csaba jansik mtt agrifood research finland · mtt agrifood research finland ciechocinek, december...

Csaba Jansik MTT Agrifood Research

Finland

Ciechocinek, December 12, 2012

segments of the chain

Segments in the chain interact with each other, usually with the neighbouring levels, via various forms of transactions – but each segment is a separate market

The chain is as strong as its weakest link e.g. economics, quality assurance, hygienics, food safety

From “field to fork” – a successful chain is organised and operating smoothly

Bakery Meat Dairy Beer

Biofuels

Spirits

Rapeoil

Margarin

Milling Feed Starch Malt Ethanol

First-stage processing

Second-stage processing

Feed

The majority of food processing industries use directly or indirectly grains and oilseeds, they are crucial raw materials.

Food

Crushing

0 10 20 30 40 50 60 70 80 90

Poland

Finland

Percentage in the shares of the food industry sales revenues

0123456789

101112131415161718192021222324252627282930

Maize

Mixedgrains

Triticale

Oats

Barley

Rye

Wheat

0

1

2

3

4

5

Oats

Barley

Rye

Wheat

Poland

Barley, maize

Rye, triticale, mixed grains

Deficit: durum wheat, maize

Export: wheat, rye

Wheat Barley, rye

Deficit: rye

Export: oats, wheat, malt barley

Finland

million t

million t

Cereal average yield levels

0,00,51,01,52,02,53,03,54,04,55,05,56,06,57,07,58,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

t/ha

Germany

Denmark

Finland

Poland

Finland and Poland similar levels – lagging behind the neighbours

Reasons for Poland: lower use of agricultural inputs

Reasons for Finland: climate and spring cereal production

Reasons: Climate, soil History of farm structure Socio-economic differences

ŁÓDZKIE

DOLNOŚLĄSKIE

LUBELSKIE

ŚLĄSKIE

MAŁOPOLSKIE

MAZOWIECKIE

ZACHODNIO-POMORSKIE

WIELKOPOLSKIELUBUSKIE

ŚWIĘTOKRZYSKIE

PODLASKIE

PODKARPACKIE

WARMIŃSKO-MAZURSKIE

POMORSKIE

KUJAWSKO-POMORSKIE

OPOLSKIE

0200400600800

100012001400

DOLNOŚLĄSKIE

below 15%

16%-25%

26%-35%

36%-45%

over 46%

tho

usa

nd

t

Share of wheat in grain area

Source: GUS database

Reasons: Climate, soil History of farm structure Socio-economic differences

MAZOWIECKIE

OPOLSKIE

DOLNOŚLĄSKIE

ZACHODNIO-POMORSKIE

WIELKOPOLSKIE

LUBUSKIE

ŚWIĘTOKRZYSKIE

PODLASKIE

PODKARPACKIE

LUBELSKIE

ŚLĄSKIE

MAŁOPOLSKIE

ŁÓDZKIE

WARMIŃSKO-MAZURSKIE

POMORSKIE

KUJAWSKO-POMORSKIE

”Polish rye-belt” –

0

200

400

600

800

MAZOWIECKIE

below 5%

6%-15%

16%-25%

over 26%

tho

usa

nd

t

Share of rye in grain area

Source: GUS database

Similarly to grain production, livestock production is also concentrated into specific regions of the country.

Pig farms

Dairy farms

Reasons: climate, soil distances Pig and poultry production is

concentrated into two areas.

Grain farms are concentrated into South-West Finland and by the coast.

One orange dot. = one grain farm

One red dot . = one pig farm

mixed farms specialised farms Quitting livestock farms

VYR: consortium of grain chain participants

integrated into Central European market Isolated by the sea

actors of the chain trade with other segments in other countries

trade only through trading companies

loose interdependence within the chain segments

role of production contracts falling

strong interdependence within the chain segments

Grain trade mainly through the sea.

Grain imports from Czech R., Hungary and Slovakia.

Grain exports to Germany and elsewhere in the world.

No

rw

ay

13

Wheat import:

14 thousand tons

Wheat export:

142 thousand tons

Espanja

32

41

Iso

-

Brita

nn

ia

21

6

Ma

ro

kk

o

Saksa

Lähde: Viljatietopankki, Csaba Jansik

14

Ru

otsi

10

6

Italia

3

4

48

Norja

61

27

21

35

549

Saksa

Egypti

Bangladesh

Nig

eria


16

Portugali

6

Italia

6

Brasilia

Kuuba

25

33

35

Tanska

38

Unkari

20

Kazaksta

n

346

41

139 S

aksa

82

Marokko

Wheat import:

684 thousand tons

Wheat export:

940 thousand tons

No

rw

ay

13

Rye import:

44 thousand tons

Rye export:

0,01 thousand tons

Liettua

5

Saksa

6

4


Puola

Viro

2

Ta

nsk

a

15

Ru

otsi

13

Rye import:

5 thousand tons

Rye export:

403 thousand tons

46

6

Espanja

Portugali


15

Alankom

aat

4

Suomi

58

Japani

No

rw

ay

13

Oats import:

0 thousand tons

Oats export:

327 thousand tons

117

27

Ruotsi

6

Ete

lä

Afrikka

10

48

22


Yhdysvallat

76

Irlanti

6

Norja

12

Oats import:

4 thousand tons

Oats export:

45 thousand tons

7

Lähde: Viljatietopankki, Csaba Jansik Espanja

Tanska

16

15

Regional distribution/suitability for rapeseed production

Regional distribution/suitability for rapeseed production

Reasons: climate, soil, farm structure, farm know-how

Reasons: climate, farm know-how

Biological limit: 1,2 million ha Biological limit: 200 thousand ha

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5t/ha

Germany

Denmark

Finland

Poland

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5t/ha

Germany

Denmark

Poland

Winter rapeseed average yield levels Spring rapeseed average yield levels

Production of winter rapeseed Production of spring rapeseed

Polish yield levels are closer to those in the neighboring countries than in the case of grains

Frost danger for winter rape is very big in Finland – saying among the Finnish farmers

Self sufficiency rate 90-110% Self sufficiency rate 30-60%

Rapid growth in the 2000s, peak in 2009

Increase in the 2000s – peak in 2010

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

1,8

2

2,2

2,4

2,6

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

million t

00,05

0,10,15

0,22

00

02

00

12

00

22

00

32

00

4

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

million t

14,9% 74,2% Rapeseed

export 373

10,9%

Rapeseed import

272

Rapeseed production 2 229 thousand tons

Total available rapeseed: 2 501 thousand tons

Oil import

58

Total crushing: 2083 thousand tons of rapeseed

Feed industry 748 thousand tons

Rapeseed oil production 790 thousand tons

Rapeseed cake production 1256 thousand tons

Rapeseed cake export

557 thousand tons

Biodiesel 478 thousand tons

Food oil 167

Feed oil 33

13

Cak

e im

po

rt

42,7% 24,6% 70,5% 4,9%

Total available oil: 848 thousand tons Total available cake: 1306 thousand tons

57,3%

70,5%

Flowchart of Polish rapeseed supply chain in the 2011/12 crop season

46,2%

53,8% Rapeseed import

126 thousand tons

Rapeseed production 129 thousand tons

Total available rapeseed: 255 thousand tons

Cake import 138

thousand t.

Total crushing: 255 thousand tons of rapeseed

Feed industry 282 thousand tons

Rapeseed cake production

144 thousand tons

Oil production 101 thousand tons

Food oil 40

Feed oil 20

40%

51% 49% 20%

Total available cake: 282 thousand tons

Total available oil: 101 thousand tons

40%

Flowchart of Finnish rapeseed supply chain in 2011

Oil export

41

Rapeseed cake 748 thousand tons

Biodiesel 478 thousand tons

Food oil 167

Feed oil 33

Rapeseed cake 282 thousand tons

Food oil 40

Feed oil 20

“Cake surplus – oil shortage” “Oil surplus – cake shortage”

Major driver of growth: biodiesel Major driver of growth: cake

Vegetable oil consumption is stable Vegetable oil consumption is stable

Protein feed self sufficiency: 27% Protein feed self sufficiency: 40%

Imported sunflower cake

642 thousand tons Imported soya cake

1888 thousand tons

Imported soya cake

180 thousand tons

+ 40 thousand tons of own protein crops: Peas (10), beans (8), lupine (22) + 142 thousand tons other protein feed from own prod.

+ 32 thousand tons of own protein crops: peas (12), beans (20)

0

2

4

6

8

10

12

14

16

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

0

2

4

6

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

billion EUR

billion EUR

In any relative indicator the 2012 export performance is not so far from each other.

Remember the size difference between the two countries.

0 5 10 15 20 25 30 35 40

Poland

Finland

Agrifood exports/food industry worker

thousand EUR/employee

Largely competitive Positive trade balance Spectacular growth in 10 years

Competitive Negative trade balance - expanding Sluggish over the past decade

Reasons:

Excellent location in the heart of Europe – logistic advantages

Peripheral location – logistic disadvantages

Cost advantages: labor, raw material, energy

Expanding huge domestic market (determines company size and growth opportunities)

High costs

Saturated small domestic market (determines company size and growth opportunities)

Who owns the chain?

Who integrates the chain?

Farmers, domestic private investors, banks, pension funds, insurance funds, or foreign capital (professional or financial)?

What is the interest of the owners? Further development? Modernisation? Geographical expansion? Market consolidation? Dividends?

Who takes the initiative to make the chain operating smoother?

Vertical coordination and integration

Organizational issues, information flow, tracebility, quality and hygienic control

Who controls the chain?

In the case of commodities? Buyers? Sellers? Traders? Is there any risk management? Hedging? Insurance?

Which segment has the biggest negotiating power? Which is the strongest to enforce its will on the others?

Market structures – concentration

Distribution of income within the chain – who adds value within the chain?

Foreign trade used as the ace card

Who bears risk within the chain?

How sudden price changes flow through the chain?

Who bears the risk of daily grocery sales?

csaba jansik mtt agrifood research finland · mtt agrifood research finland ciechocinek, december...

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