Commission Report (2002): Poland

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 7: Agriculture

Progress since the last Regular Report

Since the last Regular Report, Poland has made steady progress in the alignment of legislation and rather slow progress in the strengthening of administrative capacity. Progress on veterinary issues, with the exception of the Law on animal welfare, has been limited in particular with regard to the adoption and implementation of implementing legislation.

Agriculture (including hunting, forestry and fishing) in Poland accounted for 3.4 % of gross value added in 2001 compared to 3.7 % in 2000. Employment in agriculture accounted for 19.2% of total employment. The agricultural census was undertaken together with the population census between 21 May and 8 June 2002.

In 2001, overall agricultural production increased in comparison to 2000, primarily due to better results in crop production. Animal production remained approximately at the same level as in 2000.

In 2001, overall agricultural trade between Poland and the EC increased significantly, largely due to the ``double-zero-agreement'' to liberalise trade in agriculture. EC imports of agricultural products originating in Poland increased by 20 % to EUR 1 477 million. EC exports to Poland increased by 8 % to EUR 2 052 million. The trade balance in favour of the Community amounted to EUR 575 million compared to EUR 663 million in 2000. EC imports were dominated by fruit and nuts, preparations of vegetables, fruit, nuts or other part of plants; vegetables and meat. Fruit and nuts, residues from food industries, miscellaneous edible preparations and fats and oils were the main export goods from the EC.

The new government's strategy in the field of agriculture builds upon four objectives: improvement of agricultural profitability, strengthening of competitiveness in the agriculture and food-processing sectors, support for economic activities in rural areas, legal and institutional adjustment to EU integration. This approach has not entailed major changes in policy instruments. Structural measures (such as interest-rate subsidies, loans, credit guarantees and warranties) as well as fuel subsidies and crop insurance have been continued. Furthermore, structural pensions in the agricultural sector have been introduced. Poland has kept, and partly reinforced, its market policy measures in the form of intervention and export subsidies for a number of basic products as well as some support schemes (testing programmes in selected regions relating to dried fodder quotas, organic farming, top quality milk). However, the intervention policy aimed at maintaining high prices on the market has led to excessive stocks and storage costs for cereals.

In total the agricultural budget for the year 2002 decreased by 10.8 % to EUR 971 443 million (3.88 billion PLN). To this has to be added EUR 3.99 billion (15.96 billion PLN) for the Agricultural Social Insurance Found (ASIF), which remains stable. As in 2001, around 40% of the agricultural budget was allocated to the Agency for Restructuring and Modernisation of Agriculture (ARMA) for rural development measures, while the Agricultural Market Agency (AMA) was faced with budget cuts of 46%.

Concerning the land market, the Agricultural Property Agency (APA) continued to manage state-owned land and agricultural property. By the end of 2001, APA had sold off 1 113 689 ha (agricultural and non-agricultural land), i.e. 23.6% of the 4.7 million ha taken over from 1991 until now.

Horizontal issues Since last year's Regular Report, Poland has made further progress on the implementation mechanisms of the European Agricultural Guidance and Guarantee Fund (EAGGF). With the Commission Decision of July 2002 conferring the management of aid for SAPARD to ARMA, a decisive step has been taken to prepare the agency for its future role in the implementation of rural development programmes under the EAGGF. For AMA, the Regulation of the Prime Minister of March 2002 amending the statute of AMA has laid the basis for adjusting its organisational structure entirely to the needs of a paying agency. Organisational adjustment has taken place by the creation of the Internal Audit Office and the European Integration Office with 4 market divisions for the development of organisational and functional models and procedures for the management of Community market mechanisms. An accreditation team has been appointed in order to prepare the national accreditation of AMA by mid-2003.

With the Ordinance of March 2002, one of the last steps for the creation of the legal framework for the Integrated Administration and Control System (IACS) was taken. It defines the technical aspects and organisational rules for keeping a national register of farms and farm animals. Poland has elaborated a strategy for the establishment of IACS describing the basic elements and the timetable for their implementation, including the corresponding financial and human resources. According to this strategy, Poland has opted for the methodology of ``cultural blocks'' for the establishment of the Land Parcel Identification System (LPIS), i.e. blocks or parcels cultivated by one farmer with one or more crops. The creation of the information technology system for IACS has been outsourced together with the development of software for ARMA's role as paying agency for direct payments. Human resources are being further increased at central and regional level for the purpose of running IACS. In 2001, ARMA spent EUR 18.5 million on the preparation of IACS.

Regarding trade mechanisms, the Agricultural Markets Agency(AMA) has elaborated an organisational and functional model for the administration of imports and exports of agri-food products, and has continued to set up procedures relating to foreign trade in different commodities after accession. The development of a data communication system for handling trade mechanisms has commenced.

Following the adoption of the Law on organic farming in 2001, the Chief Inspectorate for the Purchase and Processing of Agricultural Products (GISiPAR) was appointed as the certification body and an Organic Farm Division was established in the Ministry of Agriculture and Rural Development (MARD). This division is to provide the control bodies with appropriate technical equipment and manage training schemes for the control and certification staff as well as for farmers. Implementing legislation was adopted on the detailed conditions of production of organic farming produce and on the list of food additives, processing aids and ingredients for organic products. In 2001, subsidies for organic farming were continued.

The liaison agency, the Institute of Agricultural and Food Economics, has continued the preparation for the implementation of the Farm Accountancy Data Network (FADN), in particular by defining the procedures and methodology for the collection and use of farm data. The implementation of the pilot projects for FADN has continued in several regions where the current sample size is one tenth of that required by the acquis.

Common Market Organisations Since last year's Regular Report, Poland has made progress in legal harmonisation as regards Common Market Organisations (CMOs). The degree of implementation varies between specific sectors.

The Ministry of Agriculture and Rural Development increased its staff for the management of the CMOs. Training, in particular on the use of the newly established database, and the increase in staff for the management of the Integrated Information System for Agricultural Markets (IISAM) set up to comply with the reporting requirements in the CMOs has continued. The Act on agricultural market survey became effective in January 2002. It lays down the basis for the reporting system as required for the CMOs.

With regard to arable crops, a model for the intervention mechanisms on the cereals markets and respective procedures was elaborated. A review of the intervention centres is currently ongoing. The Ordinance on the minimum prices of potatoes entered into force in January 2002. It introduces a quota system for the production of potato starch and lays down the rules for setting the minimum price and for the compensatory payment to be paid to potato starch and potato producers inside the quota. With regard to dried fodder, the legal basis has been laid down by three Ordinances adopted in October and November 2001 and the practical implementation of the CMO for dried fodder has been prepared, including the registration of dried fodder producers and the distribution of quotas.

Since the entry into force of the amended Law on the sugar market in November 2001, seven implementing acts have been adopted transposing the basic mechanisms of the sugar CMO. The Agricultural Market Agency's Sugar Division manages both production quotas for sugar and iso-glucose, fixed by the Ordinance of November 2001 and the A and B sugar levies applied since the start of 2002.

With regard to specialised crops further rules have been laid down for tobacco (definition of quotas and cultivation of areas ) and hops (definition of regions for hop cultivation and minimum quality requirements) accompanied by preparation for the practical implementation of these mechanisms by AMA and GISiPAR throughout the reporting period. The law on spirit drinks was adopted in September 2002.

As for animal products, the legal basis for the management of the CMO for milk entered into force in January 2002. AMA has established the Milk Production Quota Office. The basic concept for the quota management system has been developed as a result of a pilot project. In 2002, information technology specifications for purchasers and survey forms for direct sellers were developed to enable the acquisition of data on milk marketed in the reference period 2002/3. The price system for milk and milk products has been aligned to Community principles.

Rural development and forestry The most significant progress made in this area has been the accreditation of ARMA as the SAPARD agency, an objective which was achieved in July 2002 (see Section A.b. ­ Relations between the European Union and Poland). For rural development in the post-accession period, the Ministry of Agriculture and Rural Development has started preparing programmes for both the Guarantee and the Guidance Sections. With regard to the preparation of the accompanying measures, implementing rules for the Polish early retirement scheme (structural pension scheme) as adopted in 2001 entered into force in January 2002. The implementation was given to the Agricultural Social Insurance Fund (KRUS). The Law on afforestation of agricultural land adopted in June 2001 entered into force at the same time. It is supplemented by the Ordinance of February 2002 on the principles for drawing up afforestation plans, simplified forest management plans, training schemes, supervising afforestation works and supply of seedlings which entered into force in February 2002.

No progress can be reported on the agri-environmental measures. Indeed, the Monitoring Committee of the SAPARD programme has decided to seek deletion of the pilot agri-environmental measures under SAPARD.

For less-favoured areas, different scenarios for classification have been developed and respective lists of communities and farms have been compiled as a preliminary step.

Veterinary and phytosanitary issues, including food safety Since last year's Regular Report, some limited progress has been made in transposing the acquis in the veterinary sector. The Veterinary Act entered into force in February 2002. Some provisions including those relating to the provision of veterinary services, the system of laboratory diagnostics, and the provisions relating to trade will not be applicable until the date of accession. The Act provides the legal framework for implementing veterinary rules and fifty sectoral regulations are pending.

The amended law on animal welfare has been adopted and entered into force in September 2002. It facilitates the implementation of rules concerning keeping animals on farms and livestock transport. In the other sectors of the veterinary domain, progress has been limited mainly with regard to the adoption and implementation of secondary legislation. The completion of the timetable for the adoption of the secondary legislation is ambitious.

No progress has been made to enhance the administrative capacity for enforcing the legislation regarding contingency plans, animal health, animal welfare and public health, as this issue can only be solved by an amendment of the Veterinary Act as regards the chain of command in the veterinary sector. During the past year the human and financial resources of the Veterinary Inspectorate have seen some small increase.

The Veterinary Border Inspectorate is responsible for inspecting imports and exports. Work is underway to upgrade the seven Border Inspection Posts (BIPs) which Poland wishes to maintain as of the day of accession. Development appears to be progressing well on land borders but progress is slower at sea and air ports.

Poland has made progress in preparing the internal market control system and is technically ready to introduce the computerised network linking veterinary authorities ANIMO. With regard to the identification and registration of animals in Poland, the Polish authorities have decided to carry out a general operation for identifying in conformity with EC rules all bovine animals present on Polish territory. This operation will be accompanied by the registration of bovine animals and holdings and the setting up of an operational bovine database. In parallel, ARMA is developing the database software and will be responsible for its operation. The successive delays of the implementation of the system of bovine identification give rise to serious concern.

Poland is now testing all cattle aged over 30 months for BSE in line with the acquis, and has adopted most EC requirements in this area. However, with a view to implementing the EC acquis concerning the testing of fallen stock, the system of collection of cadavers must be effective. The biggest concern in this field is the rendering of animal waste. None of the existing animal-rendering establishments meets EC standards. The project to set up a system for rendering of high risk animal wastes is not yet finalised.

In the phytosanitary sector, a substantial amount of new legislation has been issued, but further amendments are necessary to make it fully compatible with the acquis. Moreover, the registration of producers and importers of certain plants, plant products and objects as well as the plant passport system remain to be launched. However, border controls already comply with the acquis. In the pesticides sector, further efforts are required to transpose and implement the acquis regarding authorisation of plant-protection products.

Administrative structures for phytosanitary issues have been changed by the creation of the Plant Protection and Seed Service (PPSS) in April 2002, following the merger of the Seed Inspectorate and the Plant Protection Inspection Service. This new unified body will carry out the same functions as the previous bodies and as a result of the merger the overall administrative capacity of the new authority is sufficient to carry out these tasks.

As regards food safety (see also Chapter 1 -- Free movement of goods), legislation has been adopted which seeks to rationalise the structure of the Inspection services by merging two existing inspectorates involved in the control of non-animal food products, the Central Standardisation Inspectorate (CIS) carrying out border inspections and the Inspectorate of Purchase and Processing of Agricultural Products (ISiPAR) in charge of internal controls. The Law on Trade quality of agri-food products defines the tasks of the new authority; mainly labelling, trade quality standards, controls of imports and exports. The legislation is to enter into force in January 2003.

The upgrading of food-processing establishments has been progressing well, particularly in the meat sector. Progress in the dairy sector is less advanced. However, the classification of the majority of establishments appears not to have been fully reliable and the severity of the deficiencies to be rectified to have been underestimated. A significant number of establishments evaluated as having little prospect of meeting the relevant acquis have been closed but many establishments in this category still exist. Poland has established a detailed action plan, reviewed in September 2002, to tackle this problem and all establishments needing to comply with EC rules upon accession or after a transition period have produced an upgrading plan in order to be in compliance in accordance with the envisaged date. The regulation of the Ministry of Agriculture and Rural Development on detailed veterinary conditions required for the collection, processing, storage and transport of milk and dairy products adopted in June 2002 is intended to harmonise Polish Law with the acquis.

BSE testing measures are being implemented, but further progress is needed to fully implement the regime of rapid testing. Further work is required to meet EC standards regarding animal-waste processing.

Overall assessment

The institutional framework necessary for the management of the mechanisms of the CAP is, with some minor exceptions, now clearly defined. Some decisions remain to be taken to finalise the organisational structure and empower the relevant bodies.

In the area of horizontal measures, both paying agencies, ARMA and AMA, are on track for assuming their designated roles. The key priority for both agencies is to reinforce their preparatory work, so as to secure national accreditation as paying agencies in time for accession. This implies a considerable increase in human resources. With regard to IACS, many decisions remain to be taken in key areas for building the LPIS, and, more generally, IACS. Very serious efforts are urgently needed for Poland to be able to build up an operational IACS by accession. The suitability of the cadastre data as the source material for creating the LPIS remains to be confirmed. This needs to be addressed immediately if Poland is to be in a position as of accession to administer and control efficiently the CAP aid-schemes. If the required administration and control structures are not fully operational, or do not operate correctly upon accession, Poland will be unable to fully benefit from the support systems under the Common Agricultural Policy, or will be required to reimburse EC funds already received.

The legal framework for the Farm Accountancy Data Network is in place. The institutional set-up has been defined. It is essential, if the practical work is to be finalised in time for accession, that there is greater preparation of the bodies involved in the system. The training of the accountancy offices in the agricultural advisory services responsible for data collection is one element which requires specific attention.

As for organic farming, the institutional set up and administrative capacity, in particular with regard to the control and certification bodies needs to be finalised.

With regard to the Common Market Organisations, implementation is at different stages for the specific sectors. Although the sectors of sugar, potato starch, dried fodder, specialised crops such as fresh fruit and vegetables, hops and tobacco can be considered as sufficiently advanced with regard to legal enforcement and practical implementation, the other sectors will require increased attention in the months to come.

The reporting mechanisms common to all CMOs should be operational upon accession, as should the marketing standards. However, the carcass classification system in the meat sector for which the entry into force of the legal base has been postponed would require further alignment. As for intervention, Poland had sufficient experience to take over the respective Community rules. Some question marks remain for the implementation of supply management instruments, in particular in the milk sector. Poland has presented a clear concept for the management of the milk quota. Significant efforts will be required if this is to be implemented in the envisaged timeframe.

The legal framework for rural development is well advanced but needs completion for some of the measures covered by the EAGGF Guarantee section. This concerns, in particular the agri-environmental measures and less-favoured areas. In particular, the decision of the SAPARD Monitoring Committee to drop the pilot agri-environmental measures, and the absence of any equivalent nationally-funded measures needs to be urgently addressed for Poland to be ready to implement the rural development acquis upon accession. The institutional and implementation arrangements for the early retirement scheme need to be finalised. In terms of administrative capacity, the approval of the SAPARD agency was an important step which now has to be followed by further up-grading of the agency to enable it to run the full set of rural development measures under EAGGF after accession.

Concerning the veterinary field further progress is need in terms of legislative alignment. There are around 50 regulations still to be adopted. Further work is also required to develop the necessary capacity to implement the acquis. An early implementation of those elements of the Law which relate to internal and external trade controls would greatly facilitate Poland's preparations for participation in the Internal Market. While the readiness of the seven Border Inspection Posts at the external borders of the EU is progressing in a timely manner, efforts will have to be redoubled in order to upgrade another four BIPs after accession and to increase staffing levels in the 11 designated BIPs to acceptable levels.

Implementation of a control system has not progressed as foreseen as planned. The final result of the mass action of identification and registration of both bovine animals and holdings has revealed the need for a substantial increase in effort if Poland is to implement the bovine database on schedule. Finally, the timetable for the establishment of an operational animal waste system has still to be elaborated.

Progress has been made with plans for upgrading food establishments. The implementation and management of the plans will require careful monitoring by the regional veterinary services. The situation in the area of animal welfare is far from complying with the requirements of the acquis, and further efforts are needed.

In the phytosanitary sector, further efforts are required to align with the acquis: there is no system for registration of producers, exporters, importers and distributors of plants and plant products. Further legislation is required with respect to seeds and plant propagating material.

With regard to food safety (see also chapter 1 -- Free movement of goods), considerable progress has been made regarding the upgrading of food establishments and the increase in measures to deal with BSE. Substantial efforts are required to ensure the effective implementation of the Food Safety Strategy, especially with regard to the co-ordination of the Ministries and Inspectorates involved in the process.

With regard to Pulawy, as this laboratory has been designated as the national reference laboratory for animal and public health, its upgrading is of the utmost importance.

Conclusion

In its 1997 Opinion, the Commission concluded that an important effort to align with the acquis was necessary, although significant progress had been made in adopting the measures mentioned in the Commission's White Paper of 1995 on the Internal Market. The Commission added that particular efforts were needed on: the establishment of a coherent structural and rural development policy to deal with the problem of Poland's agricultural structure; the implementation and enforcement of veterinary and phytosanitary requirements and upgrading of establishments to meet EC standards (an aspect particularly important with regard to the inspection and control arrangements for protecting the EU external borders); strengthening of the administrative structures to ensure the necessary capacity to implement and enforce the policy instruments of the CAP; and further restructuring of the agri-food sector to improve its competitive capacity. The Commission further pointed out that if such progress was accomplished, accession in the medium term should not be accompanied by significant problems in applying the common agricultural policy in an appropriate manner although a solution to Poland's structural problems would require a long-term approach.

Since the Opinion, Poland has made sharply differentiated progress toward alignment with the different elements of the EC agricultural acquis. With regard to the Common Agricultural Policy (CAP), legal adjustment is well advanced but needs further efforts in some specific agricultural sectors. Also, for the practical implementation of CAP mechanisms, major efforts are still necessary before accession. In particular, limited developments with regard to the Integrated Administration and Control System (IACS), including animal identification and registration, represent the major obstacle to Poland's readiness for accession in the field of agriculture. In the veterinary and phytosanitary field, whereas considerable progress has been made as regards the seven Border Inspection Points selected for protecting the EU external borders, slow progress has been made in the implementation of veterinary requirements during the last two years. This raises serious concerns.

Negotiations on this chapter continue. Poland is meeting the majority of the commitments it has made in the accession negotiations in this field. However, delays have occurred with regard to the implementation of the animal identification and registration system. This needs to be urgently addressed.

In order to be ready for membership, Poland will need to give urgent attention to completing legislative alignment, notably with regard to the veterinary and phyto-sanitary acquis. Of equal importance will be the strengthening of administrative capacity in all areas to ensure the effective implementation of the acquis. It must be ensured that the Integrated Administration and Control System is in place if Poland is to be in a position to administer and control efficiently the Common Agricultural Policy support schemes. The necessary legislation in the veterinary field is in inter ministerial consultation; its accelerated passage through the legislative system would substantially increase alignment with the acquis. A master plan for IACS has been prepared and is currently being refined. Efforts now need to be substantially stepped up.

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