active agricultural holdings, those engaged in non-agricultural businesses represented 16.7% (Figure 1). In this group, nearly one-third (103,200) were holdings that did not engage in commodity agricultural production and did not generate income from farming. The disposable income of these farmers came exclusively from non-agricultural sources, including business activities [27].

Poland’s accession to the EU in 2004 served as an external impulse for the development of entrepreneurial attitudes among farmers. In 2010 (compared with 2002), despite a reduction in the number of agricultural holdings (by approximately 13%), the number of those engaged in non-agricultural business activity increased by 2.5%, and their intensity (relative to the total number of active agricultural holdings) was higher by approximately three percentage points (19.8%) (Figure 1).

After 2010, the process of closing agricultural holdings continued in Poland, including those with diversified sources of income. This process progressed more rapidly among agricultural holdings engaged in non-agricultural activities (by 49% by 2020, while the corresponding figure for the entire population was 30%). This suggests that non-agricultural activity may have been viewed as a factor that facilitates deagrarianization processes and supports the smooth transition of the activity profile [26]. This is an important role of non-farm entrepreneurship because sudden and chaotic decisions to exit agriculture are especially undesirable, as they result not only in the waste of farm resources but also, at times, in their destruction [65]. The ongoing deagrarianization processes and the transition of the rural economy toward a more diversified (multisector) economy observed in Poland are not exceptional. Similar processes occurred in the last two decades in Spain [62], Germany, and other Western European countries, as well as in Central and Eastern European countries [66,67,68].

Among agricultural holdings with income from non-agricultural business activities, the majority are farms where business activities are unrelated to agricultural production (Figure 2). At the same time, the share of farms in which this activity was related to farm resources decreased (from 33.7% in 2007 to 12.8% in 2020). This may indicate that factors at the farm’s disposal (engaged in agricultural production) were fully or partially shifted from agricultural to non-agricultural business activities. The resource that is most often transferred to a new venture is labor [17]. Starting a non-agricultural business often involves investing in fixed assets (buildings, transport, etc.) previously used in agricultural production. Farmers also use financial resources derived from leasing agricultural land, but less frequently from selling it or from selling other assets previously used on the farm [17].

The decreasing percentage of farmers who link non-agricultural business activities with agricultural production indicates that these two types of activity compete for farm resources. There are relatively few farmers for whom non-agricultural activities are aimed at the more efficient use of resources involved in agricultural production or at stimulating agricultural activity. This mainly concerns large, economically strong farms that implement an income diversification strategy [17,37,69]. Competition between activities intensifies in the case of limited resources, which, taking into account the low profitability of agricultural production, often results in extensification or withdrawal from agriculture [37,70]. Such a competitive, negative relationship between agricultural and non-agricultural economic activity is also observed in many other countries around the world, especially where deagrarianization is progressing or where there are significant income disparities between agricultural and non-agricultural activities [62,71,72].

Unfortunately, public statistics only provide information on the profile of additional activities related to agricultural production. In the majority of agricultural holdings (in 2002, approximately 92.2%), non-agricultural business activities were conducted within a single section of the Polish Classification of Activities (PKD). The most significant number of agricultural holding owners were engaged in trade, industrial processing, and agricultural services (entities within the ‘other’ subgroup in Figure 3), followed by construction and transportation services.

In subsequent years, there has been an increase in farmers’ interest in agritourism, renewable energy production, service activities using their own equipment (both agricultural and non-agricultural services), and processing agricultural products from their own production, which are then sold directly to consumers (Figure 4). Moreover, a specialization can be observed based on the size of the agricultural holding. In 2020, the largest agricultural holdings (with an average of 126.5 ha of utilized agricultural area (UAA)) were involved in renewable energy production. In groups of holdings with a relatively large UAA (100 ha or more), activities related to aquaculture and service activities using their own equipment (both agricultural and non-agricultural services) were also carried out. In small agricultural holdings, the dominant types of activities were handicrafts, agritourism, agricultural product processing, providing health, social, and educational services, wood processing, and others, such as operating a shop [29]. Most of them are activities with low entry barriers, which is typical for necessity entrepreneurship [57,58,59].

From a twenty-year perspective, there is a noticeable ongoing increase in the connection between farmers’ additional business activities and changes in the market environment. There is an increasing willingness to engage in activities that respond to the growing demand in Poland for tourism services, organic products, and green energy production. This can be seen as evidence of the gradual spread of opportunity entrepreneurship, which is visible in both the activities of the largest agricultural holdings (renewable energy production) and the smallest ones (agritourism). The fact that farmers undertake various forms of non-agricultural economic activity proves that they actively participate in the process of diversification of the rural economy, adapting to changing economic and social conditions [61].

The difference between non-farm entrepreneurship in Poland at the beginning of the 21st century and two decades later lies, i.a., in the different motivations. At the beginning of the 21st century, the dominant motives were related to the need to utilize available labor resources for which there was insufficient demand from non-agricultural sectors (in 2002 and 2003, the unemployment rate in Poland reached 20%). At the same time, farmers’ incomes showed a deep disparity compared with the incomes of non-agricultural employees and entrepreneurs (the average income gap between farmers and employees was 26.6% in 2002–2003 and 38.5% compared with entrepreneurs) [32]. This pushed many farmers to seek alternative income in the off-farm sphere, including launching non-agricultural businesses.

In 2020, the situation on the labor market in Poland turned toward an employee market (the unemployment rate was 6.2%), and the income disparity of farmers in relation to other social groups decreased significantly [50]. Therefore, other reasons motivated farmers to undertake non-agricultural economic activities, such as taking advantage of market opportunities, the emergence of new market niches, diversification of income sources and improvement of the family’s financial stability, more efficient use of production resources, or obtaining non-repayable financing for specific activities (e.g., energy production from renewable energy sources) [71,73].

In other Central and Eastern European countries, like Poland, which is undergoing economic transformation, the non-agricultural business activity of farmers was also initially one of the forms of survival strategy of farmer households. Along with the spread of the market economy and structural changes in agriculture, the non-agricultural economic activities of farmers were increasingly motivated by progressive factors (pull motivation). For a growing number of farming families, non-agricultural economic activity has become an opportunity to increase and diversify their income, constituting an important element in the creation of a new rural non-agricultural economy, based primarily on micro and small enterprises in the services, trade, and small-scale manufacturing sectors [66].

4.2. Exploring the Motivation for Engaging in Non-Agricultural Business Activities

In the long term (2002–2020), within the shrinking population of agricultural holdings, the percentage of those engaging in business activity remained relatively stable (around 15–16%). At the same time, within this group, the representation of holdings for which this activity was the primary source of livelihood gradually increased (

Table 1. Farmer household structure (%) by main source of income.

AC Year:	Percentage of Farms by Main Source of Income:						% of Households with Non-Agricultural Business Activity as the Main Source of Income
	Farming	Employment	Non-Agricultural Business	Pensions and Annuities	Non- Earning Sources	Other Farms *
2002	27.9	24.9	5.8	28.9	3.0	9.5	49.2
2010	33.8	28.8	9.4	15.3	2.7	10.0	47.7
2020	30.3	33.1	8.1	15.5	2.0	11.0	55.7

* the group of ‘other farms’ includes those in which no source of income exceeded 50% of the total income. The ‘dual-profession’ farms, which obtain income from agricultural activity and hired work, dominate here. The percentage of farms in which the total income from agricultural activity and hired work exceeded 50% of income constituted 4.7–6% of all farms. Source: Own calculations based on [27,28,29].

, Figure 5).

In the population of farm owners engaged in non-agricultural business activity, there is a clear polarization in the share of income from this activity in total household income. In 2002, the largest share of agricultural holdings (28.2%) was those for which income from additional business activities constituted only a small supplement to the disposable income of the farming household (up to 10%). At the other end of the spectrum were the agricultural holdings (26.6%) for which income from other business activities accounted for at least 80% of total household income (Figure 5). Overall, for 45.3% of agricultural holdings, income from non-agricultural business activities accounted for at least 50% of disposable income.

In subsequent years, a trend toward further polarization can be observed, characterized by an increase in the percentage of agricultural holdings for which non-agricultural business activity was the main source of income, as well as an increase in the percentage of units for which income from this activity did not exceed 10% of total income (Figure 5).

The presented data reveal a polarizing approach among farmers to non-agricultural business activity: either it serves as the main source of livelihood for the farming household, or it plays a supplementary role. This indicates differentiated reasons and motivations for engaging in such activities, with both positive and regressive motivations potentially at play in both cases (the opportunity to utilize resources or the need to supplement low income). In addition, the growing percentage of agricultural holdings for which non-agricultural business activity is the main source of livelihood can be seen as a sign of a gradual shift from a temporary, occasional approach to this activity toward a more strategic orientation. This may also indicate the gradual spread of opportunity entrepreneurship [74].

The structure of income sources for farming households is linked to the size of the agricultural holding. The average size of agricultural holdings where non-agricultural activity was the main source of income was more than three times smaller compared with agricultural holdings with farming activity as the primary income source (Figure 6). Agricultural holdings with non-farm business were also internally diversified in terms of area. Farm holdings engaged in non-agricultural business activities directly related to agricultural production had, on average, 5 times larger agricultural areas compared with agricultural holdings involved in non-agricultural business activities unrelated to the farm.

According to the 2002 Agricultural Census, among agricultural holdings engaged in non-agricultural business activities, 62.5% had an area of less than 5 ha of UAA, while only 9.4% had 15 or more ha of UAA [30] (p. 18). These data indicate that, in 2002, non-agricultural business activities were primarily conducted by very small and small agricultural holdings. Based on the subsequent Agricultural Censuses (2010, 2020) [28,29], it is not possible to directly determine the area structure of agricultural holdings engaged in non-agricultural business activities. This can be performed indirectly, based on information about the economic size of holdings (according to the total standard output of the agricultural holding expressed in euros), which is strongly positively correlated with the agricultural area of the holdings [29] (p. 116).

In 2010, in the highest economic size class (one million euros or more), the share of agricultural holdings where non-agricultural business activities were the main source of livelihood was 10.6%. The discussed percentage exceeded 10% only in the economically weakest agricultural holdings: in the EUR 0–2000 class, it was 12.1%, and in the EUR 2–4000 class, it was 10.9%. In 2020, the percentage of agricultural holdings engaged in non-agricultural business activities, where it was the main source of income, exceeded 10% (11.1%) only in the group of agricultural holdings with the lowest economic size class (0–2000 euros) (Figure 7). As the economic strength of the holdings increased, this percentage decreased, and it remained above the average (8.1%) up to the EUR 4–8000 class. In the largest economic holdings, those above EUR 500,000, this percentage was 3.7% and was higher compared with the average economic size classes (EUR 25–500,000).

Non-agricultural business activity is primarily concentrated in the smallest agricultural holdings in terms of economic size, and consequently, also in those with smaller areas. However, the percentage of agricultural holdings with the highest economic strength, for which income from non-agricultural activities is the main source of income, is also relatively high.

The motivations for engaging in non-agricultural activities may differ for farmers operating agricultural holdings with varying economic potential. It can be assumed that for farmers operating small and economically weak agricultural holdings, non-agricultural business activities may be driven by low income from the farm. Their lower resource potential effectively condemns these holdings to low income from agricultural activities and the need to supplement the family’s sources of livelihood. In this group of holdings, additional business activity is typically completely unrelated to the agricultural holding and is driven by push factors. This raises the question of the effects generated by such ‘pushed’ activities in terms of survival, profitability, and the number of jobs created [75]. Such questions identify a research gap in studies on the multifunctional development of rural areas and set a direction for further research.

In contrast, for farmers operating large and economically strong agricultural holdings, engaging in non-agricultural activities may be motivated by the need to diversify income sources and reduce the economic and production risks associated with agricultural production. These agricultural holdings are better equipped with capital and labor resources and are seeking more productive ways to utilize them [53]. In this group of holdings, positive motivations for non-agricultural entrepreneurship may, therefore, prevail. For them, entrepreneurship based on opportunities [24] arising from the resources of production means and financial capital available to such holdings may be characteristic. For these farmers, non-agricultural business activities are often linked to the agricultural holding. Non-agricultural activities open up opportunities for additional use of the agricultural holding’s resources (machinery and buildings, labor resources, and financial resources). This especially applies to resources that do not find full or economically efficient application in agricultural production. For these farmers, however, agricultural production remains the primary area of activity and the main source of income.

Compared with farming households primarily relying on agricultural activities, households generating income mainly from non-agricultural business activities were characterized by the following (

Table 2. Selected features of farms with primary income from non-agricultural business activity compared to farms with primary income from agricultural activity—AC 2020.

Specification	Farms with Main Income from
	Agricultural	Non-Agricultural
Percentage of farms with agricultural production mainly or exclusively for self-supply	5.8	37.6
Average economic size of a farm (in thousands of euros)	45.7	9.3
Percentage of household managers under 40 years of age	26.5	21.0
Agricultural holdings where the manager has an agricultural education	55.6	30.7
in this:
university education	4.7	4.2
post-secondary	0.8	0.5
vocational secondary	19.8	10.0
basic vocational	15.8	5.4
agricultural course	14.5	10.7
Number of livestock per 1 agricultural holding in livestock units (LSUs)	19.6	2.0
Agricultural holdings keeping:
Cattle	42.6	6.4
including cows	32.6	4.0
Pigs	13.3	1.8
Agricultural holdings using mineral or lime fertilizers	85.8	59.9
Agricultural holdings using manure	59.7	28.6
Consumption of NPK * per 1 hectare of agricultural land in good agricultural condition	149.3	90.3
Average number of people employed full time in agricultural production	1.73	0.66

* NPK refers to fertilizers containing nitrogen (N), phosphorus (P), and potassium (K). Source: Own elaboration based on [29].

):

• A limited and decreasing significance of agricultural production as a source of income, as evidenced by the more than a sixfold higher percentage of units producing primarily or exclusively for self-sufficiency;
• On average, about five times smaller economic size of the agricultural holding;
• A lower percentage of farmers managing the holdings who have an agricultural education;
• A very small percentage of holdings involved in animal production, including cattle and pig farming, and consequently, an average livestock density (measured in large animal units) nearly 10 times lower compared with holdings for which agricultural activity was the main source of income;
• Lower agricultural production intensity, as indicated by the level of mineral fertilizer usage per 1 hectare of UAA and the percentage of units applying both mineral and organic fertilization;
• Over 2.5 times lower labor inputs incurred annually for agricultural production.

The presented characteristics can be interpreted as a manifestation of pushing conditions for engaging in other business activities due to low income from agriculture. Taking up non-agricultural activities is more common when agricultural activities are economically insufficient and push motivations are at play (income from agriculture is lower, and the economic strength and the area of agricultural land are smaller).

However, it should be noted that farmer households, in addition to farm resources, have several unique capabilities and assets, such as experience, diversity, social capital, and specific educational background, which may enable them to start businesses that are opportunity driven. Farmers may also be pulled into new non-farm enterprises because of new demand and better access to local markets [71,73,76]. The research results indicate that these progressive factors, although still not dominant in the context of undertaking non-farm entrepreneurship in Poland, have been gaining importance over the last two decades.

5. Conclusions

The increase in the number of holdings engaged in profitable non-agricultural activities is an important element of sustainable agricultural development, relating to its economic foundations, which are connected to the multifunctionality of agriculture. Farmers who are motivated by market opportunities rather than necessity have better chances of survival in the market and better financial outcomes. There can be no doubt that at an individual level, it is the characteristics of the farmers-entrepreneurs themselves, particularly their motivations (ambition, desire for self-realization, openness to risk-taking) that determine whether their entrepreneurship is driven by necessity (necessity entrepreneurship) or based on opportunity (opportunity entrepreneurship). Nevertheless, the characteristics of agricultural holdings, including their economic potential, indirectly provide information about emerging trends in this regard from the perspective of the entire agricultural sector.

The answers to the research questions come down to the following conclusions:

• Over the course of two decades in the 21st century, a relative increase in farmers’ interest in non-agricultural business activities can be observed in Poland, although its scale remains relatively small;
• In the context of the agricultural land area and economic strength of holdings, a tendency toward relatively greater concentration of non-agricultural business activities within small and very small agricultural holdings can be observed in Poland. This would suggest that, in Poland, regressive factors still prevail, pushing farmers to engage in additional business activities. This is usually accompanied by the substitutive (competitive) links between agricultural and non-agricultural business activities, which, in the long term, result in the abandonment of agricultural activities;
• At the same time, the share of farmer-entrepreneurs for whom non-agricultural business activities were the main source of household income steadily increased. Combined with the changing profile of this activity and the increasing interest in this activity among the most economically strong agricultural holdings, this may indicate the gradual spread of pull (opportunity) motivations towards business activities among Polish farmers. It is usually accompanied by the complementary links between agricultural and non-agricultural business activities.

Agricultural policy and rural development policy should more actively influence non-farm entrepreneurship. In particular, it is important to launch instruments that support non-agricultural business activities, especially those motivated by progressive factors, i.e., based on market opportunities and pro-efficiency premises related to the resources of agricultural holdings. These instruments should be diversified, as different incentives should be directed to farmers operating small holdings with low economic potential and others to holdings with large agricultural areas, strong economic standing, and a strong connection to the agricultural market. In the first case, the instruments directed at farmers should not only motivate them to engage in additional business activities but also safeguard the farm resources, particularly agricultural land, from the processes of uncontrolled deagrarianization. Specifically, this refers to the abandonment of agricultural land and its degradation, or the undesirable ‘dropout’ of agricultural land from farming use. In the case of stronger (larger) agricultural holdings, support should be oriented to make better use of farm resources, such as machinery and equipment, and to increase the holding’s resilience to income variability from agricultural activities.

From the perspective of the entire agricultural sector, support for the non-agricultural economic activity of farmers should not result in a reduction in food production or a reduction in the agricultural functions related to the protection of the natural environment, climate, landscape, or biodiversity. Instead, it should lead to a more efficient use of farm resources in order to diversify farmers’ business risk, increase their incomes, and improve their stability. These issues are a fundamental element of the economic order necessary for the sustainable development of agriculture.

The intensification of deagrarianization, unfavorable demographic processes in rural areas (ageing population, youth migration, lack of successors on farms), and the intensification of urbanization will result in further transformations of rural areas and agriculture in Poland. The development of non-agricultural activities on family farms should be an important process on the path to the sustainable development of agriculture and rural communities. However, this requires proper harmonization with the other processes mentioned above, so that the non-agricultural economic activity of farmers does not develop at the expense of rural agricultural functions but rather complements and enriches them.

The conducted analyses have made it possible to identify the basic mechanisms associated with engaging in non-agricultural business activities, but they are insufficient for a comprehensive understanding of this research area. Therefore, in the next stage of the research, the authors plan to supplement the sectoral approach with micro-level studies conducted directly among agricultural holdings. This will allow for a deeper analysis of the motivations, determinants, and effects of non-agricultural business activities conducted by agricultural holdings with different owner characteristics, production profiles, and spatial locations. Future research should also explore factors determining the success and sustainability of farmers’ non-agricultural economic activity and assess the impact of this activity on the allocation of farm resources.