The last months and quarters have been a difficult period for Polish agricultural producers. Due to previous market fluctuations coronavirus, further factors destabilized the situation: war in Ukraine, exuberant inflation, climate disturbances and trade liberalization with Ukraine. This had an impact on prices on agricultural markets.
According to the Central Statistical Office, the purchase prices of basic agricultural products in December 2023 were as much as 19.6 percent. lower than in December 2022. This is the largest annual decline in at least four years. Statistical office takes into account the prices of wheat, rye, live beef, pork resin, poultry and cow’s milk in this list.
However, as final consumers, we do not experience such drastic changes in wholesale prices. As Jakub Olipra, agricultural markets expert from Credit Agricole bank, explains, the translation of prices from purchasing to retail trade is much weaker.
“Price of agricultural raw materials this is one of many elements that make up the prices we see in stores. These should include, among others: costs of processing raw materials, logistics, marketing and many others,” explains Olipra.
A period of increased price fluctuations
In 2022, it was the main price driver war in Ukraine. At that time, we recorded very high increases in the prices of agricultural products – in the summer months they exceeded 50%. on an annual basis. We entered 2023 with a slowing growth trend, and in May 2023 we recorded negative dynamics for the first time in many quarters. The declines deepened with each subsequent month, to show a value of minus 19.6% in December 2023.
Changes in purchase prices of basic agricultural products in 2022-2023 compared to the same month of the previous year / Forsal.pl
Last year passed with constant (minor or major) price increases, while in 2022 the prices of basic agricultural products only increased. However, the two previous years – 2021 and 2020 – were also characterized by high volatility: in 2020, we had an increase of 7.5% in February. y/y, and already in May a decline of 7.0%. However, 2021 started with a decline of 3.6%. y/y to record an increase of 28.9% in December.
Changes in purchase prices of basic agricultural products in 2020-2021 compared to the same month of the previous year / Forsal.pl
Purchase prices must follow costs
As Olipra explains, such unpredictability and price fluctuations may affect the financial liquidity of agricultural producers.
– It is important that the prices obtained by farmers fall slower or at least at the same pace as the prices paid for the means of production. Then we have no deterioration financial situation of farmers – explains Olipra and gives the example of cereal producers.
– There was a strong decline in purchase prices, but at the same time we noted lowering fertilizer prices or fuel – he says.
In the case of farmers specializing in animal production, lower prices of cereals and oilseeds mean lower prices of feed, which partially cushions the falling purchase prices of livestock and milk.
In December, only potatoes are more expensive
According to the Central Statistical Office, in December 2023 wheat price in purchase was 40.8 percent. lower than last year, a rye price lower by 44.8 percent Producers received 23.2% more for milk. less than a year earlier.
Breeders also obtained lower prices – the price for beef was 9.7%. less than at the end of 2022, for pork by 5.2%, and for poultry by as much as 18.6%.
According to the Central Statistical Office data, the only basic agricultural product that increased in wholesale prices during the 12 months of 2023were potatoes – for this vegetable, producers obtained 12.9 percent more. more than a year earlier.
A period of food price stabilization is ahead of us
Economists expect that food prices – after a period of major changes, especially increases in 2022 and 2023 – they will be stable in the coming months.
“The shock of war in Ukraine has already expired and 2024 should bring greater stabilization of purchase prices. The risk factor for such a scenario are agrometeorological conditions, which, due to ongoing climate change, are becoming more and more variable, which also affects the variability of agricultural production,” says Olipra from Credit Agricole.
Let us recall: throughout 2023, the “food” category increased in price by 15.1%. In December, year-on-year, food prices however, they increased by 5.5%.
For stabilization food prices this year – in addition to the stabilization of agricultural markets – there will also be an extension zero VAT rate for food products. Originally, the relief was to apply only until December 2023, but at the end of the term of office of Mateusz Morawiecki’s government, it was decided to introduce a regulation that would extend the 0%. VAT until the end of March 2024
