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The Warsaw Voice » Business » November 30, 2010
Interview with Marek Sawicki, Agriculture Minister
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Two Decades of Change
November 30, 2010   
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Agriculture Minister Marek Sawicki talks to Andrzej Jonas.

How do you assess Polish agriculture as a sector of the economy that is intensively making up for decades of neglect within the strongly competitive system of the European Union?
Unlike other countries in Central and Eastern Europe, Poland’s agriculture retained its private structure throughout communism. Only about 20 percent of farming output during this time came from the state-run sector. More than 90 percent of the food processing sector was in the form of cooperatives. When we returned to the free-market world 21 years ago, Polish agriculture was in a better situation than was the case in other countries of the former Soviet bloc. However, farmers had to adjust quickly to the rules of competition, made more difficult by limited access to capital, something that affected the processing sector especially. Many imported goods flowed into Poland, impacting the sales levels of domestic farming produce. Exports shrank as well because we lost the easy markets to the east, especially countries of the former Soviet Union, and we were not yet full-fledged members of the Western community, not until 2004. The first 10 years after the political transformation were a tough period of adjusting to the new market conditions.

The dawn of the new century was a time when the pace of change increased in Polish agriculture, thanks to the start of negotiations with the EU and the influx of the first pre-accession funding. In terms of producing agricultural raw materials, at that time—a very important fact—we were using traditional technologies, with reduced use of pesticides, less chemicals. In the processing sector, on the other hand, rigorously following the EU’s recommendations, we began effecting qualitative changes that allowed the sector to achieve a European, modern standard within a short time. After another decade, we have become a European leader in agro-food processing.

In what sense?
In the very first year of EU membership, farming produce became a leading Polish export. Since 2004, we have been steadily improving the positive balance of trade in the agro-food sector. In the crisis year 2009, total Polish exports were worth 98 billion euros, of which almost 12 billion euros’ worth was from the agricultural sector. Agriculture at that time was the only sector of the economy that had a positive balance of trade—in excess of 2 billion euros. This year, the figure is likely to be even better. It is worth noting that we export mainly highly processed goods.

What are the main directions of exports from the Polish agricultural sector?
Almost 84 percent goes to the European Union, of which a quarter is to the German market. The other 16 percent is Russia, Ukraine and the more distant Asian markets, notably Singapore, through which we also reach the Chinese market.

Is it true that Russia has been a tough market for Polish exporters in recent years?
Exports to Russia only collapsed in 2005-2007 due to, let us say, the anti-Russian policy of the Polish government at the time [the coalition of Law and Justice, Samoobrona and the League of Polish Families] to which Moscow reacted with sanctions. After the present ruling coalition of the Civic Platform and the Polish People’s Party took over, we launched talks and restored normal relations. It needs adding, though, that Russia has the most demanding system of foodstuffs control, as France discovered recently when their meat could no longer be exported to Russia. We, too, continually discuss certain contentious issues with the Russians.

What percent of Poland’s Gross Domestic Product is generated by agriculture?
It is about 4-4.5 percent, but as I have said, agriculture accounts for over 11 percent of exports. This shows that the agricultural sector has coped well with competition. Because exports mean jobs, we can say that the actual role of agriculture in the economy is greater than its share in the GDP.

Can we say that Polish agriculture today is modern?
As far as food processing goes, 90-95 percent of Polish processing plants are of a world standard. They can easily compete on any market. As for farms, 30 percent are competitive, modern farms while the rest are self-supplying ones, producing for their own needs and continuing mainly to keep up a family tradition on family land. However, that 70 percent of farms accounts for less than 20 percent of arable land; most of them are smaller than 5 hectares. They are a major social problem, as these are welfare farms. The new EU budget perspective will most likely include proposals of system solutions regarding these farms. This is something I am working towards.

What do you think should be the biggest factor in Polish agriculture’s development?
The biggest problem in Polish agriculture today is not a shortage of capital or manpower; it is excessive dispersion. Huge promotional work is needed to encourage farmers to join forces and form groups. They should also, like the Germans, enter into closer relations, including through shareholding, with food processing businesses. Good cooperatives should also have their own retail chains so that everything—production, processing and sales—would be in the hands of one corporation.

What is your view on the EU’s agricultural policy from the point of view of Polish agriculture?
Joining the EU, we obviously benefited from the opening up of the enormous European market. From a politician’s viewpoint, on the other hand, I have noticed that since 2003, the EU’s Common Agricultural Policy has been stagnating and there seems to be no idea yet on reforming it effectively. The EU budget primarily has to serve the development of modern agriculture, to serve those who have good ideas for that development. Otherwise we will end up like France, where over 90 percent of agricultural subsidies go not to people who want to modernize their farms but automatically to anyone who won the right to a subsidy many years ago.
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