Poland Looks Forward to EU Farm Support Review

Major beneficiaries of their country joining the EU, Polish farmers are eagerly awaiting the launch this week of a review of the Common Agriculture Policy for changes allowing them to tap growing global demand and prices. Before Poland’s accession in May 2004, farmers were hesitant or even hostile to joining the EU, helping propel anti-EU parties into power, but after three years in the bloc they have largely seen their hopes fulfilled.

Pocketing around 2.5 bln euro ($3.7 bln) in aid from the EU and their government last year, Polish farmers have seen their revenue and ability to invest grow. “At the same time the darkest scenarios like an invasion of European products into Poland haven’t come to pass,” said Andrzej Kowalski, a researcher at the Economy and Agriculture Institute. According to a study by Eurotat, the EU’s statistical agency, the income of Polish farmers jumped 80.7 percent on average in 2006, compared to average growth of 12.1 percent across the 27-member EU.

In addition to direct aid, Polish farmers have also benefited from rising worldwide prices for agricultural products including grain, meat and milk. Export of dairy products has nearly tripled since 2003 to reach an estimated 1.1 bln euro this year. Milk production is one of Poland’s agricultural strengths. Spurred by purchases from international groups such as
France’s Danone and Germany’s Hochland, Polish farmers rapidly improved the quality of their milk to attain European standards before enlargement. But while they like the subsidies, the experience of dairy farmers has soured the country on the production limits of the EU’s Common Agricultural Policy (CAP). With ready demand for their products, Polish dairy farmers immediately hit their milk quota that came into force at EU entry.

With production capacity of around 12 mln tons per year (serving strong domestic consumption), Poland received for its first year in the EU a quota of just under 9 mln tons, or one third of that received by France. The quota has risen to only 9.4 mln tons this year. Before the big-bang enlargement of 2004 the rapid growth in demand and prices for milk products was not foreseen and the old members of the bloc sought to protect their farmers by allocating low quotas to new members.

One of the main hopes of Polish farmers from the European Commission, which kicks off Tuesday its “health-check” of Europe’s generous farm support system, is for a quick relaxation of the CAP’s production limits. Polish dairy farmers hope for a rapid rise in their milk quotas to take advantage of booming global demand as the production limits are due to be phased out by 2015 anyway.

“The Polish agriculture sector is capable of producing much more milk and increasing production very quickly,” said Wladyslaw Serafin, President of the Association of Polish Farmers. “Moreover, the milk is of excellent quality.” Kowalski agreed, saying “Poland has all the conditions for increasing milk production, including natural conditions, that is to say free pastures and specialised farms.”

Poland’s production potential is also boosted by the small average size of the country’s farms at under seven hectares (17 acres) due to a largenumber of remaining tiny subsistence farms.
An acceleration of the rural exodus, which hasn’t really taken place yet in Poland, should provide the opportunity for consolidation and improvements in farming efficiency.