CREDIT AS A TOOL OF INTEGRATION BETWEEN POLISH FARMS AND BUYERS OF THEIR PRODUCTS

The aim of the paper is to examine the role which credit plays as a tool of integration in the food chain in Polish agriculture, particularly in the integration of farms with food processors. This issue is explored from the perspective of transaction costs theory. The analysis showed that the practice of the use of loans by processors varies across the sectors of agribusiness. The data indicates that the dairy sector was a leader in implementing the loan contracts. Dairy processors were interested in financing different objectives from those supported by manufacturers from other sectors of the agrifood system. The former offered investment loans, while the latter granted loans for working capital. The credit activity creates transaction costs for both partners of the contract. Surprisingly, of five variables analyzed, only the period of contract was significant for the emergence of transaction costs