Poland

General Situation and Outlook

It is estimated that Poland's red meat output will grow six percent in 2003. The increase stems from the expected higher output of pork which will offset lower production of beef. High pork output in 2003 resulted from low feed costs in 2002 and the first half of 2003. Feed costs are expected to grow in the second half of 2003 and in 2004 due to an estimated four percent decrease in the domestic grain crop this year and reduced grain stocks from last year.

Polish exports of pork will likely increase in 2003 due to higher output, record governmental stocks and the export subsidy program introduced by the Government of Poland (GOP). The U.S. is expected to remain a major supplier of beef tripe to Poland in 2003 as well as small amounts of high quality beef steaks and pork hams for processing.

Poland will join the European Union in May 2004. However, according to the Polish Veterinary Service the new health certificates for red meat and poultry meat will be implemented as of December 1, 2003 or January 1, 2004.

Implementation of new health certificates similar to the health certificates used in the EU are required by the EU in order to harmonize border inspection in Poland prior to actual accession. Implementation of new health certificates will practically ban imports of U.S. beef, pork and poultry meat.

Polish red meat production is expected to decrease by four percent in 2004. The decrease will stem from reduced output of pork caused by lower inventories and slaughter expected in the second half of 2004.

Swine

The current situation on the pork market is created by several price depressing factors: an increase in pork output in the first half of 2003, record pork stocks, a duty free import quota for pork imported from the EU and substitution of pork by low cost domestically produced poultry meat by some consumers. Expensive feed-grain may hamper hog production in the second half of 2003 and in 2004. As a result, by the end of 2004, Poland may face shortages of pork. In the first six months of 2003, Poland faced severe oversupplies of pork. The hog cycle peaked early this year resulting in record pork stocks, lower farm-gate prices for hogs and farmer protests requesting government intervention on the market. Pork remains the primary meat produced in Poland. In the second half of 2003, pork production is expected to continue to grow due to high swine inventories. However, growing feed-grain prices and stocks, as well as a four percent decrease of 2003 grain output, are expected to reduce hog inventories into next year. Hog slaughter and pork output is expected to increase in 2003 and decline in 2004.

In 2003, pork consumption is expected to increase because of lower prices resulting from growing output. It is estimated that in 2003 average per capita consumption of pork will amount to 40.0 kilograms compared to 39.2 kilograms in 2002. By comparison, it is estimated that in 2003 average per capita consumption of beef will amount to 5.0 kilograms compared to 5.2 kilograms in 2002 while consumption of poultry meat is expected to rise from 19.8 kilograms in 2002 to 21.0 kilograms in 2003.

This is the seventh consecutive per capita poultry meat consumption increase.

Trade - Imports

In 2002, Poland increased imports of U.S. pork, mostly hams for processing and re-export to the United States. In 2003, pork imports are expected to decrease due to higher domestic output and large pork stocks. However, Danish and Dutch pork remains competitive on the Polish market due to a duty free quota for the EU. Exports of U.S. pork may be in jeopardy when Poland joins the EU. According to information received from the U.S. Meat Export Federation, the EU allows for imports of pork only from U.S. plants eligible for export to the EU. Introduction of EU health certificates and import regulations at the end of 2003 by Polish veterinary authorities may eliminate most U.S. pork supplies from the Polish market.

Poland maintains a duty free import quota for 34,500 tons of pork imported from the EU. The general import quota for pork in 2003 is 46,480 tons (HTS 0203) which could be utilized by all exporters including EU countries should they fulfill their duty free quota. The within quota tariff is 30 percent and applies to all countries including the EU. The overquota tariff is 76 percent plus a maximum 0.9 EUR/kg. Poland's live hog imports are comprised mainly of breeding hogs from France and Canada.

Exports

It is estimated that exports of pork and pork products in 2003 will increase because of record government stocks, higher output and a government export subsidy program. The trade liberalization agreement between Poland and the EU also opened a duty free quota for Polish pork exports to the EU amounting to 45,000 tons annually. Exports of pork in the first five months of 2004 will be at the high level in order to reduce governmental stocks. According to the Institute of Rural Economics, Poland will be obliged to enter the EU in May 2004, with pork stocks at a below 30,000 tons. After May 1, 2004, Poland will follow the EU’s rules on pork exports. As a result, Polish exports of pork are expected to decrease after EU accession. It is unclear whether after EU accession Poland will have to comply with all EU export regulations, especially meat plants which will be granted transition period to adjust to the EU sanitary requirements.

Exports of canned hams to the United States in 2003 are expected to remain at 2002 level. Canned hams and shoulders exported to the United States are produced in USDA-inspected plants and are generally of higher quality than available on the domestic market. Poland currently is only approved to export cooked and sterilized pork products from USDA inspected plants to the United States. It is also currently seeking U.S. Government authorization to export fresh pork products to the United States.

Red Meat Market Interventions

During the first four months of 2003, the Agricultural Market Agency (AMA) of the Ministry of Agriculture (governmental agency responsible for market intervention) procured 79,600 tons of pork from farmers. During the same period, sales from AMA stocks amounted to 34,400 tons. The intervention price offered by the AMA increased twice in February and March 2003 as a result of farmers protests. The AMA is expected to procure total of 120,000 tons of pork through intervention in 2003.

In 2003, the AMA will continue to allocate export subsidies for pork exports. During the same period, export subsidies will be allocated at a subsidy of 2.3 zlotys per kilogram ($.62). Until May 1, 2003, importers submitted requests to export 40,900 tons of pork with the AMA subsidy. This fulfills the Polish WTO allocation on pork exports with governmental subsidies. From January 1 until March 31, 2003, the AMA sold 25,000 tons of pork halves and pork products for export. In April 2003, demand for pork from AMA stocks dropped to 2,000 tons due to import limits introduced by Russia.

In the first quarter of 2003, the AMA sold 6,700 tons of beef quarters for export and sold 1,300 tons at the domestic market. These sales depleted AMA’s beef intervention stocks.

Impact of Poland’s EU accession on U.S. exports of livestock and animal products.

There is a chance that Poland will seek, as was the case with Spain, continuation of imports of beef tripe from the United States. Exports of U.S. origin animal genetics, mainly bovine semen and embryos will continue. U.S. exports of animal origin products will have to meet the same requirements/barriers as they currently do for export to the EU.

Poland’s EU accession in May 2004 will have detrimental effect on U.S. exports of livestock and animal products. Introduction of EU health certificates and veterinary regulations planned 6 months prior to actual accession will practically ban exports of U.S. live cattle, beef, pork and offal.

Further Information

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