Polish agriculture finds new markets as Russian ban bites

By bne IntelliNews August 5, 2015

Adam Easton in Warsaw -


Krzysztof Czarnecki’s family has been growing apples near Grojec about an hour’s drive south of Warsaw in a region that is now Europe’s largest orchard for four generations.

Many of the ripening fruit on his trees are Idared apples, a variety grown specifically for the Russian market. As Russian demand for his apples grew, Czarnecki’s family business expanded its orchards from 10 to 60 hectares and they now produce 1,000 tonnes a season, most of which are sold to Russia.

Demand for Polish apples was so great, especially from Russia, that in 2014 the country was the world’s biggest apple exporter. About 55% of all Polish apple exports were sold to Russia – until a year ago, when Vladimir Putin slapped a ban on EU meat, dairy, and fruit and vegetables, in retaliation for Western sanctions over its aggression in Ukraine.

“It’s had a very important effect on Polish food growers. If you lose your biggest customer, then the impact must be very negative. Now, from being the biggest exporter in the world we’ve got our backs against the wall and we don’t know what to do with our apples,” Czarnecki tells bne IntelliNews.

At first many Polish apple growers, who were unable to store their apples, panicked and sold their crops to whomever they could at below production cost prices, because buyers abroad knew they were desperate to see some form of return. Czarnecki says he lost about 50% of his income.

The Polish government stepped in and began to compensate farmers for their losses and Czarnecki received PLN800 per hectare. The government also bought about 15% of the apple crop normally exported to Russia from farmers and gave the apples away to charity under an EU scheme.

According to the Ministry of Agriculture, Polish apples and other fruit made up the bulk of Polish exports to Russia, which was worth about €100mn a month in 2013. After the ban was imposed the value of Polish food exports to Russia fell to about €40mn a month and this year it has dropped to €30mn a month.

But by spring of this year apple prices rebounded and there was not enough in storage to meet demand. So where did the apples go?

Fruit smuggling

According to Marcin Hermanowicz, an apple grower who owns a large modern fruit-packing warehouse in the region, many Polish fruit growers still sold their products to Russia via other routes. “There were a lot of apples from Poland sent to Belarus, to Serbia, to countries that had no embargo, and everybody knows that those apples were not for the customers there but they were re-exported to Russia, so this is how it was going on,” he says.

Middle men in Serbia and Belarus charged about €500 per lorry to change the paperwork in order for the Polish apples to be resold to Russia. “Everybody knew about it. During his New Year’s speech, Mr Putin said he was completely aware that there are Polish apples and cabbage on the Russian market. The big losers of this ban were the Polish growers who were paid less for their apples, but also the Russian customers who needed to pay more for the fruit than they were buying in Russia,” Hermanowicz says.

Hermanowicz redirected most of his trade away from Russia to Western Europe after Poland joined the EU in 2004, but he says the Russian embargo still cut his income by 25% last year because buyers in all markets used the ban to drive down prices.

The embargo has encouraged Polish apple farmers to seek new, less risky markets. “A good thing about the embargo is that not only our company but other companies in Poland started to look for the new markets, and they are not looking at Russia so much as before because of the political factor and I think those markets are there in Africa and Asia,” Hermanowicz says.

“It’s just not possible to get the markets in one year, we need new varieties, we need sanitary agreements between the Polish government and governments in other countries to start trading. In the long term probably it will have a positive result, but it’s not like we will have it tomorrow,” he adds.

Zofia Krzyzanowska, counsellor general at the Polish Ministry of Agriculture, tells bne IntelliNews that the government has been working to open up new markets for Polish food. Thanks to new intergovernmental agreements, Polish farmers can now sell beef to Japan and Ukraine and apples to Canada.

The Russian ban has been painful for some, especially Polish apple growers, but its impact has not been as big as at first feared, because of a combination of Polish state and EU funds, and the resourcefulness of the farmers themselves to either seek new markets or find ways to get around the embargo.

According to a BGZ BNP bank report, the value of Polish food exports in 2014 increased by 4.5% to €21.3bn despite the Russian ban as growing exports to France and Belgium, as well as rising apple sales to Serbia and Belarus, offset the 30% fall in sales to Russia. The UK and Germany account for about 80% of Polish food exports, while the third biggest market, Russia, accounts for just 4%.

BGZ BNP estimates that Polish food exports will rise 8% this year thanks to rising prices. And Krzyzanowska says Polish apple farmers are in a better position this year. “Thanks to their experience last year producers can decide to wait for a better price for their apples or just export to Serbia if they have those channels,” she says.


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