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The Warsaw Voice » Special Sections » December 30, 2010
Grüne Woche Messe/Green Week Fair
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To Market, to Market...
December 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 shape than its counterparts in other countries of the former Soviet bloc. However, farmers had to adapt quickly to the rules of competition, made more difficult by limited access to capital, something that particularly affected the processing sector. Many imported goods flowed into Poland, impacting the sales levels of domestic farm 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 adapting 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 making 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, farm 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, Poland’s total 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 sagged 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 German farmers, 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.

Do foreign companies invest in Polish agriculture? Is foreign investment a major factor behind the sector’s development?
Poland is still a rather closed country as far as investment in land is concerned, meaning the purchase of farmland and farms. There is still a moratorium on the free sale of land to foreigners—until 2012 in the east, and until 2016 in the west of Poland.

There are a number of foreign companies active in Poland’s agricultural production sector, but they are not yet a serious factor on this market.

There’s considerable foreign capital in the processing sector and in animal breeding. I recently met a French entrepreneur who runs a large facility raising domestic fowl, goose and turkey chicks as well as producing eggs. He told me he already holds about 30 percent of the market.

In my view, the presence of foreign players on the Polish agricultural market is not a threat but an incentive for local businesspeople to be more active. Watching how the competition behaves and taking advantage of its experience, they should work to strengthen their own businesses.

You said agricultural products account for 12 percent of Poland’s exports, with processed goods dominating. What is the main strength of Polish food exports?
The main things going for Polish foods are their flavor, smell and a competitive price—in other words, their natural values combined with economics.

Poland is a special guest at this year’s Grüne Woche trade fair…
Our partnership at Grüne Woche is the effect of my personal initiative. I approached the mayor of Berlin and also spoke to Germany’s agriculture minister about this. We were a partner at Grüne Woche in 2004, seven years ago. That’s quite a long time; it’s worth showing ourselves on this market again.

Grüne Woche is a special trade fair, it is a product but also a consumer fair, visited by huge numbers of people, not just from Berlin but also Germans coming there from other regions of the country. Over 1,500 companies from around 150 countries are there as exhibitors. In such an exclusive crowd, you get attention if you are the event’s partner country. This is an excellent opportunity to showcase our products but also to promote our culture, to attract the attention of Germans as well as guests from all over the world. I’m glad we can work on this project.

I have been attending Grüne Woche for 10 years, and for the last three I have been observing it especially closely, preparing for the work on Poland’s participation as a special guest. In recent years this trade fair has seen very strong attendance from Russian and Ukrainian participants, even though these countries don’t yet have an extensive range of goods and services to offer. However, they know in Moscow and Kiev that this Berlin event is not to be missed. Grüne Woche is a good opportunity to show our wares, taking advantage of the presence of people from those countries.

Will the Polish presentation focus on any specific food products?
For some years now, Poland has been exhibiting at all trade fairs for the agricultural sector in Europe by showcasing regional goods. First, this is always well received and, second, Polish regions know how to preserve the special character of their products. By highlighting this, they effectively attract the attention of European consumers.

In the Grüne Woche project, we are working with the Polish Information and Foreign Investment Agency (PAIiIZ) and the Polish Tourist Organization (POT). We started promoting our Grüne Woche partnership in December, preparing information for Germany, and Berlin in particular, saying we will be showing Polish food. Our slogan is Polska smakuje (Poland Tastes Good).

A few weeks later, POT will handle a similar project and partnership at Europe’s biggest tourism trade fair. This means our promotion work will continue. We have a joint logo, joint slogan, joint events. We are convinced that this is what a modern approach to product presentation should be like, promoting culture and tourism in the process.

Does this mean that the organizers of the Polish presentation at Grüne Woche, including the Ministry of Agriculture, will support individual exhibitors?
The ministry and its partners—PAIiIZ and POT—are going to Grüne Woche with a cultural presentation and accompanying service package. We are also renting some pavilions for a general presentation of the country as a whole. Individual businesses and groups will be exhibiting within the regional presentations. Each region is going to the fair with its own products, paying for its own costs of stay and renting exhibition space.

What Polish products will be showcased at Grüne Woche?
The main attention grabber will be apples—as fruit associated with sunshine, fragrance and flavor. Another hot Polish product will be geese, which account for almost 80 percent of the German goose meat market. In addition, we will exhibit dairy and meat products, mainly cold cuts and sausages. Soko³ów is a company well known in Europe today for its processed meat products; we need to continue to promote it. Of course, this is not the only Polish company from the meat and cold-cuts sector that is worth showcasing. In the past 20 years, as quality control systems were introduced in the food industry, a trend toward cattle and pig breed improvement appeared, to obtain meat of better quality and enhanced flavor. Observing this process, we can see that the last two or three years have been a time of returning to traditional breeds. More and more business groups are looking toward Polish breeds, toward meat that has the same flavor and smell as decades or even centuries ago. We can see this in the applications that the ministry receives for both domestic and EU certification.

The unique taste of Polish food is discovered by millions of foreign tourists every year. Do you think Poland is able to maintain or even improve its standards in this area?
I am sure of it. To this end, we are taking advantage of new EU regulations and standards, which provide for categories such as protected name, regional product or marginal production—meaning local, limited output. Obtaining one of these designations requires inspection and certification, and this is something we are striving for continually, so that no one can launch their products pretending they are ours or imitate our unique products. This certification system is a huge opportunity to maintain the quality of our products in the long term, and offers a price bonus as well. Organic food in Poland is still much more expensive than conventional food, unlike in the German market, for example. This shows that the Polish market is still not saturated with this kind of product. Customer demand has not been satisfied yet, so it is worth developing this sector. Smaller farms can be used for this production. The structure of Polish agriculture is definitely conducive to traditional production, good quality, and organic production. We do not just want these goods to go to the giant chain stores operating in Poland; as of 2011, we are launching a program to revive Polish local markets. Traditional bazaars, present in Poland for centuries, will be redeveloped, while maintaining all the sanitary and quality standards required by the EU. We want farmers to be able to sell products processed at their farms directly to consumers. The program will be co-financed from EU funds, while local governments interested in these subsidies will have to guarantee that for five years no middlemen will be allowed into these farmers’ markets.

Poland has long been looking for a trademark that people around the world would recognize; do you think Polish food could be that trademark?
It definitely plays that role already, even based purely on its share in exports. Our agricultural potential is certainly great and it can develop even further. But it would be wrong to think agricultural production can be speeded up like the manufacture of cars or buttons. Industrialization of agriculture is the wrong way to go. It is important to develop Polish agriculture and farming production so as to preserve the unique traditional product quality and flavors but at the same time to gain new consumers. Over the last seven years, since Poland joined the EU, this policy has been followed—with success.
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