Poland: agricultural news week 46
In our latest agrinews many Covid 19 related content. Read about poultry, fruit and vegetables and future of food sector in Easter Europe according to Deloitte.
Covid 19 may led to lowering production in poultry sector?
If the crisis is to last longer, the industry might need to reduce production, because there will be too much meat according to president of SuperDrob - big poultry company in Poland who expressed his views during the session "Condition of the meat industry - who lost, who gained?" as part of the Online Food and Trade Forum.
Poland produces 200 thousand tons of poultry per month, half of which is exported. Due to Covid-19 HoReCa sector in many EU countries is closed, and this concerns not only restaurants but also canteens in schools and universities. In Western EU countries people are used to eat outside more than in Poland. Therefore, lower demand for poultry meat from Poland (lower export demands), and also lower consumption in Poland, causes perturbations for the sector and the worst - unpredictability. It is unknown how long the closure will continue and this raises difficulties in business planning for the next 4-5 months. Decision about what to produce in March, companies need to make today. If the crisis is to last longer, the industry might need to reduce production, because there will be too much meat.
Second wave of Covid 19 in fruit and vege sector
The economic impact of the second wave of the COVID-19 pandemic is uncertain. The high number of infections and new restrictions will certainly affect consumption, difficulties in exports and thus the functioning of the fruit and vegetable sector.
In the first weeks of the coronavirus crisis, consumers in Poland showed a very strong demand for fresh products. During the summer and early fall, demand stabilized. Unfortunately, in the context of the mounting economic crisis, the pressure on prices at the retail level is increasing, which will certainly affect the sector. Consumer demand for fruit and vegetables, in particular for premium categories, organic and local products, may change unexpectedly, threatening the economic stability of entities.
Since the beginning of the pandemic, the sector has been facing many additional costs - sanitation and equipment, rising transport costs, and packaging costs. Another big problem is the shortage of seasonal workers. The active quarantine model, used- among others- in Poland, allows to continue work. Despite to strict sanitary rules, in Poland are observed numerous quarantines and diseases among seasonal workers. The lack of workers can in the future affect nurseries and orchard maintenance.
Even if those costs will be partially covered by higher demand for fruit and vegetables, it is still risky for the sector on the moment the consumption will lower and with high price pressure.
The situation of the HORECA sector will have a big impact on the vegetable operators supplying this channel. So far, the Polish government has focused on the service sector itself, i.e. restaurants, bars and hotels. But restrictions on services, closures of gastronomy, reduction of wholesale sales also have consequences for the fruit and vegetable sector.
Covid19 will fasten changes in the agri food sector in Eastern Europe
During the COVID-19 crisis, the agri-food industry proved to be one of the most resilient to a difficult situation. However, the shock of the pandemic required remedial action and accelerated the development of trends previously observed in the sector - such as digitalisation, more informed consumer choices and preferences for local products. – can be read in the report "Food Foresight: Impact of COVID-19 on the agri-food sector in Central and Eastern Europe" prepared by EIT Food in cooperation with the consulting company Deloitte.
Agri-food entrepreneurs in the region of Central and Eastern Europe should be able to count on the support of their governments, due to the great importance of their activities on the economic growth of countries - more important than in Western Europe.
The COVID-19 pandemic affected all sectors of the economy, and the crisis caused by it became a global test of immunity, including for Central and Eastern European countries. Despite continued growth and a stable environment, the agri-food industry has also suffered, although not as much as other sectors. In this part of Europe, food production fell in April by just 13% year on year.
The agri-food industry (including food trade and gastronomy) in Central and Eastern Europe has recorded a nominal increase in value added since 2005, with agriculture growing by 3% annually and food and drink production by over 4% annually. Food and drink production in the region has been the most stable segment of the manufacturing sector since the start of the pandemic. The weighted average output of GDP in July corresponded to 101% of the production in the same month of the previous year.
The Polish agri-food industry occupies a unique position in the region. Despite the fact that Poland is the largest country in the region and has strong domestic demand, it is also one of the largest exporters of food and beverages. In 2005, the export of food, beverages and tobacco products accounted for only 2.7% of Polish GDP, and in 2019 it was already responsible for 5.6% of the country's GDP. Poland is the second largest exporter in the agri-food industry, apart from Latvia, which is more dependent on exports.
According to experts from EIT Food and Deloitte, support mechanisms for the sustainable reconstruction of the agri-food industry should in the future become support mechanisms, such as maintaining remedial measures and supporting a balance between the desire for protectionism, stability and the need for reconstruction. Any action to contain or combat a pandemic must be based on a transparent and consistent assessment of its economic impact. Lawmakers must ensure that they properly identify and respond to threats that may disrupt local markets and international trade.
The European Green Deal should not be seen only as a challenge that Central and Eastern European governments and agri-food markets have to cope with, but as an opportunity they are facing. It is necessary to further develop the region's transport infrastructure, which will contribute to the acquisition of new markets, drive the growth of companies from the SME sector and thus improve the scale of the industry's operations. Finally, in response to the changing preferences of consumers, it is also necessary to undertake marketing and promotional activities of agri-food companies. - was the conclusion of the report.