Poland has developed into one of the most stable country from the former Eastern Bloc countries. The country has also seen tremendous growth both in the political and economic aspects since 1989, when its first free elections were held. With a population of close to 40 million and the GDP at purchasing power parity of around US$800 billion (equivalent to US$21,000 per capita, according to 2012 estimates), the country is ranked sixth in Europe in terms of population and economic prowess.
Since this period, Poland’s economy has flourished and is considered to be one of the healthiest of the former Eastern Bloc countries. Economic growth rates have consistently been among the highest in the EU and its economy has been climbing moderately for more than a decade. This is matched by a steady GDP growth especially since 2015 which was largely driven by a booming private consumption and investment.
Despite the progress made, there are still shortcomings in the country’s administration system as underlying problems persist such as an inefficient commercial court system, rigid labour laws and heavy personal and corporate taxes. Furthermore, per capita income is still below the EU average. Nevertheless, Poland’s success in its journey towards joining the ranks of modern, market-based economies has been remarkable and there are no signs of the country slipping into economic uncertainties.
Oils & fats scenario
Poland is a country which has a deficit oils and fats scenario as domestic production is insufficient to cater to demand. Production in 2019 was 1.57 million MT while consumption was at 2.29 million MGT which necessitates the need for imports. In this respect, Poland imports close to 1 million MT oils and fats in 2019 and palm oil is the most imported oil comprising of almost 29% of imports. Other major oils imported are sunflower, rapeseed and sunflower oils.
The deficit between oils & fats production and consumption keeps growing wider over the years and this also necessitates higher imports every year. As the most competitively priced oil, palm oil has seen its uptake into the country rising over the past few years and it has consistently hovered above 200,000 MT annually since 2012.
The most consumed oil is rapeseed oil comprising 50% of the total oils and fats consumption. Palm oil is the second-highest in terms of domestic consumption rankings at 12%. As the primary vegetable oil imported into Poland, palm oil from Malaysia is the main source and Malaysia is the only producer that also plays a role as direct exporter to Poland.
Poland has a developed infrastructure for international trade with the large and modern port of Gdansk on the Baltic Sea which is strategically located at the centre of Europe. This is an ideal location as being the gateway for palm oil imports – not only to Eastern and Central Europe, but to the EU as well. Poland’s Port of Gdansk has announced that key stages of a EUR1.3bn ($1.6bn) infrastructure improvement investment will be completed within this year.
The infrastructure improvements, which number almost 40 projects, will establish Gdansk port’s position as the pre-eminent Baltic port with access to a hinterland and foreland of 120 million people across Poland, Czech Republic, Slovakia, Hungary, Ukraine, Belarus, and Scandinavia
In addition to this, Poland is also developing their port facilities as follows:-
- Central Seaport in Gdansk: The concept for this project is ready, and will followed by environmental assessment and public discussions. Estimated completion date: 2029. Estimated cost of the project: $1,57-$2,10 billion
- Port Gdynia Project: creation of an additional port that will toad up to 180ha, to the already existing 240 ha. Cost of the project: $0,66 billion, Estimated completion date: 2026.
- The government is also pursuing the Piercing Spit of Vistula, a flagship project. If completed, this will create a 1,300 m long and 5 m deep canal that would create an inland port in the city of Elblag. The project will cost $250 million and it will be finished in 2022.
The Port of Gdansk intends to develop as the main gateway to central and eastern Europe. This region is expected to grow in GDP by 48 per cent until 2030 and this would mean that a lot of new cargo will arrive to the port of Gdansk. The port will expand considerably, in particular in the DCT container terminal.
Market sectors for palm oil
This are among the reasons which makes Poland as a potentially lucrative market for Malaysian palm oil, despite stiff competition from rapeseed and sunflower oils. Over the years, the awareness of the Polish consumer regarding the benefits of palm oil has been enhanced due in part to the constant efforts of MPOC in communicating with relevant counterparts about the health and economic benefits of Malaysian palm oil. Their apprehensions about palm oil being related to environmental issues has been alleviated to a certain extent. Malaysia stand to benefit by stressing the positive aspects of palm oil with regard to both nutrition and sustainability.
Palm oil use in Poland is categorized in the following sectors:-
Another area for growth in palm oil uptake in Poland is in the biodiesel sector. Out of the 2.3 million MT oils and fats consumed, 920,000 MT or 40% is used in biodiesel production. Although rapeseed oil is the most common feedstock, palm oil is also gaining traction as a source feedstock. There is growing demand for renewable and sustainable fuel in Poland and
Support from Poland Government
The government has a palm oil friendly attitude towards palm oil and in attesting this fact, Poland’s Ambassador to Malaysia Professor Krzysztof Debnicki said that Poland, as one of the major food producing countries in the EU is also one of the key recipients of palm oil. Palm oil is widely used in its food industry as well as chemical and cosmetics industries and also as a component for biofuels. The country has no intention to reduce the demand for palm oil despite the country being one of the largest producers of rapeseed oil in Europe. They also do not see any need for embargoes related to Malaysian palm oil.
The ambassador also reiterated Poland’s position on the EU ban by stating that “Poland’s position regarding the amendment of the EU REDII directive banning the use of palm oil as a component of biofuels was clear from the start. “We oppose the amendments because we believe they are non-systematic, selective, and do not solve issues relevant from Poland’s point of view”.
As a further show of support, the Ambassador stated that legal regulations imposing restrictions on the export of palm oil from countries such as Malaysia may have negative consequences for small and medium producers of this raw material.
The economy of Poland is growing and prior to the coronavirus outbreak which affected the global economy, Poland was among the fastest-growing economies in the European Union (EU). The growth was led by household consumption which was in no small part due to the increases in budgetary expenditures and rising wages which helped to economy to continue to grow. Coupled with the continuing low interest rates and the execution of European funds–related investments, helped Poland’s economic growth prospects.
In terms of business relationship and palm oil, the image of Malaysia is positive aided by the good relationship between the two governments. As such, there are opportunities abound for palm oil to reinforce its presence to complement the domestic oils and fats consumed in Poland especially in the non-food sectors such as oleochemicals and biodiesel.
Prepared by: Mohd. Izham Hassan
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