Poland Agribusiness Report Q3 2016 - New Report Available

Milk prices have remained low into Q116 , but production in Poland has increased regardless as dairy farmers take advantage of the end of the quota scheme. The Polish government is lobbying for EU support on behalf of the dairy industry; however, in the long ru n , it will take the exploitation of overseas markets to secure the future well - being of the sub-sector. We are less optimistic about the sugar segment , which will struggle to increase yields sufficiently to thrive in the post-quota environment. Grain yields will fall sharply on the back of the drought in s ummer 2015 , but our longer- term view is for improved farming practices to continue to boost output per hectare. The livestock segment ha s adjus ted well to the fallout from Russian sanctions and the outbreak of African swine fever. We are confident that pork and poultry producers will enjoy export-led growth , supported by domestic and foreign investment , although low prices remain a concern for pig farmers.

Key BMI Forecasts

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Wheat production growth to 201 9 / 20 : -4.7 % to 1 1 . 1 mn tonnes. Negative output growth is attributable to high base effects and low prices. We nevertheless expect to see improvements in yields.

Pork consumption growth to 20 20 : 3.6 % to 1.8mn tonnes. As a staple of the Polish diet, demand for pork is quite inelastic, but rising incomes and low prices early in the forecast period will support modest demand growth.

201 6 real GDP growth: 3. 9 %, up from 3.5% in 2015.

2016 c onsumer price inflation (ave) : 0.6 % y-o-y , up from -0.4% in 2015.

Latest Updates And Structural Trends

The EU opened a new private storage aid scheme for pork on January 4, but member states voted to close the scheme within a month. This was partly because the optimal amount for storage (around 90,000 tonnes) had already been reached by the end of January and partly because the EU Commission saw evidence of recovering pork prices. Poland did not support the ending of the scheme, which reflects the pressure domestic producers are under due to the collapse in prices.

The EU has opened a new private storage aid scheme for butter and skimmed milk powder effective January 1 to September 30. Unlike the previous expired private storage scheme, cheese is not included. The measures have been put in place in response to the collapse in dairy prices on the back of global overproduction and the Russian ban on EU dairy imports. A limited quantity of the dairy products can be purchased by processors at a fixed price, while the remainder will be subject to a competitive tendering process.

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