February 9, 2004

 

 

Polish 2004 Red Meat Output Seen Down 8%

 

Poland's red meat output is expected to decrease an estimated 8% in 2004 due to high feed prices stimulated by a 13% grain output reduction in 2003, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site.

 

It is estimated that Poland's red meat output will decrease 8% in 2004. Unfavorable weather conditions in 2003 reduced the grain harvest by 13% causing an increase in the price of feed. Limited feed grain supplies and lower production of roughages are expected to reduce both pork and beef production in 2004.

 

In May 2004, Poland will join the European Union. Poland's EU accession will limit or preclude imports of beef, pork and poultry meat from the United States. Poland is in the process of adjusting its laws and regulations to EU standards. The meat and dairy industries are the most affected areas of the food processing industry because within a short period (some up to 2007) they must modernize to meet much stricter EU food quality and hygiene standards.

 

Polish meat processing plants are divided into three groups: plants that have already adjusted to the EU requirements, plants which are adjusting and will be offered a transitional period until 2007 and plants which will discontinue production upon the EU accession.

 

According to the Poland-EU accession agreement, direct payments available to Poland after accession will be based on a mixed system considering acreage of farms or actual production. This simplified method of receiving production subsidies will reduce positive effect of EU accession on the beef and dairy industry in Poland. The swine industry and pork production will probably be less affected by EU accession because it is not subject to the CAP.

 

BEEF

 

Dairy cows dominate the Polish beef meat market with beef breeds virtually non-existent in Poland. Dairy cow inventories are expected to be stable in 2004 as dairy farmers maintain dairy herd size and produce milk to fulfill dairy quotas after EU accession. Exports of young cattle increased an estimated 8% in 2003 and are expected to remain at that high level in 2004 due to reduced slaughter.

 

Exports of calves and young slaughter cattle are additional sources of income for small farms maintaining 3 to 5 dairy cows. Most of these farms will probably have to discontinue commercial production of milk after Poland's EU accession, as they will not be able to compete with larger farms and meet milk quality standards. However, these farmers may specialize in production of beef cattle and stimulate exports. Polish beef farmers will also receive support from the EU's CAP, however, effects of this support may result in higher beef cattle inventories and increased beef production after three to five years.

 

The increase in beef output in 2003 was unexpected compared to the most recent downward trend in output and was mainly caused by higher slaughter of dairy cows. In 2003, dairy farmers adjusted their herds to EU quality standards (both livestock and equipment), as a result level of cow culling was higher than usual. Consequently, an average slaughter weight of cattle in 2003 was higher. Beef production will likely decrease 9% in 2004 due to reduced slaughter. Demand for imported beef remains low. It is estimated that in 2004, consumption of beef will remain at the 2003 level due to continuing exports. Most domestically produced beef is added to pork sausages or canned meat products and consumed locally or exported to FSU markets. Domestic beef consumption slumped in 2002 as the first confirmed BSE case occurred in May 2002; a total of eleven confirmed cases were reported as of the date of this report.

 

Trade Prospects

 

Imports

 

Since high quality corn-fed beef is not produced in Poland, U.S. choice beef has found a niche in premier Polish restaurants. Poland has been importing very small amounts of U.S. corn fed beef, however, continuing promotional efforts resulted in better awareness of Polish consumers and importers about this product. As a result of the first case of BSE in the United States, Polish Veterinary Authorities introduced a requirement for additional BSE certification to current and new health certificates.

 

The new certification must state that cattle from which beef or beef products originated was under 30 months of age. If animals were older than 30 months of age, they must be tested with negative result for BSE. In addition, the certification must state that animals from which meat or meat products was derived originated from herds free from BSE. The above mentioned certification concerns beef, beef products and offal (including tripe). Poland remains a major importer of beef offal, importing approximately 10,000-12,000 tons annually.

 

The United States and Australia are the major suppliers of beef offal. Implementation of additional BSE certification will preclude exports of U.S. beef and tripe to Poland. The requirements will change to those of the EU effective May 1, 2004 when meat products entering Poland must be accompanied by an EU consistent certificate. Imports of high quality corn-fed beef and beef offal from the United States will be discontinued on May 1, 2004, due to Polish EU accession. Consequently, only hormone-free product from EU inspected plants may enter Poland.

 

However, imports of U.S. origin tripe may continue after May 1, 2004, but only from U.S. plants eligible for export to the EU. In addition, tripe exporters will have to comply with the BSE certification described above, so actual imports may not occur in any case.

 

Exports

 

In 2003, beef exports declined by 30% compared to 2002, as a result of reduced beef stocks, which were the major source of exported beef in 2002. The majority of beef exports were from Polish government stocks destined for Russia. Exports are expected to decline in 2004 because of lower production and reduced stocks.

 

Trade Policy

 

A tariff rate quota for beef for the period Jan. 1 to April 30, 2004 is 7,731 tons (1,883 metric tons for HTS 0201 and 5,848 MT for HTS 0202). The tariff on in-quota trade for fresh, chilled and frozen beef remains at 30%. The out-of-quota tariff is 45%. All meat imported into Poland must be accompanied by a health certificate issued by a government-approved veterinarian from the exporting country. Products also must bear a label in Polish with the date of production clearly stated. There is zero tolerance for the presence of hormones in imported beef, but Polish veterinary authorities do not require that beef originate from cattle which have not been treated with growth promoting hormones. Each imported shipment of beef is tested.

 

On Dec. 25, 2003, the Polish Minister of Agriculture enforced a new regulation regarding border inspection, which included 38 new health certificates. New health certificates for animals and animal origin products are different from those used so far for U.S. products exported to Poland. Implementation of new certificates was delayed until Feb. 15, 2004. All products imported by Poland from Feb. 15 must be accompanied by the new health certificates. Please note that the date of entry into Poland, not the date of issuance of the health certificate will be of most importance. These new health certificates will be valid only from Feb. 15, 2004 to April 30, 2004. As of May 1, 2004, Poland will adopt all health certificates currently in use in the European Union.

 

On Dec. 30, 2002, the Polish Minister of Agriculture announced a new beef labeling law designed to be consistent with EU practices. According to the law each element or cut of beef has to be marked with labels stating identification number of the animal, birth date of the animal and name of the country where the animal was raised and slaughtered.

 

In addition, beef originating from a non-EU country must have labels with the following statement: "Meat does not originate from the EU". The new law went into effect on Jan. 1, 2003. However, it does not appear to be fully enforced, because the EU beef tracking system has not yet been fully implemented in Poland and may not be until a date closer to Poland's EU accession May 1, 2004.

 

PORK

 

After peaking in mid-2003 the hog inventories cycle is expected to decline in 2004. Hog slaughter and pork output is expected to decrease in 2004 due to growing prices for feed grains caused by reduced 2003 output and limited imports.

 

Pork remains the primary meat produced in Poland accounting for approximately 65% of total meat production. In 2004, pork production is expected to decrease due to low feed grain supplies, decreasing inventories and lower slaughter. In 2004, pork consumption is expected to decrease by three percent because of higher prices as a result of reduced output.

 

Trade

 

Imports

 

Poland's live hog imports are limited to breeding hogs. In 2003, Poland increased imports of raw hams from the United States, which were processed in Poland and then re-exported to the United States. In 2004, pork imports are expected to decrease due to Poland's EU accession. It is unclear whether imports of U.S. origin pork will discontinue on Feb. 15, 2004, after implementation of new health certificates by Polish veterinary authorities. After Poland's EU accession on May 1, 2004, imports of pork will be allowed only from plants eligible for export to the EU, which practically will preclude exports of U.S. origin pork to Poland.

 

A tariff rate quota for pork for the period Jan. 1 to April 30, 2004 is 15,493 tons (for HTS 0203). The tariff on in-quota trade for fresh, chilled and frozen pork remains at 30%, the press release said.

 

The out-of-quota tariff is 76% maximum 0.9 EUR/kg. Import duty rates will change to those of the EU upon Polish EU accession.

 

Exports

 

In 2003, Polish exports of pork almost doubled in comparison to 2002. The majority of exports were from governmental stocks exported as meat to Russia, Romania, Belarus, Lithuania and Latvia. High exports of pork in 2003 was a result of stocks from 2002 and the first half of 2003 due to government intervention on the pork market caused by very high output. Before EU accession the EU appears to be encouraging the Polish Government to reduce pork stocks; the Government of Poland introduced export subsidies for 40,000 tons of pork in 2003.

 

Exports of canned hams to the United States are expected to decline in 2004 due to lower pork output and the negative FSIS audit findings of some Polish meat plants. Canned hams and shoulders exported to the United States are produced in USDA-inspected plants and are generally of higher quality than available on the domestic market. It is estimated that exports of pork and pork products in 2004 will decrease by 46% compared to the 2003 level as a result of lower output and decreased government intervention.