Mass domestic grain surplus exposed as myth

Poland's grain production is estimated to be lower than last year and unlikely to create the mass surpluses the media reported at the beginning of the summer, market analysts said. With domestic demand for grain also growing this year by about 1 million metric tons to a total of about 27.5 million tons, the situation dispels the myth that Poland is drowning in oversupply, according to Michał Kisiel, the chief grain market analyst at the Warsaw-based Institute of Food and Agricultural Economics (IERIGŻ). Poland's grain production is estimated to be 24.5 million-25.4 million metric tons this year, a 4.1% decrease from last year, according to the Central Statistical Office (GUS). Despite the lower levels, Poland, a traditional grain importer, could this year see initial quotas of grain exported to satisfy demand generated by the recent Europe-wide floods and the high quality of Polish grains, grain traders said. "At the moment we have quite low prices, at around zł. 440 a ton, but at a comparable rate to the European Union's intervention price," Kisiel said. "There exists the possibility that export trade will become worthwhile, but it's not certain if export can be realized. We won't know our production situation for sure until the end of the season … We could run out by the end of the year, and prices would then increase." But officials at the Polish Chamber of Grain and Feed (IZP), who asked not to be named, were optimistic that this year's high-quality harvest could enable Poland to compete with the likes of Ukraine, Russia and Kazakhstan on the international grain market.

"This year the situation is that Polish grain is very good quality, and grain prices have gone up," said the IZP official. "Polish grain has finally become competitive. A normal market situation is developing. "We also have more than enough domestic demand for our grain, and all will probably balance out," he said. "If there are any surpluses they will be sold, and if we don't have enough, the price will go up, and we won't be able to afford to export." The current estimates invalidate the Agriculture Ministry's decision for imposing a three-month delay on the introduction of a duty-free import of 480,000 metric tons of grain from the EU at the start of July, dubbed the double-zero agreement. Duty-free imports were delayed until Oct. 1 due to the ministry's insistence that the measure was necessary to protect the domestic market from cheaper EU grain imports during a period of mass grain surpluses in Poland. And with taxes still imposed on both sides, Poland may have missed out on an opportunity to sell its grain to European countries with high-quality grain shortages as a result of last August's flooding, said Thomas Mieir, the German Embassy's agricultural attaché. Parts of Germany, in particular, were hard hit by the floods. "Because of the floods, the price of grain went up in the EU, but now the measures created to protect the Polish market may become an obstacle for those wanting to export (from Poland)," he said. At the time when the Agriculture Ministry asked the EC to delay the duty-free agreement, grain reserves were still very large, and further production was estimated to be higher than last year, according to Grażyna Woźniak, the chief specialist at the department of processing and agricultural markets at the Agriculture Ministry. "Even now it's difficult to properly gauge the situation, and it won't be clear until the last minute," she said. "So it's difficult to say if there is too much or (not). When the talks were taking part before the collection of the (grain) harvest, we couldn't possibly have known that the floods were going to happen. But it's true that GUS figures are pointing to production being lower than last year."