This report covers the market developments in FY 2013, H1/2014 and the data available as of July 2014.

The Polish food sector posted good performance in 2013 and H1/2014, both in terms of production and foreign trade, despite certain segments facing difficulties. Exports of agri-food products increased at double-digit annual pace to EUR 19.9bn in 2013, propped by relatively high food prices and favourable market situation after the 2013 harvest.

The cereal crop production declined by 0.6% y/y in 2013, partially on high base comparison, yet average yields stood at 3.84 tonne per ha, above the 3.73 level in 2012, market data show.

Sugar output diminished y/y in 2013 and further in H1/2014, as the area cultivated with sugar beet also decreased over the period. Consumption coming from households has also been shrinking, yet on the upside, external demand and demand from the food industry continues rising. Accordingly, the Polish confectionery market recorded 1.5% y/y advance in value terms in 2013 and is expected to continue growing in the coming years.

Milk production declined marginally on an annual basis in 2013, yet overall the segment performed well. The profitability of milk processors improved y/y, propped by higher sales volume, higher prices and favourable conditions on the global market, even though the cost of raw materials continued to increase last year.

Meat output volume decreased marginally y/y in 2013, after having stagnated on an annual comparison in 2012. The steepest drop was recorded in pork production and the segment will predictably face further challenges in 2014, considering the ban on pork imports introduced by Russia as of end-Jan 2014.

Key points:
• Agri-food export performance in 2014 may be affected by unstable situation in Eastern Europe
• Food consumption expected to start picking up in 2014, after two-year stagnation
• Lower sugar beet crops drive downwards sugar output in 2013, H1/2014
• Sugar household consumption declines, but demand coming from food industry rises in 2013
• Pork output forecasted to recover in 2014, yet segment to be affected by import ban