Polish Food & AGRO Market Outline – Recent Developments and Covid-19
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Polish Food & Agro Market outline – recent developments and the COVID-19 impact RVO Central & European Business Days Michał Siwek December 8th 2020 Agenda . Positioning of Poland as a food production powerhouse . COVID-19 effects on the food industry in Poland . Sub-sectors focus . Closure remarks International Food&Agri Hub Department 2 Agenda . Positioning of Poland as a food production powerhouse . COVID-19 effects on the food industry in Poland . Sub-sectors focus . Closure remarks International Food&Agri Hub Department 3 The size of Polish economy is presently 2/3 of the Netherlands’ in comparison to less than its half in 2004 Netherlands Gross Domestic Product, EUR bn, in constant 2010 prices Poland 700 650 600 +26% -218 550 (-33%) 500 450 400 -277 (-53%) 350 +79% 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Eurostat International Food&Agri Hub Department 4 Food & Agro sector was closing the gap even faster, however, the difference in last years remained fairly stable Netherlands Gross Value Added (GDP contribution), Agriculture, Food, Beverages and Tobacco Manufacturing, EUR bn, in constant 2010 prices Poland 26 24 -4 +13% (-17%) 22 20 -8 18 (-36%) +46% 16 14 12 10 8 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: 2018 in Poland was one of the least fertile years of the last decade due to unfavorable weather conditions Source: Eurostat International Food&Agri Hub Department 5 Poland has large resources of land and lays conveniently among 250 mn of consumers within the 1000 km radius Arable land in the EU countries, mn ha, 2019 Central Europe France 18.1 Spain 11.9 Germany 11.7 Poland 11.0 Romania 8.7 Italy 6.7 Hungary 4.3 Bulgaria 3.5 Sweden 2.6 Czechia 2.5 Denmark 2.4 Finland 2.2 Greece 2.1 Lithuania 2.1 Slovakia 1.3 Austria 1.3 Latvia 1.3 Netherlands 1.0 Portugal 0.9 Belgium 0.9 Croatia 0.8 Estonia 0.7 Ireland 0.5 Slovenia 0.2 Cyprus 0.1 Luxembourg 0.1 Malta 0.0 Source: FAO, McKinsey & Company International Food&Agri Hub Department 6 Flat area and the location in the middle of Europe facilitates transportation of Polish Food & Agri goods, giving advantage over direct competitors Physical map of Europe Distance from Amsterdam to major agricultural region in largest CEE countries in kilometers Poznań, 891 Poland Cluj-Napoca, 1.884 Romania Vinnitsa, 1.914 Ukraine in hours of driving Poznań, 9.0 Poland Cluj-Napoca, 20.3 Romania Vinnitsa, 20.8 Ukraine Source: Google Maps, Wikimedia International Food&Agri Hub Department 7 Poland has large labor force and ranks among the EU’s member states with the lowest unemployment rate Labor force, mn people Unemployment rate, Sep 2020 Germany 41.7 Czechia 2.8 France 26.7 Poland 3.1 Italy 22.7 Malta 4.0 Spain 18.6 Netherlands 4.4 Poland 16.3 Hungary 4.4 Netherlands 8.9 Germany 4.5 Romania 8.5 Slovenia 4.7 Czechia 5.2 Romania 5.2 Sweden 5.0 Belgium 5.2 -4.4 Belgium 4.8 Austria 5.5 Portugal 4.7 Denmark 6.1 Bulgaria 6.2 Hungary 4.4 Luxembourg 6.7 Austria 4.2 Slovakia 6.8 Greece 3.8 Ireland 7.3 Bulgaria 3.1 EU-27 7.5 Denmark 2.8 Portugal 7.7 Finland 2.5 France 7.9 Slovakia 2.5 Cyprus 8.0 Ireland 2.2 Estonia 8.0 Croatia 1.7 Croatia 8.2 Lithuania 1.4 Finland 8.3 Slovenia 1.0 Latvia 8.4 Latvia 0.9 Sweden 8.9 Estonia 0.6 Italy 9.6 Cyprus 0.4 Lithuania 9.8 Luxembourg 0.3 Spain 16.5 Malta 0.3 Greece 16.8 Source: Eurostat International Food&Agri Hub Department 8 Poland has been gradually raising its significance in the Food & Agri international trade and has been recording a regular growth in the trade balance Poland’s F&A goods international trade, USD bn, in constant 2010 USD Export Import Net export = Export – import 50 46 40 40 38 38 37 35 29 30 30 28 26 24 22 20 19 16 14 13 12 9 10 10 8 9 8 6 4 4 2 3 3 4 4 3 4 0 -10 -9 -11 -12 -15 -20 -18 -20 -22 -25 -25 -24 -27 -30 -29 -28 -29 -31 -33 -40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Note: The numbers may not add up due to roundings Source: Harvard’s Atlas of Economic Complexity International Food&Agri Hub Department 9 Agriculture plays a key role in Polish international sales, being responsible for 15% of Polish exports Polish export composition, 2018 Source: Harvard’s Atlas of Economic Complexity International Food&Agri Hub Department 10 Concerning agriculture, the Netherlands is the 3rd largest partner in exports and 2nd largest in imports of Poland Poland’s agriculture export, in USD Poland’s agriculture import, in USD Source: Harvard’s Atlas of Economic Complexity International Food&Agri Hub Department 11 Foreign owners control almost half of the revenues of the largest F&A companies in Poland, the Dutch own 4% of the revenue stream APPROXIMATION F&A revenues by origin of group shareholders1, % USA 4,6 100% = EUR 54.5 bn Germany 3,8 France 3,0 Netherlands 2,2 Denmark 2,0 China 1,8 Japan 1,2 Switzerland 1,2 United Kingdom 1,1 Norway 1,0 Italy 0,9 Austria 0,4 4,0% Netherlands Belgium 0,3 Czech Republic 0,2 Sweden 0,1 Poland 55,0% Ukraine 0,1 Canada 0,1 Spain 0,1 South Africa 0,1 Ireland 0,1 Thailand 0,1 Lithuania 0,1 Finland 0,0 Nigeria 0,0 Croatia 0,0 Slovakia 0,0 Israel 0,0 Total 24,5 1Among Polish Food & Agro capital groups exceeding annual revenues of 10 EUR mn, app. 800 groups Source: EMIS International Food&Agri Hub Department 12 Agenda . Positioning of Poland as a food production powerhouse . COVID-19 effects on the food industry in Poland . Sub-sectors focus . Closure remarks International Food&Agri Hub Department 13 Food & Agro products tend to be less affected by crises than other economy branches Median negative change in household consumption by product categories in the EU+UK, 1996-2019, % -1.0 -1.3 -2.0 -2.1 -2.1 -2.4 -2.6 -2.8 -2.8 -3.0 -3.1 -3.3 Energy Food, Clothing Health Hotels, Culture, Alcohol & Household Other Education Logistics Transport non-alcoholic restaurants recreation tobacco appliances, beverages products electronics Source: Eurostat International Food&Agri Hub Department 14 Polish food exports during the pandemic fell below the levels observed in preceding years in EUR Food exports from Poland, EUR bn 2020 2019 2018 First lockdown 2.95 2.90 2.85 2.80 2.75 March 2020 +8.2% vs 2019 2.70 2.65 2.60 2.55 2.50 2.45 May 2020 -6.8% vs 2019 2.40 2.35 2.30 2.25 2.20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: UN Comtrade International Food&Agri Hub Department 15 Polish złoty (PLN) depreciated significantly during the first lockdown and remained at the level of 4.50-4.60 PLN for 1 EUR, vs. 4.20-4.30 rate below the crises… EUR/PLN exchange rate, 1 EUR = X.X PLN First lockdown 4.7 4.6 4.5 4.4 4.3 4.2 4.1 4.0 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 01/05 01/06 01/07 01/08 01/09 01/10 01/11 01/12 01/13 01/14 01/15 01/16 01/17 01/18 01/19 01/20 Source: National Bank of Poland International Food&Agri Hub Department 16 …what helped the exports measured in PLN to actually keep growing 2020 2019 2018 Food exports from Poland, PLN bn First lockdown 11.4 11.2 11.0 10.8 March 2020 10.6 +14.0% vs 2019 10.4 10.2 10.0 9.8 May 2020 vs 2019 9.6 +0.9% 9.4 9.2 9.0 8.8 8.6 8.4 8.2 8.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: UN Comtrade, National Bank of Poland International Food&Agri Hub Department 17 The first pandemic wave influenced the exports of Polish Food & Agri products sector with varying degrees; meat and vegetables were the subsectors affected most severely Food exports1 from Poland, in PLN bn, % change YoY 102 106 103 116 104 102 112 92 82 84 91 99 Meat and edible offal Cocoa and cocoa preparations Dairy products; bird 110 109 111 112 eggs; natural honey; 97 101 98 101 92 103 96 107 edible products of Fish and crustaceans, animal origin, not molluscs and other elsewhere specified or aquatic invertebrates included 134 141 130 120 117 120 110 102 97 104 113 Preparations of 90 Residues and waste cereals, flour, starch from the food industry; or milk; confectionery ready-made food for bread animals 111 101 105 105 102 95 109 101 Miscellaneous 88 87 83 91 edible Preparations of preparations vegetables, fruit, nuts or other parts of plants 100 99 121 121 95 86 89 96 103 110 106 108 Preparations of meat, Edible vegetables and fish or crustaceans, certain roots and molluscs or other tubers aquatic invertebrates Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Note: The top 10 HS2 categories of Polish food exports, in total 78% of the value of food exports in 2019 Source: UN Comtrade, National Bank of Poland International Food&Agri Hub Department 18 Agenda .