Kowalczyk: Increase in gas prices is the main cause of inflation in Poland

Kowalczyk: Increase in gas prices is the main cause of inflation in Poland
Kowalczyk: Increase in gas prices is the main cause of inflation in Poland
photo: Marek Wiśniewski / / Puls Biznesu

There are two main causes of inflation in Poland, independent of the Polish government – the increase in gas prices by several hundred percent and the price of CO2 emissions. The first translated into an increase in fertilizer prices, the second – into an increase in energy prices – Deputy Prime Minister, Minister of Agriculture Henryk Kowalczyk said in an interview with PAP.

PAP: Minister, the prices of food have also been rising for several weeks. What caused such high inflation, according to the Central Statistical Office, in November it was at the level of 7.7%. y / y Will the adoption of the anti-inflationary shield make it less noticeable for households?

HK First, it is necessary to mention the causes of inflation. There are two main reasons beyond the control of the Polish government – the increase in gas prices by several hundred percent, which translates into the price of nitrogen fertilizers, and they have increased significantly. Another factor was the significant increase in prices for CO2 emissions. This component has an impact on energy prices, accounting for as much as 60 percent. its cost. Talks are underway at European level to verify this climate policy, which is bringing enormous increases in energy prices.

PAP: How does this translate into higher food prices?

More expensive fertilizers mean higher production costs in agriculture. We are trying to keep these prices at a “controlled” level, currently it is about PLN 2600 per ton of ammonium nitrate at the official distributor of “Azoty” in Agrochem. This is the price level, albeit high, but still acceptable to farmers. Were it not for these actions, the price of saltpeter could go up to PLN 4,000. PLN per ton. As for gas, the prices of this raw material are fluctuating. Hopefully they will eventually stabilize at a lower level and this will bring down fertilizer prices.

Unfortunately, fertilizer prices have already increased the price of cereals, which is of course beneficial for farmers, but it has caused food prices to rise, and this translates into inflation. It is estimated that food prices increased by approx. 6-8%. That is why the government proposed a protective shield that would reduce VAT on food products from 5%. up to 0 percent This would somehow compensate for the increase in food prices. The differences in prices will actually be covered by the budget without charging VAT. We are waiting for the official decision of the European Commission on this matter.

I believe that in the coming months the pace of inflation will decrease, so it will not be so high, but I do not expect prices to return to the old level. It is important that the price increase is halted. This is the most important task of the anti-inflationary shield. In addition, the government introduced subsidies for the poorest families, which are to compensate, inter alia, increases in energy and food prices.

PAP: Is the European Commission taking any measures that could stabilize agricultural markets, because expensive gas and energy also affect other countries?

HK Across Europe, the situation is difficult when it comes to agricultural markets. Therefore, problems must be solved on the European forum. The EC is rather sluggish about this. During the last Council of Ministers of Agriculture of the EU, when all ministers reported the problems of rising gas prices, fertilizers and falling prices of live pigs, the European Commission only assured that it was looking at the matters, but had not made any decisions.

PAP: It should also be remembered that in a year new problems will arise due to the new common agricultural policy – the Green Deal …

HC The European Green Deal, which will be implemented from January 1, 2023, will impose restrictions on, inter alia, consumption of fertilizers and plant protection products. This is a great challenge for farmers, it will require knowledge and the use of precise fertilization.

There is also a fear that the Green Deal will distort competition in world markets. By observing high production standards, European agriculture will become less competitive with countries that will not have such restrictions as in the EU. If we want to compete fairly, we need to equalize the opportunities for farmers in the EU and from outside the EU. There are declarations from the EU that products imported from outside the EU will be taxed (the so-called carbon tax), so that products manufactured in the EU with animal welfare and environmental protection, less fertilization and climate protection have equal opportunities on the market. Without these restrictions, I cannot imagine the functioning of the common market.

PAP: Has the Polish Strategic Plan for the new Common Agricultural Policy already reached Brussels and have any changes been made in the last phase of consultations?

HK When I took over the ministerial post, the strategic plan was after double consultations. One of the important changes that I introduced in the final phase of work on the document was the increase in payments to protein crops. Poland has already worked on programs to obtain native protein as a component of animal feed, the lack of adequate funding has reduced interest in such crops. Another change is the transfer of part of the funds allocated to financing investments in infrastructure in rural areas to investments in agriculture, because water supply systems, sewage systems and roads are significantly financed from other sources under the Polish Deal and on better terms.

I tried to introduce the highest possible rate of the redistributive payment, i.e. the one intended for farms below 50 ha, in order to ensure that these farms receive payments at the level of at least the European average and this level will amount to 102%. the EU average.

PAP: Is there any chance that in the new year, insurance in agriculture will be concluded on the basis of the new rules?

HK The new insurance should function from the beginning of the growing season. A promotional campaign will start in February. We want it to be a universal system, so there will be very strong incentives to enter this insurance system. The insurance premium will be no more than 9 percent. the amount of insurance, but 2/3 of it will be covered by the state budget, and the remaining part will be paid by the farmer. Financial resources for this purpose are secured for the entire area of ​​crops. It is important for me that these insurances are comprehensive, i.e. cover all damages, including drought.

The insurance system is built around the Mutual Insurance Company. It is a type of insurance that allows unused funds in one year to be counted towards contributions in the following year. This is important because if the disasters and damages in a given year are small, you will be able to lower your premiums in the next one.

The main insurer in agriculture will be TUW, but also other insurers will be able to operate on this market. They will encourage farmers to insure their crops, explaining what benefits they will get by purchasing policies. So far, farmers have not insured crops, e.g. because of too high premiums, this was the case in the drought where some companies made “prohibitive” offers to farmers. When the system becomes more common and comprehensive, the policies will be cheaper.

PAP: The bone of contention was often the estimation of damages …

A drought application and a remote sensing system, i.e. satellite monitoring of crops, will be used to estimate the damage. This system is useful for calculating drought damage, but point damage caused by e.g. hailstorms will still be assessed in the traditional way, i.e. on site.

State aid to farmers who suffer losses as a result of natural disasters will mainly consist of participation in insurance compositions. So far, assistance in the event of such damage has been imperfect, because it often did not compensate for the losses incurred and will have to be abandoned.

PAP: What about Holding Spożywczy, will its creation be completed soon?

HK: Work on its creation has been accelerated, valuations of the companies that will be included in the holding are ongoing. Activities should start in the spring. It aims to break price collusion so that farmers are not forced to sell their products at low prices. Producers of soft fruits felt it the most. The growers, who did not have a storage base, were forced to quickly sell the fruit at prices dictated by the recipients. It happened that the purchase prices did not even cover the costs of harvesting. Having a state-owned holding company, it will be possible to help in the form of, for example, providing a storage room or purchasing fruit, so as to give a market impulse to raise purchase prices. We are also thinking of helping pig producers who have problems selling pigs from ASF restricted zones, and what the processors use.

PAP: Minister, you are in charge of the ministry for a short time, so I am not asking about the summary of the whole year, but about what you have managed to do for agriculture so far?

HK: African swine fever is the number one problem. This disease has been in Poland for many years, so it cannot be eliminated quickly, but its spread has been limited. The development of biosecurity plans by pig producers located in restricted zones has been accelerated. Currently, more than 70 percent. farms have such plans.

If a farmer finds himself in a restricted zone due to ASF and has difficulties selling pigs, he can report the problem to the district veterinarian, who has contact with the nearest processing plant who will buy the pigs at market price. Information about such establishments is available to veterinarians, there are agreements with those establishments that are ready to help farmers.

In addition, we have introduced aid programs for farmers, including support in the form of a subsidy in the amount of PLN 1,000 per one sow per 10 piglets.

Another aid for farmers – it is a greater return of excise duty contained in agricultural fuel. In addition, there will be a reduction in VAT rates for fuel, so farmers will fully receive the excise duty refund provided for by EU regulations.

There will be new facilities for retail trade for farmers. Those who want to sell their products will have a free place for such sales.

And finally, the level of compensation for the loss of 1 percent under KRUS will be equalized. health – from PLN 809 to PLN 1033 to the amount that operates within ZUS. At the same time, the sickness allowance for farmers will be increased from PLN 10 to PLN 20.

PAP: Thank you for the interview. (PAP)

Anna Wysoczańska interviewed

awy/ skr/

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