Overview of Poland's Booming Food Processing Sector

6 Jan - The food processing and catering industries in Poland are increasingly interested in importing processed fruits and vegetables and baking ingredients such as baking mixes and fats.

There are over 33,000 food processing companies in Poland and the number grows each year; consumers have larger disposable incomes and are interested in quality products, so food manufacturing continues to enjoy a boom.

A product that has been imported into the EU can be transported to Poland without additional tariffs and without meeting many additional regulatory requirements. This report lists the major food manufacturers and the ingredients they use already.

MARKET SUMMARY

Poland’s economy underwent a radical transformation to a market oriented economy between 1989 and 2001. During this period, the value of food consumption in Poland, in real terms, grew 25 percent. This transition continued to 2007 as the economy expanded and foreign direct investment continued. Food consumption patterns also changed, resulting in decreased consumption of milk and animal fats, sugar and potatoes. On the other hand, consumption of fruit, vegetables, processed red meat, poultry, vegetable fats, fish, cheese, yogurt, and highly processed food, significantly increased.

The sector is varied with both domestic and international companies represented on the market. The most important sub sectors of the food processing sector are meat, dairy, and alcohol, followed by confectionery, food concentrates, sugar, fruits and vegetables, juices and non-alcoholic beverages production.

Poland’s EU accession boosted exports from the food processing industry (meat and dairy sectors) mostly to EU countries as well as to new markets located in Asia. This trend is expected to continue in the coming years. Some products are subject to new EU sanitary restrictions that prohibit their sale in Poland almost entirely, such as poultry and beef. Exporters of beef jerky need hormone free inputs.

EU membership also provides Poland with substantial financial assistance that is helping further modernization and growth in Poland. The structural development funding from the EU amounted to approximately $15 billion dollars from 2004 to 2006, with about 15 percent of the total dedicated to rural development.

Poland experienced continued strong growth in 2007 with gross domestic product increasing by 6.6 percent, but this began to slow in early 2008 with lower production and sales growth. During the latest financial crisis, costs of production have increased, and many producers lost their competitiveness on the market. Additionally, many improvements are needed in the Polish food processing sector. More investment is needed from the formal institutions responsible for the food sector’s development, promotion and organization of the processing industry needs changed, and there is no consolidation of fruit and vegetable processing institutions. These changes would improve the organization of processing, and lower costs of production. Polish producers, processing companies and salesmen are not cooperating properly. For some producers, the selling price of the item is not enough to cover the cost of producing it. If the situation does not change, there will be no chance to increase competitiveness on the open market.

Foreign trade is of high importance to the country’s economy. In 2008, the food industry has generated 14 percent of GDP while the export of food products is 20 percent of the total food production sold. Eight percent of food companies sold 77 percent of total products in the food sector. In 2007, export of food by retail chains could have reached even $600 million dollars, which would have been 4 percent of the whole value in food exports. Economic diversification is currently not a top priority for the Polish government, which means the country is at a higher risk to external shocks and global demand.

In January-April 2008, exports from Poland increased by 34.1 percent compared with the same period in 2007. This figure is due to the changing U.S. dollar-Polish zloty exchange rate as much as from increased volume of trade. The vast majority of Poland’s exports, 80.4 percent, are destined for the EU. Agricultural products account for 13 percent of Poland’s exports, with 60 percent sold to other EU members.

Foreign direct investment (FDI) fell slightly in 2007 to 12.8 billion euro from 15.1 billion euro of FDI in 2006. However, 2006 was a year of higher than average FDI, and foreign interest in investment in Poland remains strong. Poland is an attractive market and investment venue for foreign businesses. In 2007, Poland ranked 75th in the World Bank’s ease of doing business index out of 175 countries.
Imports of agricultural products in 2008 (after the second quarter) totaled about $4.9 billion, compared to $7.1 billion in 2007 (whole year). About 69 percent of total food imports originated from the European Union.

After 2 quarters of 2008 the value of agricultural products imported from the United States amounted to $131 million USD, which represented 2.7 percent of all Polish agro-food imports. In 2007, the value of agricultural products imported from the United States was estimated at $178 million USD. Imports from the United States were dominated by tobacco, poultry (primarily trans-shipments to Moldova and Ukraine) and red meat, but also included raw materials and semi-processed products, such as dairy protein isolates, tree nuts, hides and skins, processed fruits and vegetables.

Poland views the United States positively and U.S. products are considered high quality. Product that has been imported into the EU can be transported to Poland without additional tariffs and without meeting many additional regulatory requirements aside from required labeling in Polish language. Food processing and catering industries are increasingly interested in importing processed baking ingredients such as baking mixes and fats, flavors and aromas, sweeteners, food additives, food colors and enzymes. The food processing industry is developing rapidly and successfully and there is a high demand for high quality inputs.

Source: www.flex-news-food.com