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The Warsaw Voice » Special Sections » March 29, 2012
Polska... tastes good!
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Polish Food Producers Eye Distant Shores
March 29, 2012   
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The vast majority of Polish food exports end up in European Union countries. But a growing number of food producers are seeking to sell their products outside the EU. Polish food is highly valued in many countries. The best proof of this is the continued growth in Polish agri-food exports, which were last year worth a record 13.8 billion euros, or 12 percent more than in 2010. Poland recorded a food trade surplus of around 3 billion euros in 2011.

Such a surplus is important in Poland’s foreign trade balance. Food exports have a positive impact on many sectors of the agriculture and agri-food industry. In 2011, exports accounted for around 30 percent of the food industry’s output.

A key factor that pushed up Polish food exports to European markets was Poland’s entry into the EU in 2004. Opponents of EU entry warned that Poland would be flooded by food from Western Europe. But the opposite proved to be true. Since Poland’s EU entry, Polish agri-food exports tripled and food now accounts for around 11 percent of the total value of Poland’s exports.

The increase in trade was possible thanks to the removal of customs barriers and Poland becoming part of the EU Common Agricultural Policy. The EU is the main market for Polish food. In 2004, 70 percent of food exported from Poland went to the EU. By 2011, this had increased to over 75 percent. Before 2004 Poland exported mainly red meat—pork and beef—as well as poultry and offal. At present, confectionery, meat and meat products, and fruit preserves are Poland’s most important agri-food exports on the EU market.

Polish food producers export their products mainly to neighboring countries and to large European markets: Germany, Britain, France, Russia, the Netherlands and Italy. But research conducted by the Agriculture Ministry shows it is useful to maintain trade relations with large, distant countries to ensure stable sales.

“The nearest markets are natural ones for Polish producers. Agri-food products are easily damaged during transport and their prices depend to a large degree on fuel and transport costs,” Agriculture Minister Marek Sawicki said in an interview for the portalspozywczy.pl service. “If we have good partners nearby it is worth trading with them. Germany and Russia are the main partners, generating more than half of our trade surplus. The decision here rests with entrepreneurs – no one will be encouraging them to trade with a region where exports are unprofitable. But in order to stabilize sales it is worth maintaining good relations with large, distant markets, like China, Japan, Vietnam and South Korea, even if they offer lower profitability. In this case, if there is any crisis or perturbation on the European market, we have a backup strategy and an opportunity to sell more products on more distant markets.”

Research conducted by the Market Research Department at the Institute of Agricultural and Food Economics (IERiG¯) shows that a change trend which began in the second half of 2010 in Polish foreign trade in agri-food products continued in 2011. The process of diversification of export and import markets intensified as Polish exporters sought new sales opportunities and importers sought new supply markets.

The proportion of Polish exports going to the CIS and developing countries rose at the expense of EU and other developed countries.

Research also indicates that the 27 EU countries remained Poland’s main trade partners, accounting for around three-quarters of the total turnover. Changes in the geographical breakdown of exports prove that domestic exporters, in response to the continuing economic problems in developed countries which are Poland’s main trade partners, are looking for new markets so as to diversify their sales. This is reflected in the diminishing share of developed countries in Polish food exports, and a growing share by Eastern and developing markets where, in contrast to previous years, sales of Polish food are on the rise.

Participants in the 10th Conference of Agri-Food Exporters, held in Warsaw in late February, pointed to the need to boost activities aimed at diversifying export markets for Polish food.

“We have prospects for expansion. We are looking for new trade partners on Far Eastern markets. High quality is a measure of Polish products’ success, but effective promotion is also important for us to keep our position on existing markets and win new markets,” deputy Agriculture Minister Tadeusz Nalewajk told the conference.

There is every indication that Polish food exports will continue to expand. “If nothing extraordinary happens internationally Poland will maintain a positive balance in its agri-food trade until at least 2020,” said Prof. Andrzej Kowalski, director of IERiG¯. “This does not mean, however, that there are no risks. We are competitive because we offer the world goods attractive in terms of price. This is slowly changing. Producer prices of agricultural products, labor costs and energy prices are going up and we are steadily losing our competitive advantage. This is why it is so important to consolidate the food industry, an effort which, unfortunately, has been hit by problems. Poland’s largest agri-food companies are medium-sized at most compared to their counterparts in highly developed countries.”

Participants in the conference stressed the need to significantly change the way in which Polish businesses operate on Eastern markets. There are three factors which determine the prospects for expansion on Eastern markets: potential, demand and supply. Those attending the conference argued that in order to cope successfully with growing competition it is necessary to maintain competitiveness in terms of price and quality while at the same time improving product innovation.

The fact that more than 10 Polish meat-processing plants have successfully passed checks by Chinese veterinarians is a good signal for the expansion of Polish food on Eastern markets because it means in practice that Polish exporters are allowed to sell pork in China. Now, Polish veterinary services are trying to ensure that Japan and Indonesia also open their markets to Polish products.
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