We maintain our forecast for Poland's grain production to fall in 2012/13, with the effect of winter-kill cancelling the effect of higher plantings. The recent decision by the European Commission to lift a ban on chicken meat imported from Thailand could decrease the share of Ukrainian or Russian exports into Poland. For sugar and dairy, financial support as well as sector reforms imposed by the EU are likely to help production to recover strongly over our forecast period.
Key Forecasts
- Corn production growth to 2015/16: 22.0% to 2.2mn tonnes. The EU's Rural Development Plan 2007-2013, for which Poland has a budget of EUR17.2bn, will encourage consolidation, modernisation of agricultural holdings and infrastructure improvements in the country's grains farms, boosting yields of all three grains.
- Poultry consumption growth to 2016: 10.6% to 1.0mn tonnes. Poultry is considered a lowerfat and healthier alternative to other meats. It is also often used in ready-to-eat meals, increasingly popular with busy Polish shoppers.
- Sugar production growth to 2015/16: 16.3% to 12.0mn tonnes. Polish sugar producers will most likely be encouraged to increase output as EU reforms of the sugar sector come gradually online until full abolition of sugar production quotas in 2015. That said, restrictions put on the EU's subsidies budget are expected to weigh on growth.
- 2012 real GDP growth: 2.5% (down from 4.3% in 2011; predicted to average 3.9% over 2011- 2016).
- Consumer price inflation: 4.0% year-on-year (y-o-y) on average for 2012 (slightly down from 4.3% y-o-y for 2011).
- BMI universe agribusiness market value: 3.4% y-o-y decline to US$18.1bn in 2011/12, forecast to increase on average by 0.2% annually between 2010/11 and 2015/16.
Industry Developments
The EU is expected to authorise another wave of zero-duty imports in the coming months on the back of a smaller expected 2012/13 wheat harvest and as it looks to protect margins of the EU's livestock farmers.
The European Commission announced that it would allow a further 1.2mn tonnes of feed wheat to enter the EU by the end of June without tariffs. Many countries, including Poland, are in favour of the imports allowance because it will make it cheaper for livestock producers to buy feed grain. The move will go ahead even though some large grain producers voted against it. The zero-tariff opening is intended for H212 and will double the 1.2mn-tonne allowance already put in place in H112.
The confectionery market in Poland has been growing at a steady annual rate, boosted by marketing, novel product launches, an increase in snacking and the traditional fondness for sweets. The leading companies in the market include foreign majors, namely the UK's Cadbury (now owned by US behemoth Kraft Foods), Nestlé, Lindt & Sprungli and Barry Callebaut, with Wrigley Poland also having a notable presence.
The recent decision by the Directorate-General for Health and Consumers of the European Commission to lift the ban on chicken meat imported from Thailand is not expected to affect local producers, as they are focused on the fresh chicken market and are protected by strict marketing standards. For Poland specifically, the entry of Thai poultry could decrease the share of exports from Ukraine or Russia as both countries also get access to the EU market. We believe Thai exports are more comparable to Ukraine's or Russia's than to Brazil's or Argentina's because of their lower quality and price.
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Poland Agribusiness Report Q3 2012
