We see the most growth potential for the livestock sector in Poland owing to increased export potential to the EU and Asia. The livestock industry in the country is relatively price-competitive compared with industry majors such as Brazil and the US, but it does not necessarily have the right export networks and infrastructure to rival these countries. We believe a law prohibiting kosher beef production, the horsemeat scandal and recent quality concerns in the beef industry will limit growth potential in the beef sector, but poultry and pork are likely to continue to perform strongly. For grains and sugar, we see growth potential limited by the recent U-turn in the EU's biofuels policy, which restricts the amount of food crops to be used in the production of ethanol.
- Wheat production growth to 2016/17: 4.2% to 9.7mn tonnes. The EU's Rural Development Plan 2007-2013, for which Poland has a budget of EUR17.2bn, has encouraged consolidation, modernisation of agricultural holdings and infrastructure improvements in the country's grain farms. Increasing international investment will also play a role.
- Beef consumption growth to 2017: 8.2% to 183,600 tonnes. Over the past decade, beef consumption has declined rapidly in the wake of bovine spongiform encephalopathy and with consumers believing that poultry is a healthier choice. The horsemeat scandal, as well as recent quality concerns, could affect consumption growth over the long term, and we have revised down our forecasts out to 2016/17.
- 2013 real GDP growth: 1.2% (down slightly from an estimated 2.0% in 2012; predicted to average 2.7% over the period 2012-2017).
- Consumer price inflation: 0.5% year-on-year (y-o-y) on average for 2013 (down from the 4.1% y-o-y estimated for 2012).
- BMI universe agribusiness market value: 0.8% y-o-y increase to US$15.2bn in 2012/13, forecast to increase on average by 0.5% annually between 2011/12 and 2016/17.
Revisions To Forecasts:
- Wheat 2013/14 production revised down from 9.6mn tonnes to 9.3mn tonnes because of historical revisions and base effects. Also, wheat prices will be lower.
- Corn 2013/14 production revised up from 2.7mn tonnes to 3.1mn tonnes based on the latest official estimates.
We have revised down our wheat production forecast for Poland in 2013/14 after the latest official estimates showed only a slight increase in plantings and yields. We now forecast wheat production to reach 9.3mn tonnes in 2013/14 (compared with 9.6mn tonnes previously), an 8.0% rebound from 2012/13 levels. We expect a recovery from 2012/13 because weather conditions during winter crop growing were favourable, while high prices during plantings encouraged investment in the crop. Still, we have turned less optimistic about the wheat crop, as heavy rains in June caused damage to the crop in the south-western part of the country and increased the risks of fungal disease in the wheat fields.
A recent vote from the country's constitutional court to ban kosher beef production, followed by a rejection by the parliament of an amendment to restore the practice, is dealing a significant blow to the country's kosher beef industry. Kosher beef production and exports have been booming in Poland in the past five years, as the country has looked for new markets to sell its beef in a context of falling consumption in the rest of Europe and increasing competition with South American producers for major markets. The country, because of its large Jewish community and its cultural and historical ties to Israel, had been particularly well placed to sell its kosher beef in the country and the rest of the Middle East.
We have revised down our forecast for sugar production in the EU in 2013/14, from 17.2mn tonnes to 15.9mn tonnes, as planting growth in the bloc has been subdued, especially in Germany. We believe the lower plantings were a result of farmers favouring more competitive crops, especially corn and wheat, for which tight markets encouraged extensive growth in planting. Member states that found themselves with significant quantities of sugar unsold at the end of 2012/13, due to out-of-quota volume remaining on the domestic market, are experiencing the sharpest decline in planting growth in 2013/14. For example, farmers in Germany are expected to decrease sugar beet acreage significantly in 2013, with smaller decreases forecast in Poland, Romania and the United Kingdom. In contrast, Italy is forecast to increase its sugar beet acreage. Yields across the region are expected to improve in 2013/14, as 2012/13 saw yields average lower because of unfavourable weather conditions during plantings. However, yield increases will be insufficient to take EU-27 production growth to more than 1.9% y-o-y in 2013/14.