Poland is well situated
The country is surrounded by good apple markets.
Historically, Poland was not in an enviable position, located between Germany to the West and Russia to the East. During the Second World War, the capital of Warsaw was attacked by both countries and almost destroyed. But today, the Polish people are finding advantages in their situation.
"From a historic point of view, it was not the luckiest position," Polish apple grower and packer Marcin Hermanowicz told members of the International Fruit Tree Association at their annual conference in Germany. "But if you speak about exporting apples, it's the dream place that you could imagine."
Germany and Russia are the world's top apple importing countries, and the United Kingdom, the third-largest apple importer, is only 36 hours away by road from Hermanowicz's business. To the north are the Scandinavian countries, which are also big apple markets. In addition, some Polish producers export to the Balkan states in southern Europe.
Poland produces an average of 2.5 million tons of apples annually, triple its volume in 1990. The 2008 crop was a record at 2.8 million tons. Poland is the world's fourth-largest apple-producing country after China, the United States, and Iran, Hermanowicz said.
The growth of the Russian market is one of the reasons for the rapid growth in production over the past couple of decades. Russia wants cheap apples, and Poland, just next door, can supply them.
Another reason is the development of Poland's processed apple industry. About 50 percent of the crop, on average, goes to processing.
More than 75 percent of all fruit farms are smaller than a hectare (2.5 acres). Most orchardists are part-time growers and have other jobs. Because they have no cold storage, they need to sell fruit straight from the tree to processors for apple concentrate.
Of the remaining crop, half is consumed on the local market and half is exported. Until recently, the Russian market was growing fast and was able to absorb Poland's increasing production.
Hermanowicz said Poland hoped to export 700,000 tons of apples to the former Soviet countries of Russia, Belarus, and Ukraine this year, but it is facing increasing competition from China and Southern Hemisphere producers in those markets. There is also increasing local production.
In 2004, Poland joined the European Union, opening up more markets. Previously, it was difficult to export to Europe because of tariffs and entry prices. "Right now, we're building our position there, but not as fast as we wish," he said.
Polish apples are not always as high quality as Western clients would like. Hermanowicz said it has nothing to do with the quality of the apples on the trees. Rather, it's because of a lack of infrastructure.
"We don't have enough cold storage capacity, and we don't have big pack houses to pack the way customers want apples," he said.
He estimates that the industry has controlled atmosphere storage capacity for 350,000 tons of apples and another 350,000 tons of regular storage capacity, meaning that it can only store 700,000 tons out of the almost 3 million tons produced, forcing the rest onto the market before the end of December. "That's why we're not so competitive in Western markets," he said.
Another reason Poland struggles to be competitive is its variety mix. Idared is its top variety, accounting for 21 percent of the crop. Idared is a beloved variety in Russia, which likes big, red apples, but is not so popular in Western Europe. Poland also produces other varieties that are not popular in the West, such as Sampion (known as Szampion in Poland), Logo, Gloster, Ligol, Cortland, and Jonathan.
Jonagold, which can be sold in Western Europe, accounts for 11 percent of the crop, and Golden Delicious and Gala only 2 percent each.
With its record crop this year, Poland has been exporting some fruit to North Africa and the Middle East, Hermanowicz said. The fresh market has been difficult. Sales have been brisk, but prices have been low and even below the cost of production for some varieties.
"The only varieties that have reasonable prices are Gala and Golden Delicious," he said. "Those are known worldwide, so if we don't sell them to Russia and traditional markets, there are always other markets we can sell them to."
Ironically, the global economic crisis is helping Polish apple producers, he said. For example, the exchange rate versus the euro has moved in their favor, with 4.5 Polish zlotys to the euro, compared with only 3.0 to the euro last year, making Polish apples more attractive in export markets. The recession has also prompted consumers to look for cheaper products, such as Polish apples.
Prices for processing apples are also low, returning only about 2.5 eurocents per kilo (1.5 U.S. cents per pound) to the grower. People thought this would be a serious problem for Polish growers, Hermanowicz said, but most have other jobs and are able to survive.