Polish food sector suffers losses due to Russian embargo

Polish authorities are trying to counteract against the aggravating situation of Polish food industry, including farmers, breeders and orchard owners and the losses they sustain due to the Russian embargo.
Russia announced on Thursday last week it will ban fruit, vegetables, meat, fish, milk and dairy imports from the United States, the EU, Australia, Canada and Norway. The measures were taken in retaliation for the western sanctions against Moscow over the Ukraine crisis.
As far as Polish food production is concerned, different industries have different problems to deal with.
According to Vice President of the Association of Polish Butchers and Meat Producers, Piotr Ziemann, most vulnerable to economic losses are the meat manufacturing plants from east Poland for most of them are of small scale and entirely rely on export to Russia and other eastern countries.
Ziemann also called for attention to the deteriorating situation of producers in Russia's boarder region of Kaliningrad who mostly used to import raw material from Poland.
He said that the industry had been affected not only by the embargo, but also by the earlier restrictions on the export after the detection of African swine fever in Poland.
According to preliminary data of the Polish Ministry of Agriculture, in 2013 Poland exported to Russia pork worth 99 million euros (132 million U.S. dollars), beef more than 29 million euros, live poultry 7 million euros and edible offal 6.8 million euros.
Another industry to be hard hit by the embargo is dairy industry, especially the cheese industry. The cheese producers are currently assessing their losses and looking for new sales markets.
Last year, Poland exported dairy products worth 1.6 billion euros, out of which 10 percent was aimed at Russia. According to the Russian customs service, the value of dairy products import from Poland was 193 million U.S. dollars. Apart from cheese, main dairy products that were exported to Russia are milk, butter, cream, yogurt, cottage cheese, etc.
President of the National Association of Dairy Cooperatives, Waldemar Bros, said that 70 percent of the dairy export to Russia was cheese, so cheese manufacturers are to suffer most.
According to the Foundation of Assistance Programs for Agriculture (FAPA), due to an increase in demand for Polish dairy products in Russia, this country has become a major recipient of Polish cheese.
The milk production in Poland has been continuously rising recently. Agricultural Market Agency recently reported that in the first three months of the quota year 2014/2015, namely from April to June, the volume of Poland's milk production is about 8 percent higher than a year before, meaning that probably Poland will exceed the national limit of milk production.
According to Russia, the embargo on EU food and agricultural products is to be valid for one year. Waldemar Bros hopes that Russian consumers will pressure for reinstatement of Polish dairy products on Russian market.
However, Bros said that the industry has been actively seeking new markets for their products for several years. Many of the Polish producers will attend the next food fairs in Hong Kong, China, in a bid to to explore opportunities to export their products to Chinese market.
Director of Polish Milk Chamber Agnieszka Maliszewska also expressed wish to look for new sales markets. She said that while it is impossible for the Chinese market to replace Russian, the Chinese market is still extremely absorbent and has a huge interest in milk powder.
Polish Minister of Agriculture Marek Sawicki has announced on Monday that during Tuesday meeting with EU commissioner Dacian Ciolos, he would discuss, among others, food export to third markets and export subsidies matters.
Sawicki stressed that facing the Russian embargo, Poland cannot wait helplessly and has to look for aid. The conversation in Brussels will also concern the principles of withdrawal of the vegetables that have not been exported to Russia from the market.
A complaint to World Trade Organization against the Russian embargo has been forwarded to Polish Minster of Economy Janusz Piechocinski who is about to make a decision, according to reports.
Analysts said the exact amount of the losses that Poland can avoid is not known yet. It depends on how many Polish products will be put on the markets of third countries and how much the national and European consumption can increase. Another factor is how the Polish products can be sold in Europe. Farmers will withdraw perishable products in exchange for EU compensation only after no other ways at their disposal.
The whole value of Polish food exports to Russia in 2013 was about 1.3 billion euros. (1 euro = 1.338 U.S. dollar)