Gov't offers farmers a bandaid
The compromise worked out with farmers is considered a temporary solution to far-reaching problems hounding the sector. The agreement will be funded with zl. 317 million ($81 million) from the national budget.
Although the deal will likely bring a halt to recent road blockades, it falls short of addressing deeper problems facing rural Poland, according to agricultural specialists. "That agreement is a bandaid on an open wound," said Andrzej Czylewski, an agriculture specialist in the macroeconomics department at the Academy of Economics in Poznan. "It offers only superficial first aid to the Polish agriculture and food sectors. What is needed is a systemic solution like the New Deal in the U.S.A."
The agreement sets minimum prices for cereals, dried milk and meat and establishes incentives for bringing products to market. For example, the government agreed to support a floor for the sale of wheat at zl. 450 a ton by purchasing about half of this year's anticipated crop. Wheat currently trades globally at about zl. 400, which is about the cost of production here, according to local farmers. Also under the agreement, farmers will receive an additional zl. 60 per ton of wheat sold in August, zl. 70 per ton sold in September and zl. 90 per ton sold in October. Similar rates and schedules were set for other products. Whether the prices offered are high enough for farmers to make ends meet is still an open question, according to economists. "Is that a profitable price? What's sure, it couldn't have been any higher," Czylewski said.
Elements of the compromise show that the government came to the table prepared to meet some demands and with the desire to stabilize the marketplace. First, contrary to earlier interventions, payments made by the Agriculture Market Agency (ARR) will now go directly to farmers and not to middlemen buying the products. "This is the first time that's happened," Czylewski said.
Another first is the structure of the interventions. The stepping monthly increase in intervention rates encourages farmers to hold onto their products rather than dumping at harvest. That could help stabilize prices in a market where farmers have typically rushed to sell products immediately to beat the season's peak.
An additional stabilization effort is on the demand side through government-sponsored low-interest loans. Agents buying cereals in August can access credits at 5%, compared with 17% last year and well below commercial rates that run above 25%. Rates are scheduled to increase 1% a month for the following two months, so the purchasers are encouraged to buy early rather than wait until the market fills and the glut puts downward pressure on prices.
"This is a very good solution," Czylewski said. "Finally someone in the government started thinking."
Although the deal will likely bring a halt to recent road blockades, it falls short of addressing deeper problems facing rural Poland, according to agricultural specialists. "That agreement is a bandaid on an open wound," said Andrzej Czylewski, an agriculture specialist in the macroeconomics department at the Academy of Economics in Poznan. "It offers only superficial first aid to the Polish agriculture and food sectors. What is needed is a systemic solution like the New Deal in the U.S.A."
The agreement sets minimum prices for cereals, dried milk and meat and establishes incentives for bringing products to market. For example, the government agreed to support a floor for the sale of wheat at zl. 450 a ton by purchasing about half of this year's anticipated crop. Wheat currently trades globally at about zl. 400, which is about the cost of production here, according to local farmers. Also under the agreement, farmers will receive an additional zl. 60 per ton of wheat sold in August, zl. 70 per ton sold in September and zl. 90 per ton sold in October. Similar rates and schedules were set for other products. Whether the prices offered are high enough for farmers to make ends meet is still an open question, according to economists. "Is that a profitable price? What's sure, it couldn't have been any higher," Czylewski said.
Elements of the compromise show that the government came to the table prepared to meet some demands and with the desire to stabilize the marketplace. First, contrary to earlier interventions, payments made by the Agriculture Market Agency (ARR) will now go directly to farmers and not to middlemen buying the products. "This is the first time that's happened," Czylewski said.
Another first is the structure of the interventions. The stepping monthly increase in intervention rates encourages farmers to hold onto their products rather than dumping at harvest. That could help stabilize prices in a market where farmers have typically rushed to sell products immediately to beat the season's peak.
An additional stabilization effort is on the demand side through government-sponsored low-interest loans. Agents buying cereals in August can access credits at 5%, compared with 17% last year and well below commercial rates that run above 25%. Rates are scheduled to increase 1% a month for the following two months, so the purchasers are encouraged to buy early rather than wait until the market fills and the glut puts downward pressure on prices.
"This is a very good solution," Czylewski said. "Finally someone in the government started thinking."
