VZCZCXRO2037
RR RUEHKW
DE RUEHWR #0538/01 1211320
ZNR UUUUU ZZH
R 301320Z APR 08
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC 6389
INFO RUEHKW/AMCONSUL KRAKOW 2079
RUEHBS/USEU BRUSSELS
RUEHRC/USDA FAS WASHDC 2039

UNCLAS SECTION 01 OF 02 WARSAW 000538 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TPP/ABT/ATP JANET SPECK 
USDA/FAS FOR OCRA/CURTIS, SEIDBAND; OGA/CHAUDRY; OSFO/LEE, 
CURTIS 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECON ETRD PGOV PL PREL
SUBJECT: IMPACT OF RISING FOOD/COMMODITY PRICES - POLAND 
 
REF: SECSTATE 39410 
 
¶1. (U) SUMMARY: Overall food prices in Poland have risen 
about 7 percent in the past year, but are not reflected in 
lower rates of consumption as wage increases topped 10 
percent in the same period.  A continuing increase in prices 
could affect at-risk populations in poorer regions.  Rising 
food prices have had an effect on policy: the Polish 
government announced its priority is food production rather 
than biofuels.  End summary. 
 
--------------- 
Farm Production 
--------------- 
 
¶2. (U) The increase in grain prices stimulated a greater 
supply of grain in Poland.  Farmers released last year's 
grain stocks in response to the price incentive.  In 
addition, the Polish zloty has appreciated against both the 
Euro and U.S. dollar helping to stimulate grain imports both 
from within the EU and from other suppliers such as 
Argentina. Despite high world commodity prices the strong 
Polish currency has kept imported feeds, mainly soybean meal, 
relatively inexpensive for Polish farmers.  Higher prices for 
major grains and rapeseed are expected to result in expanded 
acreage in 2008 and 2009. 
 
¶3. (U) Higher prices for feed grains have had a minor impact 
on livestock production to date.  There has been no impact on 
pork prices due to the current oversupply of hogs in Poland. 
In addition, Poland is importing cheaper pork from Denmark 
and other EU countries. The effects on poultry prices have 
been negligible as well due to sufficient supply and 
relatively cheap pork, an easy substitute for consumers. 
Later in 2008 the supply will diminish and increasing feed 
grain prices should begin to raise meat prices.  The 
introduction of a potential GM feed ban in August 2008 could 
have a major effect on animal production if the Polish 
government does not delay its implementation. 
 
----------- 
Consumption 
----------- 
 
¶4. (U) According to the official data published by Poland's 
statistical office from March 2007 to March 2008 food prices 
increased 7 percent, while the general price and service 
index increased 4.2 percent.  Higher food prices are not 
reflected by lower consumption because average wages 
increased more than 10 percent over this same period due to 
Poland's fast growing economy. 
 
¶5. (SBU) The level of income and consumption in Poland is 
very different between rural and urban areas.  In rural areas 
income levels remain much lower, but many of those are 
involved with farming and therefore have access to cheaper 
and self produced food.  Poland does have pockets of poverty. 
 A food relief agency in Poland, The Foundation for Corporate 
Responsibility, reports that Poland has the largest 
percentage of children at risk for poor nutrition in Europe, 
above 30 percent, or 3 million children, and if food price 
increases continue it could have an effect on the children in 
the poorer regions, such as northeastern Poland. 
 
------ 
Policy 
------ 
 
¶6. (U) In response to the rising world food prices, the 
government of Poland has announced several times that its 
priority is food production rather than grain-based biofuel 
production.  Poland will instead focus on the use of second 
generation cellulosic biofuels from grasses and wood rather 
than grain-based biofuels. 
 
¶7. (SBU) The Polish government has also expressed a 
willingness to delay to 2012 a GM feed ban scheduled for 
implementation August 2008.  If the Government of Poland and 
the Polish Parliament are able to delay the ban the Polish 
livestock industry will avoid dramatic feed-related price 
increases. 
 
¶8. (SBU) As an EU member, Poland enforces all of the 
non-tarriff trade barriers introduced by the European Union. 
In addition, Poland enforces its own GM seed ban, hindering 
its own feed grain production.  The Common Agricultural 
 
WARSAW 00000538  002 OF 002 
 
 
Policy (CAP) continues to heavily subsidize Polish farmers. 
Poland will receive USD 5.7 billion from the European Union 
in direct and rural development subsidies to farmers in 2008. 
 Despite high prices, support for the CAP remains strong and 
Poland opposes major CAP reform. 
 
 
ASHE