Prosperity in agriculture

| Prospects & Investment |

In Q3 financial year 2013 the situation on agricultural production market improved significantly. The change took place in August 2013 when the Synthetic Agricultural Economy Indicator (pl: SWKR) went up by 0.6 point to 100.8 points and was not only 0.5 point higher than one year before, but also the highest in the past 6 months.

Changes of prices of agricultural products

The figure has gone up both owing to improved “price scissors” indicator, as well as the leveled indicator of expected growth. Price increases of most animal products have offset the consequences of falling cereal and livestock purchasing prices in July and August 2013.

Polish and global harvest

Despite slightly poorer harvest in 2013/14 season, supply will continue to dominate Polish cereal market, owing to lower domestic demand and decreased exportation volume. Export capacity is limited by more plentiful harvest we have seen in virtually all major cereal cultivation areas, in particular in Russia, Ukraine and in the North Sea region. A drop in domestic demand results from a marked reduction of pig population – the trend stemmed from high prices of cereals, which make breeding pigs less profitable.

Prices of cereals dependent on livestock farming

The considerable fall of the prices of cereals and fodder may boost the profitability of breeding granivorous animals, with particular regard to pigs and poultry. This could bring about a reversal of the falling trend and continued growth of poultry production. However, increased market supply of pork is not expected until the second half of 2014.

Forecast for agriculture

Analysts foresee that in the near future the market circumstances for farmers may deteriorate, following a seasonal drops of cereal purchasing prices. This year’s fall of prices of cereals is likely to be deeper than price dips over the past two years.

Articles prepares by Strategy and Development Team of Grupa Azoty “PUŁAWY”, headed by Andrzej Górecki.