Pork chops are on the table, and on a warm summer weekend, a barbecue is a must – this has been the reality in many Polish homes for years. However, this may change in the medium term. All because of the galloping prices, which, according to Eurostat data, have increased the fastest in the EU. But not only.
Meat prices in the EU
From the beginning of 2020 to February 2022, meat prices in Poland were quite stable – sometimes they rose, sometimes they fell, but the differences were small – the fluctuations were only a few percent. The situation began to change in March 2022, when the price index moved significantly. For comparison: while the meat price index in February was 124.7, in March it was 132 and in April it was already 143.3. All this is in relation to 2015, for which the index value is assumed to be 100. The record was set in September last year. At that time, the price index rose to 164.9, which gave us the leading position in the EU countries in terms of price increases.
Prices have changed throughout the EU, but nowhere as dynamically as in these three countries: Poland, Bulgaria and Hungary. The index for the EU currently stands at 140 and is highest in Bulgaria (171.4), Hungary (171) and Poland (168.3). In the Old EU countries, price changes were also significant, but the pace at which they occurred was much slower. For example, in Germany, the price index in June was 147.6, and in France 131. In March 2022, it was 111.3.
Experts explain that the situation was caused by several factors: increased grain imports by China, Russia's invasion of Ukraine, led to a more than doubling of the production costs of poultry, pork and beef in 2022 compared to 2020. This was reflected in the price of the products.
– Prices of feed, energy and other raw materials necessary for production constitute about 80% of all costs and have the greatest impact on the final price of products. In addition, there are personnel costs and costs resulting from the low level of technological advancement of many meat plants. With low margins, high volatility on the market and lack of knowledge about the real costs of production processes, it is much more difficult to optimize them, they are simply transferred to the customer – points out Andrzej Szubryt from BPSC, a company providing software supporting management, among others for the meat sector.
According to a representative of an IT company specializing in computerization of the food sector, the meat industry was one of those most skeptical about investing in technology.
– We showed specific calculations showing how much money large retail chains saved on simple automation of communication with business partners, but we did not see much interest in the meat industry. Since the product sold itself, Poland became one of the largest exporters of poultry, the management did not see a greater need to optimize costs. This has only started to change recently – explains Andrzej Szubryt.
The meat market in Poland is very fragmented
The meat market is very fragmented. Companies that are better computerized can manage costs much better. An example is Cerdrob Foods, which has been investing in technology for years. In 2013, it implemented the ERP Impuls EVO system, which was supposed to help, among other things, track product batches, and a year ago it reached for its new version, at the same time integrating it with logistics solutions. The head of the company's IT department says the following about the benefits of digitalization:
– The new version of the system enabled precise monitoring and production planning, which contributed to the effective management of raw materials and minimization of losses. It also enabled better tracking of the flow of raw materials and meat products, which significantly improved traceability – a key aspect in the meat industry. Additionally, the system ensured optimal inventory management and quality control, which increased the company's operational efficiency and profitability. – specifies Adam Wiechoczek from Cerdrob Foods.
Poles eat a lot of meat and look at the price
According to data from Agrarmarkt Informations-Gesellschaft (AMI), Poles consume 58 kg of meat per year, which places our country above the EU average in terms of consumption, but at the same time quite far behind the leaders: Ireland, Cyprus and Spain, where over 80 kg of meat is consumed per person per year. Other data is presented by the Central Statistical Office, according to which the average Kowalski consumed over 73 kg of meat in 2022. However, they do not change the essence – we eat meat willingly, although contrary to appearances, not as much as citizens of some EU countries.
In a report published on the market, PwC says clearly: 89% of Poles eat meat more than once a week, and the main determinants of the choice of meat type are the ease of preparing a meal and price. And it is this second factor that is becoming a growing problem – both for consumers and producers.
Clouds over producers
Exporters have learned how important price is. The abolition of customs duties and quotas on much cheaper poultry meat from Ukraine has put them under strong pressure. However, it is not only price fluctuations that are keeping producers awake at night. According to PwC data, an average of 50% of consumers, both in Poland and throughout Europe, plan to reduce their meat consumption. In 2022, over 60% of Poles had access to meat substitutes;
of which almost half of them tried these products, mainly out of curiosity. Over 40% of them consume meat substitutes regularly.
The European Commission's plans to significantly increase production requirements in the EU are also causing concern. Will this have to affect production costs? According to experts, it doesn't have to, the key is active production management, which means data-driven production.
