Shake-out begins for Poland’s 1.9m farms
POLAND was the bogeyman for agri-food industry opponents of EU enlargement. Europe’s ninth largest country, with hardly a hill to break the landscape of its broad plains, it has the potential to again become the continent’s granary - and its abattoir, dairy, and vegetable garden!
Irish dairy co-op chiefs say it will lead the stiffer competition which will drive down European prices.
Already, they are finding it harder to export to the Continent, where buyers have been taking as much cheap Polish dairy produce as they can get their hands on.
Meanwhile, cheaper cattle from Poland have dented the demand for Irish calves, and for a while now, mushroom growers have suffered from the market upset caused by huge volumes of Polish produce coming onto the German market.
However, Poland’s EU entry was welcomed by countries like France and Ireland, whose governments realise that generous farm subsidies from Brussels are guaranteed to continue, when Poland’s near 2m landowners join the EU family. Other optimists see Poland’s population of nearly 40 million as a huge market for quality Irish food. And Irish farmers who became frustrated by the “closed shop” in Irish farming see the possibilities of investment in some of Poland’s 16.9m hectares of attractively priced farmland.
For 45 Irish farmers, the Polish picture is now clearer. These members of the ICMSA’s National Council joined a study tour in the country recently. Four days and 600 miles of touring later, some of the myths had been exploded.
They visited seven dairy farms. They were briefed by Brown and Co, a UK-based land agency helping investors in Polish farmland, and by Janusz Rowinski, an adviser to the Polish Ministry of Agriculture. The farmers were also briefed by representatives of Allied Irish Bank, sponsors of the ICMSA trip, and a leading provider of banking services in Poland.
The Irish visitors were made welcome; throughout eastern Europe, Ireland is the role model for successful EU membership. There are historical and religious similarities: Poland is 95% Roman Catholic; only Ireland and Italy have larger church attendances.
In the 19th century, about one fifth of Poland’s 20 million people emigrated, mostly to the USA. At home, four million Poles had succumbed to war, famine and plague, as Russia, Prussia and Austria pillaged the country. The emigrants escaped the hammer-blows of two World Wars and the following years of socialist repression. However, the communist system from 1945 to the late 1980s usually guaranteed jobs for all, and more or less equal pay.
Now, unemployment is a relatively new and worrying experience in Poland, averaging 20% , and rising to 40% in the job black-spots in the north east.
Even newer is EU membership, since last May.
Where do farmers fit in this brave but challenging new world? Daniel Piotrowski milks 80 cows near the town of Wegrow, about 50 miles east of Warsaw.
He supplies Hochland, a German company with a plant in Wegrow, which was paying e1.22 per gallon in August.
Milk production is the star enterprise in Polish farming, with the milk price rising steadily as Germany, France and Denmark line up to buy Polish dairy products which are 20% cheaper than average prices in the EU-15.
Dairy farmers have performed well to get 80% of their milk up to the EU hygiene standard, but the secret of the industry’s export success is the low wages of its processing workers, in a country where the average wage is only €550 per month.
Polish wages are likely to remain low for some years. Not far from Daniel Piotrowski’s comfortable farmhouse and well equipped farm, many of the people of Wegrow live in cramped apartment blocks. The town lost 3,000 jobs recently, when Siemens of Germany took over the local electric equipment factory and closed it down.
All over Poland, urban unemployment is the priority for the government. Agriculture Ministry adviser Janusz Rowinski says it will take a few generations to create a modern efficient agriculture, because there are more pressing calls on government funding, and Warsaw is slow to put up the matching funds which would allow the country to maximise the benefit of EU rural development funding.
Farmers are a politically important sector in Poland, not surprising when 18% of the population works in farming, and almost every family in Poland is connected to farming. However, agriculture is only 2.9% of Polish output. Farmers have also been appreciated for their low input tradition, which provides a nearly organic supply of food for the country’s 40m population. There has also been a long tradition of summer holidays spent in rural villages, which narrows the urban-rural gap. But politicians are under severe pressure to look after the needs of the country’s 2,113,000 urban jobless, and rural Poland may have to become a commuting society, says Janusz Rowinski, unless the poor rural infrastructure and low education levels can be overcome, so that small enterprises can be located in the countryside, where 1,050,000 are registered as unemployed.
Poland had its first democratic elections in 1989, and its novice politicians, newly released from the socialist system, have made numerous mistakes, ever since working class hero Lech Walesa’s troubled presidency started in 1990.
Corruption in politics remains a constant theme, and the country’s shockingly low European Parliament turnout of voters, only 21%, indicated that the Government cannot afford too many more wrong moves.
Brussels, too, is conscious of the need to move slowly and carefully in its new eastern member states. That’s why direct aid to farmers is being phased in over 10 years.
EU Agriculture Commissioner Franz Fischler said 100% aid from the start would boost average farmer earnings to more than double the average national wage. “This would undermine incentives towards labour restructuring in countries with small farm structures, and would create social distortions and inequalities.” Enlargement will not be a success if farmers in the East see their incomes jump (at least until the cost of land and farm inputs catches up) but at the expense of hard times for hundreds of millions of eastern consumers, who have been through more than enough trauma over the past 14 years.
Nevertheless, milk producers in Poland’s best dairy farming areas are already matching, if not exceeding, Irish dairy incomes, says Adam Oliver of estate agents Brown and Co.
These farmers are the exception in a country with 1.9m landowners, 53.5% of whom have less than 5 hectares.
In the south and east, there is little “real” farming, landowners only produce for their families, “strip” farming a few acres each, frequently still horse-powered.
Poland has only one eighth of Denmark’s farming productivity, and the Government expects there can be only 250,000 to 450,000 viable long-term farmers.
In the first two days of the offer of EU farmer retirement pensions, 3,945 farmers submitted applications and around 50,000 took the forms to fill out. Participants must be aged more than 55 years and must give up their land. With funds sufficient only for 100,000 farmers to take up the offer in Poland, Warsaw will ask Brussels for additional funding.
Poland’s best farms are west of the centre, land quality deteriorates to the east. The country has 35% “poor” soils, and of Poland’s 16.9m hectares, 2.3m are unused.
One of the government’s aims is to increase forests to 30% of the land area; they admit this will take many years.
Before joining the EU, farming in Poland was getting 15 to 20% subsidisation, less than half the EU level.
The national farm advisory service is free of charge, and nearly every big town has a farming technical secondary school, but many of them can’t get students, because farming careers are not attractive. Average fertiliser used is estimated at only 93kg of N per ha. Fertiliser is cheaper than in the EU, but the price difference will level out quickly.
Dairy farmers have increased average yields from 3,000 litres (659 gallons) per cow in 1990, a to 4,000 litres (879 gallons) now. Even they were not confident about joining the EU, fearing a flood of food imports, but that is changing to the opposite view now, because imported foods are so much more expensive than local produce.
“The Poles did not get as good a deal as the Irish”, says farmer Jan Tomaszevsky, who sees no big gain yet since Poland joined the EU last May.
Realistically, he is well placed, as one of the country’s better farmers, with his 24 cows averaging 4,700 litres (1,033 gallons). Owning 14 hectares and leasing 16 hectares for his 40 cattle, he recently bought 19 purebred in-calf heifers (Costing €1,000 to €1,500, some came from Slovakia, some from Poland).
Jan qualifies for extra milk quota because has a farm business plan in place, and will get up to 5,000 litres per cow (1,100 gallons) for the 19 new heifers. That’s good news for him and his wife, who is a teacher; she, and a brother-in-law, help Jan with the farm work. They are getting a good milk quota deal, but Poland as a whole got a raw deal.
Poland looked for a milk quota of 13.74 million tones, the EU proposed 8.8m, the result was 9.38m.
In next week’s Farming: are there still bargains for farm buyers in Poland?
