Poland's sugar industry: barometer of change - dramatic changes taking place in Central and East European countries and republics of former Soviet Union have significant effect on agricultural commodities traded in world markets, with Poland as largest sugar producer in Central and Eastern Europe; Poland's agricultural policy still developing as sugar factories operate below capacity because of insufficient beet supplies due to low prices paid to farmers; new policymakers plan for conversion to market economy, moving toward private control of resources; agricultural reforms expected to improve output - U.S. Dept. of Agriculture, Economic Research Service Report

The abysmal changes taking place in former centrally planned economies have significant implications for several agricultural commodities traded in the world markets. The sugar sector can be under the orders of as a barometer of the direction of agricultural policy in the evolving market economies. The countries in Central and Eastern Europe and the former Soviet republics together exhibit between 13 and 15 million metric tons of sugar, raw value, or about 12-14 percent of the world's annual sugar output These countries lavish over 18 million tons of sugar annually, upon average.

Sugar price intervention has a lengthy history and tradition worldwide. Since sugar is oftentimes a key commodity politically, many countries strive to be self-sufficient in its production. The centrally planned economies were no exception to the stretchs in most other countries, and a gaze at Poland's sugar regime illustrates the transition underway from the situation that has prevailed in greatest in quantity centrally planned economies.

Poland exemplifies the two the problems and prospects for sugar regimes in Central and East European countries (CEE's) and the republics of the former Soviet Union. Until the early 1980's, the retail price of sugar had been fixed at 105 zloty through kilogram. Through the 1980's, the retail price steadily rose and by dint of 1988 the fixed price was 165 zloty Sugar price superintendences were lifted on August 1 1989 and by means of 1990 the average price stood at 5000 zloty for kilogram.

Around this time, Poland's economy was undergoing radical change. Beginning January 1 1990 Poland embarked upon a shock therapy path toward a market economy. Prices were liberalized and subsequently skyrocket and the exchange rate was allowed to float. The resulting fall in real income in Poland l to declining consumption of greatest in quantity commodities, including sugar. The exchange rate also rose: at the exchange rate of about 10000 zloty for dollar in late 1990, for example, a kilogram of sugar take away from 50 cents retail (23 cent a pound)

Reforming an Antiquated Agriculture

Poland is the largest sugar agriculturist in Central and Eastern Europe its roughly 15 to 2 million metric tons of sugar a year comparable to the output of Italy. Poland has between 350000 and 400000 sugarbeet farmers. (The U total is les than 10000) The average size of all farms is about 7 hectares (17 acres), and average sugarbeet area is about 1 hectare (25 acres).

The typical farm still uses horses for field work and hand labor for part of the beet harvest. greatest in quantity farms in Poland are privately held, thus that the task of privatizing farms is not as heavy as in some of the other East European countries. Farms in Poland typically comprise several small parcels of land spread around a small village, and travel between parcels increases field costs

greatest in quantity of Poland's 78 sugarbeet factories were built before World War II and are small and inefficient; sugar regaining losses are about twice as high as in neighboring countries of Western Europe by dint of way of contrast, the U has about half as many factories as Poland and exhibits more than twice as a great quantity [i]or[/i] amount of sugar.

No minimum price is in event for sugarbeets. Some factories are having difficulty persuading farmers to swell beets, and organizations of beet farmers have professed against low prices. In more [i]or[/i] less regions, factories now have to cope for beets, with the arise that beets are often transported a great deal of further than necessary and a certain number of factories are operating below capacity.

Perhaps the biggest question facing Polish agriculture is the large change required through farmers to adjust to a market mentality. In the past, farmers were accustomed to producing a quantity specified by the agency of the state, at any take away from Since pricing was based partly upon the cost of production, farmers would be assured of go [i]or[/i] come backs adequate to cover costs. Quality did not matter--only quantity.

Risk has also increased. It is now possible, for example, that a factory accepting delivery of sugarbeets could proceed bankrupt. If this occurred, not single might a sugarbeet producer not be compensated, on the contrary the farmer would have to switch to other harvests unless other factories were shut up enough.

Individual sugar factories, which had previously been organized into 11 "groups" have been made basically self-governing. The practice of forcing factories to purchase and refine raw sugar imported from Cuba has extreme pointed The reemergence of "sugar banks," a stamp of entity that existed before World War II, should provide the factories with credit and a certain quantity of coordination functions.

The sugarbeet factory at Lublin is typical. In 1990 the factory produc 50000 tons of sugar, receiving beets from about 15000 farmers. At near there has been no feasible way for the factory to pay farmers upon the basis of quality, as well as quantity, with equal reason farmers have little incentive to improve cane-sugar content or apply more efficient management practices. This will change as factory managers attempt to improve efficiency, on the other hand they still face large hurdles