Magdalena NowickaPoland

Ministry of Agriculture and Rural Development

Department of Rural Development

Support for milk processing in the pre - and after Polish accession to the EU

Republic of Poland - general information

Member of the EU since May 2004

Population: 38,2 mln

Area: 312 685 km2

Rural areas cover 93.2% of the country

Number of farms (over 1 ha): 2 mln in 1996, 1,5 mln in 2010,

Agricultural land – 16,9 mln ha (2002),

15,5 mln ha (2010)

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The extensive dairy sector in the pre-accession period

Milk production = 12.2 bln l (1998) 1.3 mln holdings had dairy cows, 19,5 % of them more

than 3 cows. Milk production/cow = 3700 l

About 500 000 milk producers, full-time employment for 100 000 people.

About 290 milk processing co-operatives and 130 private firms (with or without foreign capital).

Only 19 plants meeting EU export license standards.

4

Number of cows and the production of cows’ milk in Poland

5

Production of cows’ milk per 1 ha of agricultural land

6

Average annual quantity of milk

7

Preparation of the SAPARD in Poland [1/2]

April 1999 – The beginning of the preparations for the implementation of SAPARD in Poland

June 1999 – Adoption of Council Regulation (EC) No 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the pre- accession period.

July 1999 – Council of Ministers approves the strategy for rural development and agriculture in Poland.

July 1999 – Adoption of Commission Decision 1999/595/EC on the indicative allocation of the annual Community financial contribution to pre-accession measures for agriculture and rural development.

December 1999 – Adoption of Commission Regulation (EC) No 2759/1999 laying down rules for the application of Council Regulation (EC) No 1268/1999 on Community support for pre-accession measures for agriculture and rural development in the applicant countries of central and eastern Europe in the preaccession period.

December 1999 – SAPARD programme submitted to the Commission 8

History of the preparation of the SAPARD in Poland (Special Pre-Accession Programme for Agriculture and Rural Development) [2/2]

June 2000 – Adoption of the Financial Implementing Regulation.

October 2000 – SAPARD programme adopted by Commission Decision.

January 2001 – Signature of Multi-Annual Financing Agreement with Poland

2001 – 2002 SAPARD Agency preparations, audits

August 2002 – Start of the SAPARD programme in Poland

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SAPARD budget by measures [EUR]Measures Total eligible

costTotal public expenditure

EU contribution Nationalcontribution

Privatecontribution

1. Improvement in processing and marketing of food and fishery products

1 195 520 004 

(after the final change

1 095 393 824)

597 760 002 

(after the final change

547 696 912)

448 320 000 

(after the final change

410 772 688)

149 440 002 

(after the final change

136 924 224)

597 760 002 

(after the final change

547 696 912)

2. Investments in agriculture holdings

554 891 066 

(513 111 638)

277 445 533 

(256 555 819)

208 084 148 

(192 416 864)

69 361 385 

(64 138 955)

277 445 533 

(256 555 819)

3. Development of rural infrastructure

445 960 002 

(672 348 175)

437 040 002 

(658 901 211)

327 780 004 

(494 175 908)

109 260 002 

(164 725 303)

8 920 000 

(13 446 964)

4. Diversification of economic activities in

rural areas

362 773 338 

(349 561 432)

181 386 669 

(174 780 716)

136 040 000 

(131 085 537)

45 346 669 

(43 695 179)

181 386 669 

(174 780 716)

5. Agri-environmental measures

30 560 003 

(0)

30 560 003 

(0)

22 920 000 

(0)

7 640 003 

(0)

0 

(0)

6. Vocational training 34 146 668

(32 993 032)34 146 668

(32 993 032)25 610 000

(24 744 773)8 536 668

(8 248 259)0

(0)

7. Technical assistance35 350 012(6 172 417)

35 350 012(6 172 417)

32 463 450(4 937 932)

2 886 562(1 234 485)

0(0)

Total

2 659 201 093(2 669 580 517)

1 593 688 889(1 677 100 107)

1 201 217 602(1 258 133 702)

392 471 291(418 966 405)

1 065 512 204(992 480 410)

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Changes in the SAPARD programme

Changes made in the program after the start of its execution and implementation procedures were designed to simplify and facilitate access offered under the SAPARD program support to the beneficiaries, as well as broadening the category of beneficiaries eligible for support.

November 3, 2004 the Commission approved the final financial table for the SAPARD programme.

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Initial allocations Final allocations

Agri – food industry 37,32% ↓ 32,65%Agricultural holdings 17,32% ↓ 15,29%Infrastructure 27,29% ↑ 39,28%Diversification 11,33% ↓ 10,42%Agri-environment 1,91% 0%Training 2,13% ↓ 1,97%TA 2,70% ↓ 0,40%

The initial and final allocations for each of the program

Support for milk processing – measure description [1/4]

Measure 1: Improvement in processing and marketing of food and fishery products

Scheme 1.1. Support for processing of animal origin products

Beneficiaries - Milk, meat and fishery sectors

Objectives:‒ to increase the volume of production coming from plants with food

safety systems (HACCP) and EUROP grading system;‒ to improve the milk collection system;‒ to improve the quality of fish supplied to processing plants or for

direct sales;‒ to increase the number of processing plants with sewage, waste and

by-product management facilities;‒ to introduce new technologies ensuring better adjustment to market

needs;‒ to increase the share of raw material purchased on the basis of long-

term contracts between processing plants and agricultural producers, and in particular between processing plants and agricultural producer groups. 12

Support for milk processing – measure description [2/4]

Scope of grants for Scheme 1.1.‒ construction and modernisation of buildings of processing plants and

equipment in accordance with EU veterinary, sanitary and animal welfare standards – in existing enterprises;

‒ modernisation or replacement of production lines and the introduction of technologies which will increase value added and which will conform with the requirements of the acquis communautaire in relation to hygiene, quality, packaging and labelling, not later than before the grant is paid out;

‒ investment enabling the reduction of nuisance caused by waste water discharges, gas and dust emissions;

‒ investments related to the reduction of power and water consumption with regard to the technological processes;

‒ investments in waste and by-products management;‒ implementation of food processing safety system (HACCP);‒ purchase of equipment to introduce the EUROP grading system;‒ purchase of milk tanks and coolers.

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Support for milk processing – measure description [3/4]

Eligible expenditure construction and modernisation of buildings; purchase and installation of new machinery and equipment

including computer software and special transport equipment; general costs, namely costs of architects, engineers and

consultants' fees, legal fees, feasibility studies, acquisition of patents and licences, for preparing or implementing a project.

Levels of aid the maximum rate of aid is up to 50% of the total eligible costs

‒ cannot exceed 2 500 000 EUR/per the industrial plant over the programming period

‒ in addition, a plant may receive in total up to 275 000 EUR for investments in favour of poducer groups

‒ not lower than 30 000 EUR/project14

Support for milk processing [4/4]

The results of the measure 1 1 778 applications submitted, 1 342 contracts signed,

the budget of the measure fully used

Dairy sector: 385 applications submitted, 325 contracts signed (value: 101 mln euro), payments reached the amount 97 mln euro.

The average value of the project in the dairy sector = 297 000 euro.

Most of the expenditure (about 70%) in the dairy industry was spent on the purchase and installation of machinery and equipment and to adjust processing plants to sanitary and veterinary standards.

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The achievement of the expected results (projects completed)

Result indicators The value of the indicator

Expected results

1 number of plants approved as complying with EU veterinary and sanitary regulations 147 100

2 volume of production coming from plants with export certificates to the EU countries (in million litres) 1 386 2 700

3 number of plants with HACCP system 127 -4 number of plants, that have implemented the adaptation to the sanitary

and veterinary EU 154 -

5 number of plants compliance of the industrial plant with the minimum national requirements related to the production hygiene and animal welfare

155 -

6 number of milk tanks purchased 320 -7 amount of processed raw material (in million litres) 8 530 -8 volume of production (in million tonnes) 3 838 -9 amount of raw materials contracted with agricultural producers

(in million litres) 4 928 -

10 average size of producers group (number of members of the group) 0 -11 % of E-grade milk collected 80 -12 reduction in pollution by plants (in %) -8,8 -13 waste and by-products treated (in %) 68,2 -

14 amount of waste and by-products treated (in tonnes) 954 221 -

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SOP 2004-2006 budget by measures [EUR]Measure Total eligible cost

Total public expenditure

EU contribiutionPoland’s

contributionPrivate

expenditure

1.1 Investments in agricultural holdings 902 448 005 586 591 204 315 856 801 270 734 403 315 856 8011.2 Setting up of young farmers 178 930 178 178 930 178 134 197 633 44 732 545 01.3 Training 19 364 305 19 364 305 15 491 444 3 872 861 01.4 Agriculture advisory support 42 781 699 42 781 699 34 225 359 8 556 340 01.5 Improvement of the processing and marketing of agricultural products

1 005 461 720 502 730 860 347 427 767 155 303 093 502 730 860

2.1 Restoring forestry production potential damaged by natural disaster and fire and introducing appropriate prevention Instruments

13 913 555 13 913 555 10 719 702 3 193 853 0

2.2 Land reparcelling 21 250 000 21 250 000 17 000 000 4 250 000 02.3 Renovation of rural areas and preservation and protection of cultural heritage

112 500 000 112 500 000 90 000 000 22 500 000 0

2.4 Diversification of agricultural andagriculture-related activities to provide multiple activities or alternative incomes

162 238 126 81 119 063 56 783 344 24 335 719 81 119 063

2.5 Agricultural water resources management

140 000 000 132 000 000 100 000 000 32 000 000 8 000 000

2.6 Development and improvement of the infrastructure related to agriculture

84 376 104 42 188 052 29 531 636 12 656 416 42 188 052

2.7 LEADER + Pilot Programme 30 443 952 30 443 952 23 455 552 6 988 400 03.1 Support to the system managing and implementing the Programme

12 367 620 12 367 620 9 275 715 3 091 905 0

3.2 Institutional development 8 630 200 8 630 200 6 472 650 2 157 550 03.3 Providing information about the Programme and promotion

3 002 180 3 002 180 2 251 635 750 545 0

Total 2 737 707 644 1 787 812 868 1 192 689 238 595 123 630 949 894 77617

Measure 1.5. Improving processing and marketing of agricultural products [1/3]

Measure objectives improvement of sanitary-hygienic and veterinary conditions of

production; market orientation of production and utilization of the existing

market niches; creation of new and the rationalization of existing sales outlets; improvement of production quality; increase in value added of production; reduction of adverse environmental impact; improvement of the logistics structure; improvement of animal welfare; introduction of new and modernization of the existing production

technologies

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Measure 1.5. Improving processing and marketing of agricultural products [2/3]

Scope of Aid construction or modernization of production plants

or the agricultural product wholesale infrastructure; environmental protection investments bringing

measurable ecological results.

19

Measure 1.5. Improving processing and marketing of agricultural products [3/3]

Level of Aid max 50% of total eligible costs max 5 million euro / beneficiary no less 25 000 euro per one project

BeneficiaryProcessing plants in milk, meat, fruits and vegetables, grain and other sectors defined in eligibility criteria); agricultural product wholesale markets, commercial freezing and storage of agricultural products, egg packaging.

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The results of the measure 1.5

1 085 projects completed , total value = 1 bln euro,

243 projects in the dairy industry (22,4% of the total), total value of circa EUR 300 mln.

21

RDP 2004-2006 budget by measures [EUR]

Measure Total eligible cost EU contribution National contribution

1. Early retirement 534 739 542,30 427 791 000,30 106 948 542,00

2. Support for semi-subsistence farms undergoing restructuring

340 559 376,60 272 356 571,69 68 202 804,91

3. Support for less-favoured areas (LFA)

944 704 686,13 754 722 432,93 189 982 253,20

4. Support for agri-environment and Animals welfare

208 334 142,42 166 581 658,27 41 752 484,15

5. Afforestation of agricultural land

99 985 829,74 79 942 091,02 20 043 738,72

6. Meeting the EU standards

630 945 068,00* 504 686 720,00 126 258 348,00

7. Support for agricultural producers’ groups

6 373 266,50 5 056 019,70 1 317 246,80

8. Technical assistance 29 824 467,58 23 720 855,73 6 103 611,85

9. Complements to direct payments

677 648 837,42 542 079 232,80 135 569 604,62

Total 3 473 115 216,69 2 776 936 582,44 696 178 634,25

22* the original budget of measure was EUR 243 400 000

The results of the measure 6

71 385 agricultural holdings received the support of the total value euro 633 mln.

Scheme 2. „Adjustment of milk farms to the EU public health standard” - 5 540 households have received the aid (nearly 4 500 euro/holding).

The value of payments reached 23 mln euro.

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The effects of the investment in the dairy sector

Type of investment NumberValue of investment

(mln euro)

Number of modernized cowsheds 0 0

Number of modernized posts 0 0Modernization of the walls and floors in raw milk storage spaces and in milking spaces or milking

stalls5 003 0,62

Equipment for milking (modern milking systems) 3 305 5,3

Equipment in the milk cooler till 200 l 1 189 2,5

Equipment in the milk cooler from 200 to 400 l 2 145 6,9

Equipment in the milk cooler from 400 to 800 l 1 203 5,4

Equipment for water intake 867 1,4 Equipment room to store milk in the wash-basin

with water heater 4 499 0,6

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RDP 2007-2013 budget by measures [EUR]Measure title Total eligible cost Public expenditure

Private expenditure

111 Vocational training for persons employed in agriculture and forestry 30 000 000 30 000 000 0112 Facilitation of young farmers’ setting up 420 000 000 420 000 000 0113 Early retirement 2 549 600 000 2 549 600 000 0114 Making use of the advisory services by farmers and forest owners 147 500 000 118 000 000 29 500 000121,144 Modernisation of agricultural holdings 4 796 890 923 1 919 068 111 2 877 822 812123 Increasing the added value to basic agricultural and forestry production 3 728 000 000 932 000 000 2 796 000 000125 Improvement and development of infrastructure related to the development and adjustment of agriculture and forestry

637 531 111 637 531 111 0

126 Restoring agricultural production potential … 111 111 111 100 000 000 11 111 111132 Participation of farmers in food quality schemes 40 000 000 40 000 000 0133 Information and promotion activities 14 285 714 10 000 000 4 285 714141 Liabilities for the period 2004-2006; Measure: “Support for semi-subsistence farms”

560 000 000 560 000 000 0

142 Agricultural producer groups 140 000 000 140 000 000 0211,212 Support of management in mountain areas and in less-favoured areas (LFA) 2 448 750 000 2 448 750 000 0

214 Agri-environmental programme (agrienvironmental payments) 2 314 861 111 2 314 861 111 0221,223 Afforestation of agricultural and nonagricultural land 473 501 520 473 501 520 0226 Restoring forestry production potential damaged by natural disasters and introducing appropriate prevention instruments

100 000 000 100 000 000 0

311 Diversification towards non-agricultural activities 691 160 000 345 580 000 345 580 000312 Establishment and development of microenterprises 2 047 167 200 1 023 583 600 1 023 583 600321 Basic services for the economy and rural population 1 613 984 209 1 613 984 209 0322,323,313 Rural renewal and development 589 580 000 589 580 000 0413 Implementing the local development strategy 1 023 615 385 620 500 000 403 115 385421 Implementing the cooperation projects 15 000 000 15 000 000 0431 Running of the Local Action Group, acquisition of skills and activation 152 000 000 152 000 000 0511 Technical Assistance 266 600 000 266 600 000 0TOTAL 24 911 138 284 17 420 139 662 7 490 998 622

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Measure 123 Increasing the added value to basic agricultural and forestry production [1/3]

Scope of Aid‒ construction, modernisation or reconstruction of

buildings or facilitates constituting infrastructure of processing plants or of agricultural products wholesale,

‒ Purchase and installation of new machinery or equipment (including laboratory equipement and software)

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Measure 123 Increasing the added value to basic agricultural and forestry production [2/3]

Aid intensity The financial aid cannot exceed 5 mln euro per

beneficiary and :‒ 40% of the total eligible cost of the project implemented by

SME; ‒ 25% of the total eligible cost of the project implemented by

non - SME;‒ 50% the total eligible cost of the project implemented by a

SME, who acquires the raw materials on the basis of the long-term agreements with agricultural producer groups or who implements a project related to the processing of agricultural products for energy purposes.

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Measure 123 Increasing the added value to basic agricultural and forestry production [3/3]

Beneficiary

Enterpreneurs

registered and operating in processing or marketing of agricultural products,

SMEs or enterprises employing less than 750 persons, or an enterprise with turnover not exceeding 200 mln euro

different sectors of agricultural products processing covered (including milk sector)

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Current information - measure 123

1481 contracts with 879 beneficiaries signed;

75 % of the budget contracted;

Nearly 900 operations finished;

42 % of the budget spent.

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Support for processing of agricutlural products and number of beneficiaries including the dairy sector – summary

30

Support for processing of agricutlural products and number of beneficiaries including the dairy sector – summary

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What makes a program successful?

Consultations with the social, economic and regional partners – adjustment of the programme to their needs and objective asessment of the situation of the sector.

Communication through the meetings, conferences, trade newspapers and other media.

General and detailed information dissemination through different channels: websites, hotlines, printed materials advisory services, banks, commercial sector, branch organisations etc.

Good practice – neighbor effect

Grant system (refundation of eligible costs) can work if beneficiaries have an access to credits.

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