The Polish organic food market presents opportunity for further intensive development. In recent years, the market for such products has increased by several percent each year. The increase in organically farmed area was spectacular between 2004 and 2014, beginning with 84,000 Ha and reaching 658,000 Ha. Steady increase in the purchasing power of Polish consumers and development of higher incomes among well-educated social groups create good prospects for U.S. organic food exporters. Poland is a country with an excellent geographical location to access the EU.

Poland is one of the biggest agricultural producers within the European Union’s (EU) member states. According to the principle of primacy of EU law over national law, Poland adheres to the standards adopted in Community law. Following this rule the organic market in Poland is regulated in full and directly by EU Regulations. These are:

Basic COUNCIL REGULATION (EC) No 834/2007 of 28 June 2007 on organic production and labeling of organic products and repealing Regulation (EEC) No 2092/91;
COMMISSION REGULATION (EC) No 889/2008 of 5 September 2008 laying down detailed rules for the implementation of Council Regulation (EC) No 834/2007 on organic production and labeling of organic products with regard to organic production, labeling and control;
Commission Regulation (EC) No 1235/2008 of 8 December 2008 laying down detailed rules for the implementation of Council Regulation (EC) No 834/2007 as regards the arrangements for imports of organic products from third countries.

The organizational system of organic farming in Poland is regulated by the Act of 25 June 2009 on organic farming (Journal of Laws No. 116, item 975). Other core Polish acts are:

Act of 30 August 2002 on the conformity assessment system (Journal of Laws of 2010, No. 138, item 935) as amended;
Act of 5 December 2014 amending the Organic Agriculture Act (Journal of Laws of 2015, item 57)

Legislation is in force in its’ updated wording. All legal acts concerning Polish organic farming are available at www.minrol.gov.pl

Control System of Organic Agriculture and Certification

In Poland, as in most EU countries, control tasks have been delegated to certification bodies, authorized and supervised by the designated competent authority. The organic agriculture and distribution market is composed of the following State and private institutions:

The Minister of Agriculture and Rural Development, authorizes certifying units to conduct controls and issue certificates;

Agricultural and Food Quality Inspection in Poland, supervises certifying units and organic production supervision.

Agricultural and Food Quality Inspection cooperates, among others, with the following State institutions:

Office of Competition and Consumer Protection;

Veterinary Inspection regarding fodder production;

State Plant Health and Seed Inspection;

Polish Accreditation Centre – a body accrediting certifying units;

Private authorized certifying units accredited regarding organic farming, in accordance with Standard PN-EN ISO/IEC 17065: 2013-03 General requirements concerning units handling product certification systems.

Only certified entities that are accredited by the Polish Center for Accreditation can receive the Minister of Agriculture’s permission for business activity.

Labelling of Organic Products

EU organic product label

 

Certified farms and processors can market products labeled with an EU organic logo as a guarantee of organic quality. In addition, other logos, national and private, and the certification body’s logo, can be used in the Polish market. Organic food offered to an individual consumer must comply with all provisions for authorized food products and should be packaged in individual packages and labelled as such. This additional requirement does not need to be fulfilled if the seller is a farmer who has a current certificate on which products offered for sale are listed, or a store controlled by a certification body, with a current certificate where organic food may be sold in bulk.

The so called eco-label of a food product lists information applicable to all food products such as the name of the product, the name and address of the producer, the date of manufacture, the shelf-life, etc. In addition, the label contains the authorization number assigned to the certification body [PL-EKO-01] by the Minister of Agriculture and Rural Development and the EU logo of organic farming.

Polish Organic Agricultural Production

Polish organic area accounted for 5.2 percent of the organically farmed land in the EU28 in 2015. Total organically farmed area amounted to 657, 902 Ha in Poland. The total organic area is the sum of the ‘area under conversion’ and the ‘fully converted area’. Before an area can be considered ‘organic’, it must undergo a conversion process. Fully converted into organic farming area shared 73.6 percent of the total organic agricultural land in Poland. The proportion of the area already fully converted to organic farming and the area still under conversion shows good potential for the further growth of organic farming in Poland. The increase in area between 2004 and 2014 was spectacular, beginning with 84,000 Ha and reaching 658,000 Ha. Despite this rapid growth, organic farming’s share is still much lower in Poland than in the EU leading organic producer countries. An upward trend in organic area is expected in the near future as the demand for organic products and the organic market are forecast to grow in Poland.

Poland’s Share in Total EU-28 Organic Area, in 2015
Source: Agricultural and Food Quality Inspection in Poland
Fodder crops, meadows and pastures occupied the largest organically farmed area in Poland in 2014. Cereals represented almost 17 percent of Polish organic crop area. Organic vegetables, pulses, protein and industrial crops increased their shares of total organic area in the last few years.
Source: Agricultural and Food Quality Inspection in Poland

 

 

The number of organic producers increased from 3,700 to 24,800 between 2004 and 2014. During the last few years the pace of grow has slowed down in comparison with the first years after Poland’s accession to the EU in 2004. Poland accounts for over 5 percent of the EU total number of organic producers.

According to the industry’s expert opinions it is difficult to estimate the actual number of organic production farms in Poland. The national statistics show the official number of registered farms, but not all of them are active in organic production. The statistics show only those who have obtained organic certificates. The number of active producers is still too small in terms of market demand. Organic farms are dominated by small farms, below 20 Ha (66 percent of total number of organic farms). Less than 5 percent of organic farms are over 100 Ha. In 2010-2013 the average size of organic farm was 25 Ha while the average conventional farm was 10 Ha. The main obstacle for the development of the sector is the high cost of organic production, matched with very high levels of production risk. The huge problem for Polish organic farming is the lack of cooperation and a very high fragmentation in the organic production chain. The scale of individual sales is too small from the economic point of view. Due to the lack of a proper organic market organization it happens that many farmers sell their products through conventional market channels, which diminishes their potential income from organic production.

 

Source: Agricultural and Food Quality Inspection in Poland

 

Source: Agricultural and Food Quality Inspection in Poland

 

Source: Eurostat, http://ec.europa.eu/eurostat

 

In 2015 plants harvested green took the biggest share in total agricultural production of organic crops and amounted to 649,000 MT. Cereals for grains production rose from 117,500 MT in 2013 to 135,200 MT in 2015, despite the lower share in total organic area. The most important organic cereal is oats used for organic feed.

According to Eurostat, the Polish organic livestock share in the EU remains small and amounts to less than 1 percent. As regards composition of organic livestock production, cattle dominate among organically bred animals in Poland. From Polish Industry information, poultry meats are the most popular organic meat products among Polish consumers, but the statistics on this type of production are not generally available. In 2012 there were also fallow deer, deer and rabbits organic farms in Poland.

 

Source: Eurostat, http://ec.europa.eu/eurostat

 

The level of development of the organic food processing industry development is still insufficient in Poland, regarding the full agricultural potential and consumers’ demand. In 2014 there were 484 processing plants producing foods with organic certificates. In 2004 there were only 55 organic processors. Unfortunately the increase in number of organic companies does not reflect the real industry potential. In fact it is much lower than what the statistics show. Some of these companies are not active in the production and they focus on trade only. Polish organic processing is still at a low level in comparison with leading European organic producers.

 

Source: Agricultural and Food Quality Inspection in Poland

 

Source: Agricultural and Food Quality Inspection in Poland

 

Local organic processed products are mostly grains, fruits, vegetables, milk and milk products like milk drinks and cheese, and eggs. Production of processed organic products is statistically not covered enough to analyze longer trends. Agricultural and Food Quality Inspection (IJHARS) data show a sharp decrease in organic milk production in Poland what is related to a change of the structure in the dairy herd. Beef cattle production rose while the dairy herd was in decline in the last few years.

Organic Market Size and Organization

The Polish Ministry of Agriculture and Rural Development forecast that the value of organic food market in Poland will exceed PLN 1 billion (U.S. $ 0.25 billion). According to organic food industry, organic food market value was estimated at PLN 0.7 billion (U.S. $ 0.18 billion) in 2014. Organic food’s share in the whole Polish food market is estimated at 0.4 percent, much lower than the EU average. Nevertheless this is the fastest developing and one of the most promising food market sectors in Poland.

In Poland there are three main distribution channels of organic products:

Specialized healthy food or organic food shops;

Hypermarkets and supermarkets chains;

Direct sales from farmers and processors.

The online distribution channel is still very small in Poland but it shows a very dynamic pace of growth. There are about 800 special healthy food shops in Polish market, with a 50 – 100 percent share of organic food, shared with other “healthy” but not certified products. Shops of this type operate mainly in largecities, but individual stores are also active in the centers of smaller towns, with less than 100,000 inhabitants.

According to Euromonitor, the biggest share in the value of Polish organic packaged food is held by National Brand Hipp Polska Sp. z o.o. (47%). Products under brand Ekolukta Sp. z o.o.- dairy plant take 9% of the organic market value. Other national brands on the Polish market are: Chlodnia Olsztyn Sp. z o.o., Biofuturo Trade Sp. z o.o., and Bioplanet Sp. z o.o.

One of the popular chains of organic shops is by Organic Farma Zdrowia. According to the Company manager, in 2016 there were 40 shops operating under this networks’ logo. There are also a few smaller players: Yellow Emperor (6 stores), Ekozakupy (with 4 shops in Bydgoszcz).

The characteristic feature of the organic retail market is the large number of small shop openings, along with many closures of such specialty shops after a brief period. This is often due to the poor business skills of the people who attempt this business, which is still very difficult and risky in Poland.

Organic food has become more and more available in supermarket chains, which usually designate special area or shelves for organic food. Discounter chains, popular in Poland, include Biedronka, Lidl and Kaufland, who develop their own brands for the organic food market. The biggest share in organic food on offer in these chain stores are imported packaged products as local organic food supplies are still very limited and not well prepared for entry into big retail chains. According to some market research studies, consumers believe that hypermarkets do not always guarantee the proper quality of these products; the products are not properly displayed, thereby creating a barrier for recognizing these products and distinguishing them from conventional, much cheaper items.

Local Trends and Consumer Perception of Organic Foods

Organic foods with the organic logo are more and more popular among Poles. In recent years, the market of such products has increased by several percent each year. Consumer awareness of a healthy life style that includes foods increased significantly in the last ten years. Price is still a decisive factor in consumer choices but new groups of consumers appeared who are ready to pay more for organic food.

Organic and low-processed foods are seen as healthier than the conventional foods by an increasing group of Polish consumers. According to a recent analysis of the food market of GfK Polonia, 67 percent of Polish consumers believe that the natural value of food is more important than the value added to the product by industrial processing and additives. The dynamic development of the organic market in Poland is enhanced by a wide distribution of stores offering organic items, which include not only specialist shops but also conventional retail chains. According to GFK Polonia, Poles most often buy organic food in hypermarkets, discount stores, delicatessen small stores and specialty outlets.

In Poland the organic food market is still developing. Direct sales from the farmers were always very popular in Poland but direct organic food sales became a new phenomenon. It addresses a different group of clients, more educated and with higher than average incomes. Weekend travels to the farmers in search for healthy food has become a new kind of fashion among young people, looking for a different, healthier style of life than their parents’. Consumers are also increasingly interested in food related to organic products which are not certified. Such products come from a well-known source, with strong belief in their inherent quality, and are much cheaper than what is found in conventional shops.

Unfortunately, it creates unequal competition between uncertified producers and certified producers who bear much higher costs. Some consumers confuse the concept of organic certified food and “natural”, locally obtained food. A lot of educational work among Polish consumers is still expected.

 

Imports and Exports of Organic Products and Market Access

Organic products from outside the EU, and refer in their label to organic farming, must meet the requirements of production methods and rules harmonized or recognized as compatible to those which are set by EU legislation. These rules must be followed for each stage of production, processing and marketing. Organic farming products, imported according to the rules required by Council Regulation (EC) No 834/2007 to one of the EU countries, can be freely placed in the markets of all Member States.

Agricultural and Food Quality Inspection (IJHARS) is a State institution which provides permissions for distribution of organic products imported from third countries to Poland, if they are not listed in EU Regulation No 1235/2008, Appendix III or Appendix IV (under certain conditions). In 2015, 303 border controls carried out by regional offices of IJHARS took place with regard to the marketing of organic products imported from outside the EU. The controls referred to organic products imported from 29 third countries, including Albania, Azerbaijan, Belarus, Brazil, Burkina Faso, Chile, China, Egypt, Ethiopia, Philippines, India, Indonesia, Japan, Canada, Kazakhstan, Colombia, Morocco, Moldova, Pakistan, Paraguay, Peru, Serbia, Sri Lanka, USA, Tunisia, Turkey, Ukraine, Uzbekistan, and Vietnam.

In 2015 35 importers submitted their consignments to WIJHARS for release for free distribution. The total amount of organic products imported from third countries to Poland amounted to 4,700 MT, of which 69.6 percent were imported from Ukraine (55.8%) and Moldova (13.8%). The biggest group of products imported from these countries is: spices, tea, coffee herbs, fruits and vegetables.

Prospects for Organic Foods in Poland

The Polish organic food market presents strong opportunity for further intensive development. This concerns new product types, value and volume of sales of products existing in the market and development of new brands. According to Euromonitor forecast organic packaged food sale is expected to increase by 27 percent in the period 2015-2020. In the forecasted period price competition should increase due to development of private labels and new entrepreneurs. Discounters are expected to focus on offering lower-priced organic packaged food.

Source: Euromonitor International, FAS calculations (Exchange rate 1.0 U.S. $ = 3.94 PLN)
Source: Euromonitor International, FAS calculations (Exchange rate 1.0 U.S. $ = 3.94 PLN)

Products with the biggest prospects for U.S. organic products are: dry fruits, peanuts, fresh citrus fruits organic grains (mostly rice), seafood and fish, and baby food.

Advantages and Challenges facing U.S. Organic Products in Poland

Advantages for U.S. exporters to Poland’s market:

  • Friendly economic environment. There are promising expectations for Polish macroeconomic indicators for the future, especially with increasing GDP. According to the EU Commission annual GDP growth for Poland was 2.8 percent in 2016 and it is forecast for 3.2 in 2017;
  • Convenient geographical location, in the neighborhood of other Common Market countries, and with high demand and expenditures for organic products. Poland is also close to threesmall but fast developing Baltic States markets;
  • Great local market with 39 million of citizens;
  • Steady increase in purchasing power of Polish consumers and development of high incomes among well-educated social groups;
  • Increasing ecological awareness of Polish society and an increasing interest in organic products, as a consequence demand for organic local and imported food is growing;
  • Presence of some selected groups of U.S. products on the shelves of Polish shops, well recognized and valued by organic customers;
  • Developing distribution channels, expanding sales possibilities and service quality;
  • Good forecast for growing organic food consumption and for growth of diversification in the organic products market. Fashion now is for healthy life, including food;
  • No formal barriers for EU-U.S. trade in organic food due to harmonization of both partners legislation (US-EU Organic Equivalency Arrangement);
  • Unknown future of EU budget financial support for organic farming and unstable policy for this sector may diminish local supply due to reduced organic farming. Such a scenario would open the Polish organic market for imported products much wider.

Challenges which can be met by U.S. exporters in market access to Poland:

  • Increasing competition from both EU suppliers and from outside exporters, mostly China, Vietnam, India and South America (mostly in wine market);
  • The extension of well-established brands requires marketing support to reach local consumers and keep the new products in the marketplace for longer, not only as a novelty;
  • Dynamically increasing but still low group of high income consumers who can afford higher prices food. The price level remains main factor of choice in food market for the greatmajority of the society in Poland;
    • Distribution channels remain still at a lower development level than on average in the EU;
    • Consumers’ education and information on organic products should be included into market access strategy for Poland. According to the Eurobarometer Report European’s Attitudes Towards Food Security, Food Quality and The Countryside Report”, consumers’ recognition of organic products logo is about 12 percent in Poland, while the EU average was estimated at 24 percent;
    • Market demand capacity is limited to big cities mostly;
    • Organic products market is still in the initial phase of growth which increases the level of market uncertainty.

     

Financial Support for Organic Agriculture

Polish farmers can get financial support from EU funds. The Polish Program for Rural Areas Development, for years 2014-20, was prepared according to EU regulations, mainly EU Regulation No 1305/2013, December 17, 2013 on European Agricultural Fund. There is a special package for organic farming in the document. The package is continuation of the same activity in the previous Program for Rural Areas Development for years 2007-2013. The Program and financial support was the basic kick off behind the rapid growth in organic farming in Poland. For the years 2014-20 the budget for organic farming in Poland amounts to EUR 699.96 million (U.S. $ 743 million). The scope of the Organic Farming financial package will include supporting voluntary commitments from farmers who will declare to maintain or switch to organic farming practices and methods as defined in Council Regu zlation (EC) No 834/2007. Organic Farming will be subject to the control of authorized certification bodies.

The beneficiary can be an active farmer with a farm located in the Republic of Poland with an area of agricultural land not less than 1 ha, which will commit to the implementation of organic farming for a period of 5 years and to comply with the requirements of the individual organic packages / variants of organic production.

Rescource: https://gain.fas.usda.gov/