EU negotiators unveil $6 bln ag plan
Poland pledged to pump zl. 25 billion ($5.95 billion) into the beleaguered farming sector during a three-year run up to European Union (EU) membership, according to government officials who unveiled Poland's blueprint for agricultural reform last week in Brussels.
Apart from the stiff membership fee for the ag sector, which equals about 1% of the nation's gross domestic product (GDP) each year, the EU is expected to pump a minimum E500 million in pre-accession aid. The payoff for Poland, industry members said, is once Poland gains entry, the farming sector would qualify for upward of zl. 9 billion ($2.14 billion) a year in EU funds subsidizing production in the sector.
Agriculture has been a major sticking point in negotiations over EU membership. The blueprint is considered a starting point for accession negotiations scheduled to begin next spring.
Poland's commitment is an aggressive plan, industry members said, that will require a strong national will, especially among farmers, who account for about one in five Polish citizens. In addition to the promised windfall in subsidies, a key bargaining chip with the agriculture sector is unrestricted entry in European markets under the EU's common agricultural policy (CAP), they said. But that door swings both ways. As Polish products find easier access to markets abroad, European goods will also flow more freely into Poland. Moreover, in the near term prices are expected to rise for domestic products as the government taps producers and consumers for money to fuel upgrades in production standards during the next three years.
Thus as the price advantage for Polish products dwindles, much depends on how fast producers here can incorporate improvements to maintain the competitive edge of value for money in a more open market place. On a broader economic level, near-term price increases will likely also fuel upward pressure on inflation.
Under the blueprint announced in Brussels last week, Poland will spend about zl. 25 billion through 2002 to modernize production and infrastructure in the farming sector and test products and procedures to make sure they are in compliance with EU norms and qualify for the EU's CAP subsidies, which could kick in immediately upon membership.
"The idea is that we spend the money so that on entry we are part of CAP on day one," said Krzysztof Mularczyk, executive director of the Foundation for the Development of Polish Agriculture, based in Warsaw. Under CAP, those Polish farmers and food producers who meet the standards of modernization and quality would have free access to EU markets and stand to obtain direct subsidies for production. But where the money will come for modernization and whether producers can complete changes in the next three years is uncertain.
Poland's dairy sector is considered one of the branches that will be the most costly to ready for EU entry. Only one-third of the milk sold in Poland meets EU norms and the price tag for the upgrade runs zl. 15.5 billion ($3.7 billion) or more than 60% of the nation's run-up bill.
But dairies are not the only producers requiring significant refitting. Poland's meat sector also will need to be revamped and laws regulating the whole agro sector will have to be tuned to fit with EU norms.
"Certainly in terms of the dairy industry, there is a long way to go," Mularczyk said. "Another problem is the legal area, but it's a general problem rather than a problem for rural or agriculture sectors."
In addition to s500 million in EU aid from programs targeting agricultural restructuring (SAPARD) and the environment and infrastructure (ISPA), the government here is looking to fund 18-20% of ag upgrades from the state budget with the remainder coming from the companies in the sector. That has economists forecasting price rises of 5-6% a year during the next three years, industry watchers said.
Some question whether modernizing the ag sector in such a short period of time is realistic. "In my opinion, three years' modernization of agriculture isn't possible," said Joanna Maciejewska, manager of European integration at the Regional Advisory Center for Agricultural and Rural Development in Wroclaw.
In addition to opening domestic markets without equal access and aid, farmers fear the sell-off of Polish land to foreign individuals and companies. Rural Poland, which accounts for about one-fourth of the population, is looking for diplomats to hold a hard line on these basic issues.
"Basically Poland in this particular area is going to be least flexible compared to other areas," Mularczyk said. "The simple truth is if too much is let go on this one (ag sector), plus on the sale of land to foreign subjects, the government seriously fears the loss of the referendum."
"There is a lot of euro-scepticism in the rural areas," Mularczyk said. "Both of these issues are absolutely key to the rural population at the end of the day supporting accession."
