Poland: agricultural news week 1

In the first agrinews this year read about boom for diet catering in Poland, rising prices on eggs, and problems with financial liquidity in the Polish agri food sector caused by the pandemic. You can also read about unfair retrospective discounts in the Polish retail chains.

Wishing you a New Year filled with new Hope, new Joy and new Beginning,

Agri Team in Warsaw

kleurrijke salade met kaas en olijven en tomaten
©Murawska

Diet catering booming in Poland

In 2017, 350 companies providing dietary meals to our homes were operating in Poland. In 2019, there were already 650 such companies. Catering companies in Poland carry out 100,000 deliveries every day. And the average monthly cost of such a diet is about PLN 1,200 - this is what the report prepared by Pomelo Catering shows. A lot has changed in this sector also during the pandemic: the weakest players have dropped out, and the leaders are consistently solidifying their position and are doing really well despite the pandemic.

Pomelo Catering estimates that the dietary catering market in Poland is the largest in Europe. Currently, it is worth about PLN 1 billion. Only 5 years ago, there were only a few companies on the market that provided this type of service. Today, there are 650 of these entities. The market is developing very dynamically. On the other hand, the demand for these services is constantly growing. Pomelo Catering grows almost 100% year on year. But the entire industry is also growing at this, maybe a bit slower pace, and the market is still not saturated.

Source: Puls Biznesu

euro and Polish zloty
©A.Murawska

Payment problems in the agri food sector

The COVID-19 pandemic is showing its impact on the agriculture and food industries. The Payment Practices Barometer survey shows that the value of delayed B2B invoices issued by Polish companies from the agri-food sector almost doubled. Moreover, the waiting time for the payment of receivables resulting from overdue invoices was extended in the Polish agri-food sector to an average of 20 days (such a result was declared by 40% of respondents). On the other hand, 91% of respondents stated that the receivables turnover ratio (which tells about how many days cash is frozen in receivables) increased by 10% or more for them. For the industry as a whole, it is an average of 154 days, while the average in Eastern Europe is 103 days.

As many as 62% of agri-food entrepreneurs admitted that the pandemic had a negative impact on their revenues, and 55% said that the current situation was negatively affecting their cash flow.

To protect the company from a lack of liquidity, 47% of entrepreneurs had to delay payments to their suppliers, and 37% were more involved in enforcing the payment of unpaid invoices.

Source: Puls Biznesu

banner of UOKIK on their procedures towards unfair practices of Polish retailers
©UOKiK

UOKiK initiated proceedings against retail chains suspected of applying unfair retrospective discounts

The Office of Competition and Consumer Protection (UOKiK) initiated investigation procedures towards Kaufland Polska Markety, Eurocash and SCA PR Polska (Intermarche). The objections concern, inter alia, the retrospective fixing of discounts and commercial conditions in relations with suppliers of agri-food products. Jeronimo Martins Polska, owner of Biedronka stores, has recently been fined for similar practices (see here).

Retrospective discounts (retro discounts) refer to purchases made in the past. They are used in relations between retail chains and suppliers of agri-food products. There are different systems of granting retrospective discounts. In some situations, a supplier signing a contract is not able to determine the value of the discount they have to grant to the retail chain and on the basis of which criteria. Such activities may be recognised as prohibited action of the dominant party to the agreement, constituting an unfair leveraging of contractual advantage.

Jeronimo Martins Polska, owner of Biedronka stores, has been fined for similar practices. The President of UOKiK also verifies discount policies applied by other retail chains. The first effect of the analysis has been to initiate three explanatory proceedings which concern companies: Kaufland Polska Markety, Eurocash (organiser of numerous chain stores, including ABC, Delikatesy Centrum, Lewiatan, Gama, Groszek and Euro Sklep) and SCA PR Polska (company responsible for purchases in the Intermarche chain).

Following the preliminary findings of the Office, it was recognised, inter alia, that entrepreneurs conclude agreements with suppliers of agri-food products for a given year with a delay - in such situations the agreements are retroactive in force. Suppliers may therefore be unfamiliar over a long period of time with the conditions under which they supply agri-food products to the chain. In addition, there may also be situations where suppliers are charged with additional discounts not provided for in the original delivery contracts.

Source:  UOKIK

eggs
©A.Murawska

Bird flu affects egg prices

Wholesale egg prices are rising due to the bird flu in Poland. In the opinion of industry analysts, this will not translate into their growth in retail - the latest report of the Polish National Chamber of Poultry and Feed Producers shows.

The number of laying hens liquidated in Poland in recent weeks due to official control of avian influenza reaches two million. The reduction of the number of laying hens is also taking place in other European countries. The actions of the veterinary services reduce the supply of eggs on the wholesale markets, which results in price increase.

Psychological factors are also important. Egg processing companies- fearing the further spread of the avian influenza virus- increased their orders, which put additional pressure on prices.

Contrary to popular opinion, it is before Christmas and not before Easter that the most eggs are sold in shops each year.

However, in 2020, the increased pre-Christmas demand did not raise the retail prices of eggs. Store customers should also not be afraid of increases related to bird flu

Poland is the sixth largest producer of eggs in the European Union, with a 9% share in the total EU egg production. In 2019, 648 thousand cars were produced in Poland tons of eggs. Over 30% of the production goes for export.

Source: Puls Biznesu