Poland: Soaring costs for dairy, investments go ahead

During the first three-quarters of 2023, the dairy sector in Poland generated a net revenue of PLN 38.3 billion (US$9.62 billion), down 10.1% compared with the previous year. Exports revenue dropped by 6.9% to PLN 6.8 billion (US$1.71 billion).

The sector’s financial performance is mixed, with the cost of milk delivered to dairy plants totalling PLN 11.6 billion (US$2.91 billion), up 2% compared with the previous year. Meanwhile, the average purchase price dropped by 8.3% to PLN 2.07 (US$0.52) per litre, the Chamber of Milk reported.

Milk price compensates for soaring costs

Cheaper raw milk was one of the key factors bolstering the dairy processing segment’s profitability. Overall, operational costs stood at PLN 38.3 billion (US$9.62 billion), which was 6.2% below the previous year. Energy costs jumped 13.7%, while costs associated with external services like transport and logistics jumped 7.2% and wages and salaries increased 7.9%.

“Based on the data from the three-quarters of 2023, the financial health of the Polish dairy industry has deteriorated compared to the same period in 2022, but it has improved compared to the results in the first half of 2023,” Agnieszka Maliszewska, director of the Polish Chamber of Milk, was quoted as saying in the statement.

Dairy profit

In the first half of 2023, the Polish dairy industry generated a net loss, laying the ground for negative forecasts about the industry’s future. However, new statistical data shows that the Polish dairy industry is back above the breakeven point.

In the first three-quarters of 2023, the industry’s net profit amounted to PLN 139.8 million (US$35.11 million), compared to PLN 1.653 billion (US$410 million) in the previous year. The Chamber of Milk calculated that only 49.5% of dairy companies generated a profit, which compares to 79% in the previous year.

Investments in dairy farming

Remarkably, the worsening financial results did not discourage dairy companies from keeping up with their investment plans. In the first three-quarters of 2023, Polish dairy businesses invested PLN 563.9 million (US$141.6 million), almost equal to the same period of the previous year.

Despite this, the outlook for the immediate future remains gloomy. Maliszewska voiced fears that the production costs will keep growing in 2024, and consequently, Polish dairy products will become less competitive in the foreign markets.