Agricultural machinery market Poland: Industry slightly in the black

Author / Editor: Wojciech Traczyk / Lina Klass

It is also the agricultural industry where production automation emerges, but in the case of Poland, this process is progressing slowly. In the past year, especially in its second half, the demand for automation of agricultural production increased, however, the growth rate was too small to speak of a breakthrough in this market segment. However, there have been symptoms emerging recently to see the early 2018 with more optimism.

Automation of Polish agricultural production requires increased expenditure
Automation of Polish agricultural production requires increased expenditure
(Source: Pixabay)

Despite the rather slow growth of the entire agricultural machinery industry, there are quite a few positive production gains for machines such as tractors, field seeders, scarifiers and cultivators as well as ploughs. A significant role here has the well-developed export of this type of machines, worth 750-800 million Euros per annum. In terms of trade with this industry, Poland systematically achieves a positive balance which after six months of 2017 amounted to 185 million Euros.

Warm reception in the foreign markets

Agricultural machines produced in Poland meet with a very positive reception in many non-European markets, especially in Africa. The magnitude of further benefits from foreign exchange will depend on the degree of improvement in the transaction price relationships in exports and imports. Since over a half of the Polish export is represented by the harvesting and threshing machines with just an average level of technology, and among those imported to Poland, there is a high percentage of more advanced machines available, the prices achievable in exports are lower than those paid for the imported equipment.

Although the manufacturers of agricultural machinery still do not fully utilise their production capacities due to insufficient sales, there have been signs of optimism about the future economic climate. This is apparent in the change of the index of moods of enterprises involved in the production of agricultural equipment. This index, from the beginning of 2015 to mid-2016, was gradually decreasing, reaching a score of -5.14 points in August 2016 which reflected the pessimism prevailing in the industry at the time. Later, however, it started to improve to score 2.1 points in autumn 2017.

The broad access to EU funds under the Rural Development Programme (RDP) may contribute to the improvement of the situation of producers of agricultural machinery. The funds launched for 2014-2020 cover a total of PLN 14.8 billion for investment in fixed assets, but their use is currently only 2.7%. This may mean that there will be a significant acceleration in the use of these funds in the near future.

Structure of the Polish agricultural industry

The Polish market for agricultural machines is dominated by large Polish enterprises employing over 250 people. There are about 50 such companies operating on the market, and the range is complemented by a group of around 200 smaller businesses manufacturing less complicated agricultural machines and spare parts for them. In addition to machines used in traditional agricultural technologies, Polish companies also offer equipment and machinery for specialised vegetable and animal production, including the production of healthy food and cultivation for industrial or energy generating needs.

According to the German Engineering Federation VDMA Association, the absorption capacity of the Polish agricultural machinery market in 2015 can be estimated to be 1.1-1.2 billion Euros, which gives Poland the 6-7th place in the EU with nearly 4% share in the European market, whose total value is estimated to be ca. EUR 28 billion. In Poland, almost all types of machines, equipment and tools used in crop and animal production, as well as in the storage and processing of agricultural products are now manufactured, with the exception of self-propelled machines – especially high-power farm tractors and combine harvesters. The more technically complex the machine is, the higher the share of imports in the sale of this product on the Polish market. However, in the case of machines with medium and low complexity, there is a clear advantage of domestic production over imports observed; for example, 75-80% of ploughs and sprayers available in Poland are manufactured in the country.

In Poland, there are also machines available from virtually all major European and global companies supplying farmers with tools for production. It forces domestic entrepreneurs to fiercely compete for a position on the Polish market and for customers in chosen international markets. Market successes, however, prove that Polish companies in a specific range of products can effectively face the foreign competition, which is supported by low production costs and the right choice of specialisation.

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