1. Regoverning Agrifood Markets in CEEC – Poland’s Pork and Apple Markets Jerzy Wilkin, Malgorzata Juchniewicz and Dominika Milczarek

2. 2 Introduction Goal of the research: Links between producers, the processing sector and distribution networks. Position of small producers, their possibilities of self-organization and public support.

3. 3 Introduction Example of two important food products in Poland: pork and apples. The 4th largest producer of pork, One of the largest producers of apples in the EU, A significant exporter of both products, especially for UE market.

4. 4 Inheritance of Former System Private farmers dominated production sector, Fruit and meat-processing plants belonged to so-called socialized sector, Distribution networks consisted both of private and socialized sector.

5. 5 Transition Period Dramatic collapse of cooperatives, A weaker position of farms and an increased competition between them, Market-oriented producers started to intensify production and to modernize their farms.

6. 6 Transition Period Distribution networks: A booming development of local market places at the beginning of 1990, An increase in the number of alimentary shops, Fast development of super- and hypermarket chains.

7. 7 Transition Period Food-processing sector Meat market: Privatization and modernization of meat- processing industry, A concentration process in procurement and processing. Apple market: An emergence of many small processing plants due to growing home demand for processed fruits and vegetables.

8. 8 Current Situation – Meat Market A growing structural asymmetry on the meat market: On both ends of food chain - numerous groups of actors, i.e.: 1.1 million of producers and 12 million of households. In the middle - processing plants and traders characterized by a growing level of concentration. In some regions food processors or procurement companies have quasi-monopolistic positions.

9. 9 Current Situation – Apple Market Fruit market can be characterized by: a high level of fragmentation and competition (both between producers, brokers and processing companies), highly fluctuating supply and prices, a low level of organization, high transaction costs.

10. 10 Current Situation – Apple Market Production structure: Apple production is concentrated in small and medium farms (5-15 ha), Only 10% of farmers possessing orchards specialize in apple production Due to prices and supply fluctuations. Average size of an orchard - ca 0.86 ha.

11. 11 Share of farms having an orchard according to farm area Source: on basis of PSR 2002 data (in % of total number of farms with an orchard)

12. 12 Current Situation – Apple Market Fruit-processing sector: Utilizes around 60% of fruit crops; There are around 1300 fruit and vegetable- processing companies, Majority (90%) of them are small, Most of them located in the central Poland, An increase in production of processed fruits and a lower dynamics of demand at domestic market lower prices and emergence of a group of effective processing companies.

13. 13 Current Situation – Apple Market Share of Polish production of apple extract in the world production (in thousand tones) Source: Ozimek 2002, p.17

14. 14 Current Situation – Apple Market Distribution network: High level of dispersion of wholesale and retail trade: Around 3800 companies, Small wholesale companies deliver fruits mainly to processing companies and to local market places. Super and hyper-market chains

15. 15 Results of Preliminary Survey The most important problems for producers are: problems with marketing of their products and fluctuation of prices. The smaller farmers, not associated in any producers’ group tend to perceive their situation as difficult: because of lack of capital necessary for investment and a lack of influence on the market.

16. 16 Results of Preliminary Survey All interviewed persons agreed that small farmers, not associated in any producers’ group or cooperative have no chances to survive and to develop. Therefore: why such a weak cooperation between farmers?

17. 17 Results of Preliminary Survey Contracts: Pig producers having multi-year contracts with meat processor – ca. 10% higher price. Majority of fruit producers have no written contracts Larger producers and producer groups sell directly to large retail stores. Usually, they have short-term written contracts.

18. 18 Conclusions Polish agriculture is still dominated by small producers. Their position is weakening year by year. The largest problems are: Poor institutionalization, especially in the area of self- organization, And very limited access to modern knowledge and technology. Thousands of farms reduce their ties with the market. There is a lack of well-defined and efficient public support for small producers.

19. 19 Further Research Identifying obstacles in forming producers groups and cooperatives. Analysis of contracting arrangements between main elements of food economy. Analysis of the impact of EU enlargement. Who benefits most from European integration? Better description of the impact of big retail chains on other parts of food economy.

20. 20 Vertical Flow of Apples in Poland in 2001