Country Report Poland. Business climate and readiness to invest. Business expectations: Farmers more confident

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1 Country Report Poland Business climate and readiness to invest Business expectations: Farmers more confident Readiness to invest: Every second farmer plans to invest Especially dairy and pig farmers plans to invest in the upcoming 12 months DLG-Agrifuture Insights/September 2017

2 Country Report for Poland Business environment friendlier, peak value for tendency to invest in European comparison The farmers in Poland are more satisfied with the current business environment than in spring With 2.9 points, farmers assess the current situation to be as good as it last was in autumn Farmers have left the depressed mood of 2015 and 2016 behind them. Dairy cattle farmers and cash crop producers are more optimistic about the business development of the coming 12 months. The expectations have normalised after the reserved expectations of 2015 and On the other hand, pig farmers evaluate the expectations for the business development of the coming 12 months cautiously. The improved economic environment leads to a 4 percentage point higher investment confidence than in spring The value is increasing to 49 percent. Farmers in Poland are more satisfied with the current business environment Farmers in Poland are more satisfied with the current business environment: than in spring The upward trend which began in autumn 2016 has continued and farmers assess the overall situation as average. Like their colleagues in the other countries, Polish farmers are coming out of a depressed mood. For the operating income in 2015 and 2016 did drop compared to 2013, however extreme declines failed to materialise. For example, the drop in milk prices was moderate; from the peak in 2014 when milk reached 32 cents/kg, prices dropped relatively moderately to 25 cent/kg in The fact that pork and milk from Poland are in demand has contributed to the improving the mood. After the collapse of exports after the outbreak of the African swine fever and the resulting export ban, exports significantly recovered in For compared to 2015 exports increased by 10 percent in Thanks to improved performance, piglet production in the country has increased, but imports of piglets has also grown. DLG-Agrifuture Insights/September

3 The cash crop producers have brought in a 1.3 million larger wheat harvest in 2017 than in 2016, and therefore have achieved better results than were predicted in the course of year. And the barley and maize harvest were also larger. However, the prices are at a moderate level compared to those of recent years due to the large global grain harvest. Expectations for business development: Dairy cattle farmers and cash crop producers more optimistic Dairy cattle farmers benefit from a predominantly positive economic environment and the rising milk prices. The demand for Polish milk is also on the rise due to dynamically growing exports to Germany. All together the milk delivered in Poland has increased by 6 percent compared to The milk producers market at higher prices and can once again increase their revenues in the ongoing year. This results in more confidence among the Polish milk producers in the business development over the coming 12 months. As a result, the expectations have, compared to the course of the past several years, normalised at an average level. Cash crop producers are also optimistic about the further development of business. For despite the general price pressure due to the extensive global harvest, good qualities achieve premium prices. And the growing domestic pig production provides for a growing demand for feed grain. In contrast, pig farmers are somewhat more sceptical, although exports of pork have clearly recovered again after the major slump (due to African swine fever). However, due to the new case of African swine fever in the Czech Republic, the risk is increasing that, in addition to the northeastern region affected up until now, the southern parts of the country could soon also be affected by the epidemic. The new trade restrictions then to be expected are dampening the expectations of the pig farmers for the further business development over the coming 12 months. Investment confidence: Farmers in Poland in the top position DLG-Agrifuture Insights/September

4 Compared to the last survey in spring 2017, investment confidence has increased by 4 percentage points. With 49 percent, the farmers in Poland hold the top position in the countries surveyed for farmers who intend to invest during the next 12 months. The increasing investment confidence can be traced back to growing investment plans of livestock owners. For both the dairy cattle farmers and the pig farmers are planning more investments for the coming 12 months. As a result, the trend to increasing investment plans of the livestock owners in Poland continues. For since spring 2016 there has been a noticeable improvement in the mood to invest among livestock owners - compared to the survey of spring 2016, the tendency of livestock holders to invest has risen by approximately 10 percent. Livestock holders have once again reached the investment level that fluctuated around 50 percent prior to the low-price phase in 2015 and The livestock holders surveyed in Poland are continuing their dynamic expansion and the modernisation of production. DLG-Agrifuture Insights/September

5 In contrast, the investment confidence of cash crop producers has dropped slightly compared to the survey of spring After investment confidence had recently improved, it is now moving laterally. In a comparison made over many years, the investment confidence of cash crop producers is - with 41 percent - considerably below the average of many years, which fluctuated around 50 percent from 2010 to The survey shows that the farm managers surveyed in Poland are again increasing their investment activity, expanding and modernising their existing production. It is to be expected that - DLG-Agrifuture Insights/September

6 especially in animal husbandry - farmers in Poland will further strengthen or expand their considerably improved market position gained in recent years. Reasons for investment: Farmers in Poland on an expansion course Agriculture in Poland is characterised by small-scale operating structures and advancing structural change. This environment offers growth-oriented farmers the opportunity to expand existing capacities. The expansion of capacity is by far the most important reason to invest for the surveyed farmers from all production segments. In contrast to this, catching up on postponed investments and digitalisation play a secondary role. This path of growth is strengthened by the assessment of the surveyed farmers that exports have a positive effect on the economic development of their businesses. This is particularly apparent in the refinement sector, which has shown an especially dynamic development in poultry farming. And in pig farming as well, the indicators for increased production are once again favourable since the outbreak of the African swine fever. The current low interest rates are also evaluated as positive, for investments are financially affordable. On the other hand, farmers view the prices for agricultural products as neutral, for especially the prices of milk and meat have significantly recovered in the course of In particular, farmers judge high land prices, the drought this year and, finally, increasing costs in production as negative for the economic development. DLG-Agrifuture Insights/September

7 DLG-Agrifuture Insights/September

8 Further information and contact DLG e.v. Dr. Achim Schaffner Tel.: DLG e.v. Competence Center Agriculture Eschborner Landstr Frankfurt / Main Tel.: Fax.: afi@dlg.org; DLG-Agrifuture Insights/September