Agricultural Market Agency 20 years of activity

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1 Agricultural Market Agency 20 years of activity

2 ARR PRESIDENTS Bolesław Woźniak Włodzimierz Rembisz Jan Lisowski Kazimierz Gutowski Andrzej Łuszczewski Jan Sobiecki Ryszard Pazura Zbigniew Izdebski Roman Wenerski (acting) Ireneusz Jabłoński (acting) Stanisław Kamiński (acting) Bogdan Twarowski

3 Agricultural Market Agency Ladies and Gentlemen, This year the Agricultural Market Agency is celebrating the 20th anniversary of its establishment. The ARR was set up in 1990 to take measures aimed at stabilizing agricultural markets and since that time it has been carrying out its tasks for the benefit of both, food producers and consumers. The Agency s activities serve to ensure the country s food security and improve the quality of life in rural areas. The objectives of the ARR have remained unchanged over last 20-years, however, the form and scope of instruments applied and measures taken have been developing following the needs of agriculture and the situation on agricultural markets. Deeper changes took place in the year Due to Poland s accession to the European Union the ARR was granted the status of a paying agency and it obtained unconditional accreditation for the implementation of UE Common Agricultural Policy schemes. The ARR s firm position in Poland and abroad, also among other EU paying agencies, is the achievement which results from the Agency s efficient operation and ongoing improvement of its work organization. However, first and foremost it is the effect of hard work and commitment of the Agency s competent staff, to which on this occasion I would like to convey the words of my sincere gratitude. President of the Agricultural Market Agency Władysław Łukasik 1

4 The Agricultural Market Agency s first years of activity The creation of the Agricultural Market Agency (ARR) resulted from the necessity to implement intervention policy on the agricultural market in the difficult period of economic transformation of the country which consisted in a transition from a centrally-planned economy to the economy based on free-market principles and private property. This process was accompanied by a decline in agricultural prices and farmers income. From the creation of the Agency in 1990 to the mid-90 s the foundation of intervention policy was laid to neutralize the negative effects of the rapid departure from state purchases and bureaucratically-set prices of agricultural and food products. Basic tools of intervention such as purchases and sales of agricultural products (in justified cases also import) were introduced by the intervention agency to the agricultural market. A system of credit guarantees for exporters and purchasers of agri-food products was also applied. Intervention covered the markets for cereals, pigmeat, beef, milk and milk products, sugar and potatoes (starch and derived products), and occasionally for honey, wool and tobacco, hop and flax fibre. In connection with the ongoing political and economic transformations, the basics of a modern market infrastructure were laid down commodity exchanges, brokerage houses (among them ARRTRANS company) and a system for obtaining rapid information about the market. The basic statutory tasks of the Agency at that time included ensuring the country s food security. Capital involvement of the ARR in commercial law companies, including companies with storage facilities allowing for the gathering of state reserves of agricultural and food products and their management (e.g. ELEWARR), made the fulfilment of the Agency s tasks easier. 5th and 10th anniversary of the Agricultural Market Agency 2

5 Agricultural Market Agency THE EXPANSION OF INTERVENTION The next phase of the Agency s development came in the years In 1996 the Act on the Establishment of the Agricultural Market Agency was amended, and the Agency was also issued new Statute. The amended Act on the Establishment of the Agricultural Market Agency increased control and strengthened supervision over the performance by the Agency of its tasks in the scope of intervention and defined the relationship between the Agency and other operators of the agricultural market. Particular market instruments were modified. Conditions for launching intervention buy-in and sales of products in specific market conditions and the periods for intervention buy-in were established. These activities were carried out on the basic agricultural markets cereals, meat, milk and sugar. Growth in the scope of intervention was accompanied by a progressive increase in employment levels at the Agricultural Market Agency. The number of employees carrying out the Agency s mission rose from 20 at the beginning of the Agency s operation to nearly 100 by the mid-1990s. The year 1998 marked the beginning of preparations for Poland s accession to the European Union. Work commenced on a review of EU legislation, as well as activities laying the groundwork for negotiations in the area of agriculture and the signing of the Treaty of Accession to the EU. Employees of the ARR were actively engaged in the process, participating in working groups linked to the Ministry of Agriculture and Food Economy responsible for the preparation of legislative solutions for particular markets in the agricultural sector. Areas of actions Cereals market Milk market Meat market Sugar market Potato starch market Honey market Tobacco market Hop market Wool market Rape market Scope and forms of ARR actions in Forms of intervention direct purchase (wheat and rye) purchase in the system of authorised stores imprest purchase purchase of cereals with price subsidies aid for storage credit guarantee intervention purchase of butter intervention purchase of skimmed milk powder aid for private storage of butter, skimmed milk powder and cheese aid for production of skimmed milk powder and whole milk powder aid for export of skimmed milk powder and whole milk powder production quota system (adjustment to the EU rules ) purchase of half-carcases purchase of beef quarters aid for private storage of pigmeat aid for export of half-carcases and beef free distribution of food intervention purchase of sugar aid for export of sugar and isoglucose aid for sugar used for non-food purposes settlement of export of sugar C produced over quota A and B collecting sugar levies issue of credit guarantees for intervention purchase of sugar-beet and storage of sugar (sugar taken over for credit guarantees) intervention purchase of starch and other products (dehydrated mashed potatoes, potato products) payments for starch producers payments for producers of starch potatoes aid for export of starch and other products (potato flours, dehydrated mashed potatoes, potato products) payments for entrepreneurs using starch for non consumption purposes intervention purchase of honey aid for sold raw tobacco raw tobacco production quota system intervention purchase intervention purchase aid for export Administration of foreign trade Administration of national stocks of food products Elaboration of market information system of the ARR Engagement of ARR in commercial companies Support of market infrastructure development 3

6 THE PERIOD OF PREPARATION FOR POLAND S MEMBERSHIP IN THE EU The years were a time of strengthening of market balance and a further increase in the competitiveness of Polish food producers. It was also the period in which the ARR prepared to perform the function of an EU paying agency. Market measures were carried out in accordance with an annual programme of intervention. New instruments were launched for products covered by intervention measures and the schemes implemented were gradually adjusted to EU requirements in place. Among them there was aid for storage of butter and cheese, as well as export subsidies used for the export of skimmed milk powder, potato starch and rapeseed. It was the year 2001 when the ARR was selected to fulfil the role of a paying agency after Poland s accession to the European Union. This decision resulted in the necessity to perform an internal reorganization of the Agency s structures, as well as adaptation of its rules for functioning to meet accreditation requirements. As the European Commission extended the range of instruments for influencing the agricultural market the ARR was gradually increasing its staffing levels. In the period of preparations for obtaining accreditation of exceptional importance was the support given to the Agency i.e. by experts from Great Britain, Sweden, the Netherlands and France within the framework of the EU pre-accession Phare assistance programme. During the programme s carrying out, the implementation materials were developed for the schemes of the Common Agricultural Policy (CAP). These materials were used afterwards for the preparation of detailed procedures for CAP schemes implementation, management and support activities, and for preparation of information brochures. Employees of the ARR were trained in the administration of the CAP schemes, and future beneficiaries of these schemes received information about the possibilities of participation in such schemes as well as about the conditions of obtaining aid from EU funds. Building of Conference and Office Complex the Headquarters of ARR 4

7 Agricultural Market Agency ACCREDITATION On 31 October 2003, the ARR presented the Ministry of Finance with a packet of documents (including internal Agency acts and procedural manuals for particular CAP schemes) necessary for receiving accreditation. After analyzing the documents submitted and after an audit performed on the ARR, on 19 April 2004 the Agricultural Market Agency re- ceived unconditional accreditation and the status of a paying agency, a role it continues to fulfil to the present day. With Poland s accession to the European Union on 1 May 2004, the Agency began the implementation of selected schemes covered by the European Union s Common Agricultural Policy. ARR COMPETENCES Statutory competences of the Agency cover: Disbursement of funds to participants in Common Agricultural Policy schemes and state programmes administered by the ARR. Issue of individual decisions directed to beneficiaries of these schemes. Conducting controls to confirm that operators meet the requirements set for participation in schemes, including eligibility to receive funds or to produce certain products, in the framework of schemes administered by the ARR and upon the request of other institutions of the agricultural and food sector. Administration of financial resources from EU funds, the State budget and Promotion Funds. Transfer of information concerning CAP schemes to the European Commission. Informing participants in schemes on decisions taken at the EU level with regard to CAP support instruments implemented by the ARR, as well as on the conditions of participation in particular schemes. Collection, analysis, processing and publication of information concerning the markets for agricultural and food products in Poland and abroad, as well as preparation of forecasts for such markets. Participation in EU decision making process in the scope of tasks undertaken. 5

8 LEGAL BASIS ARR activity is regulated by a number of acts of national and EU law. Main national legislation regulating ARR activity includes: Act of 11 March 2004 on the establishment of the Agricultural Market Agency and on the organization of some agricultural markets. Act of 22 May 2009 on the establishment of agri-food products promotion funds. Act of 20 April 2004 on the organisation of the market in milk and milk products. Act of 19 December 2003 on the organisation of the market in fruit and vegetables, the market in hops, market in tobacco and the market in dried fodder. Act of 22 January 2004 on the manufacture and bottling of wine products, trade thereof and the organisation of the market in wine. Act of 20 December 2002 on the organisation of some agricultural markets. Act of 26 January 2007 on payments in the framework of direct support system. Act of 16 April 2004 on administrating foreign trade. Act of 25 August 2006 on biocomponents and liquid biofuels. Ordinance of the Minister of Agriculture and Rural Development of 7 February 2008 on granting the Statutes to the Agricultural Market Agency. Ordinance of the Minister of Finance of 19 April 2004 on establishing the Agricultural Market Agency as a paying agency. Ordinance of the Minister of Finance of 9 November 2006 on granting the Agricultural Market Agency ac- creditation as a paying agency in the area of activating funds from the European Agricultural Guarantee Fund. As regards European Union legislation, the following acts determining competences and manners of performance of ARR activities should be mentioned: Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) along with a number of European Commission implementing regulations on the implementation of specific support measures. Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003, along with implementing regulations. Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy. Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD. Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production. 6

9 Agricultural Market Agency ORGANIZATION OF THE ARR The Agricultural Market Agency consists of a Headquarters and 16 regional branches situated in each voivodship capital city. The Agency s head is the President who manages its activities and acts as its representative. The President of the Agency performs his functions with assistance of his deputies, directors of the headquarters offices and directors of regional branches. ARR President supervises the work of the Legal Unit and of the following offices: Human Resources Management Office, Administration Office, Analysis and Programming Office, Internal Audit Office, Internal Control Office, Technical Control Office, Food Promotion Office and International Cooperation Office. The deputies of the ARR President are in charge of the following offices: Plant Products Office, Animal Products Office, Consumption Support Office, Foreign Trade Office, Organizational Office, Data Communication Office, Information Office, Finance and Accounting Office, Sugar and Biofuels Office, Milk Quota Administration Office. The organizational structure of the ARR is founded on a basic objective of ensuring flexibility, effective action and full absorption of the Agency s resources. The arrangement of the scope of authorization to take decisions and devolution to lower organizational levels allow for direct contact with clients and facilitates the identification of real customer needs, which in effect allows for comprehensive performance of tasks and effective assistance for beneficiaries. The organizational structure is also conditioned by the requirement set for a paying agency in EU legislation to ensure a division of functions: authorization of payment confirming the fulfilment by the beneficiaries of conditions necessary for receiving funds, as well as the execution and accounting of payment. Technical control services functioning in the framework of the ARR and located all around Poland, allow to ensure the proper level of verification of beneficiaries eligibility to receive funding. These services carry out control and verification at the beneficiary s premises or at the sites where production or processing takes place. In the period from 2004 to the end of the first quarter of 2010 ARR technical control services performed over 120 thousand control tasks. The number of controls performed in relation to particular schemes is varying and is dependent on the level of benefi- ciaries involvement in the schemes Number of controls carried out by the Technical Control Service of ARR Regional Branches in The Agricultural Market Agency staff is highly qualified (the planned employment level at the Agency is 1300 employees). A comprehensive training programme (especially during preparation for the assumption of the functions of a paying agency) ensures that the Agency s employees are professionally prepared to carry out their tasks. 7

10 WE WORK IN ACCORDANCE WITH THE HIGHEST STANDARDS The quality of the work of the Agency is ensured by the implementation of and compliance with a range of norms and standards concerning the division of responsibilities, work organisation, management and ensuring the security of system for information and data exchange. The fact that the ARR meets the accreditation requirements established for paying agencies allows to pay out funds to the CAP scheme beneficiaries without undue difficulty and to conduct the clearance of accounts with the European Agricultural Guarantee Fund. At the same time, to ensure the highest level of performance, the Agricultural Market Agency has implemented a certified quality management system based on the PN-EN ISO 9001:2009 standard. The system applied in the ARR facilitates cooperation at each organizational level, reduces the administrative burdens imposed on beneficiaries and raises the quality of tasks performed. To conduct ongoing self-assessment and control in the framework of the ARR organizational structure, there are organizational units whose task is to monitor the compliance with the standards implemented: independent internal audit which performs its functions in accordance with International Standards for the Professional Practice of Internal Auditing developed by The Institute of Internal Auditors, established by the Minister of Finance as the standards for internal auditing in public sector institutions, highly qualified inspectors from the Internal Control Office, who on the basis of EU guidelines on the application of INTOSAI control standards perform checks and eliminate possible irregularities in the internal operation of individual ARR organizational units, improving the organization of their work, independent internal auditors acting in the framework of the Quality Management System who verify whether the rules of the PN-EN ISO 9001:2009 standard are implemented, and make recommendations on system improvements. Awarding the PCBC Quality Management System Certificate and the IQnet international certificate to the ARR during the International Fair for Food and Catering Products Polagra Food The information security management regulations implemented at the Agency (in accordance with PN-ISO/IEC standard) ensure the appropriate level of involvement by Agency employees in maintaining information system security as well as serving to define paths for its development. The Agricultural Market Agency is subject to regular external controls performed by domestic control and certifying services and bodies supervising the work of the ARR, as well as audit services from European Union structures. Processes carried out at the ARR are subject to continuous analysis and assessment, the results of which are the important source of information for the introduction of changes to optimize the functioning of the ARR. During the preparations for the implementation of the ISO quality management system the Agency s documentation was revised and the internal procedures were simplified, which had a positive impact on increasing the efficiency of the service delivered by the Agency to its clients. 8

11 Agricultural Market Agency SOURCES OF FUNDING CAP schemes administered by the ARR are financed primarily from the European Agricultural Guarantee Fund. Some schemes also require that Poland supply co-financing. Funds for this purpose come from the State budget or from funds transferred by organizations that associate producers, processors and operators, or from the beneficiaries themselves. National aid programmes (including complementary national direct payments in the sectors of starch and tobacco) carried out by the Agency are financed totally from the State budget. Activities resulting from the Act on promotion funds of agricultural and food products are financed from contributions submitted by participants from particular sectors of the agri-food market. The ARR administers these funds in accordance with the abovementioned Act. Structure of ARR sources of financing (in PLN million) * V-XII % 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Expenditure financed from EU funds Expenditure financed from State budget * forecast 9

12 BENEFICIARIES The beneficiaries of ARR activities are agricultural producers, operators involved in the production, storage and/ or processing of agricultural and food products as well as their sale and purchase in the EU and the import and export of these products, and also organizations associating the aforementioned entities. A significant portion of the assistance is also addressed to charitable organizations and educational institutions. Basic information concerning all ARR beneficiaries is kept in the Central Register of Operators maintained by the Agency. Each operator is given an individual Register number, which is used in the contacts with the ARR. ARR beneficiaries may submit applications in both paper and electronic format using electronic data storage devices or by . Selected schemes also have e-applications allowing documents to be filled out and submitted online. ARR information stand at the International Fair for Food and Catering Products Polagra Food, September

13 Agricultural Market Agency ARR ACTIVITIES The range of Agency activities in the field of support of the agricultural and food products market covers over 20 commodity groups and over 50 CAP schemes. In the framework of its statutory tasks, the ARR performs promotion and information activities concerning agricultural and food products, conducts market analyses, and assists Polish operators in bringing their products to market in third countries. Beneficiaries participating in schemes administered by the ARR have received financial support totalling nearly PLN 8.6 bn in the period from Poland s accession to the EU to July I. REGULATION AND SUPPORT FOR THE INTERNAL MARKET INTERVENTION ACTIVITIES BUYING-IN AND SALES Stabilization measures may be applied in the event of disturbances occurring on markets in cereals, skimmed milk powder, butter and beef, and their legal basis is to be found in EU regulations. Such activities consist in the purchase of products at intervention price (or in the framework of tender procedures), then storage of such products and later their resale onto the market or their Structure of ARR expenditures related to intervention buying-in from May 2004 May 2010 Sugar 30,12% Cheese 0,01% SMP 8,72% Butter 3,83% Pigmeat 0,51% Cereals 56,81% distribution in the framework of food aid scheme. The sale of intervention stocks is effected through a tender and is launched upon the European Commission decision. From the moment of Poland s accession to the EU, the ARR has performed intervention buying-in and sales of cereals, sugar, butter and skimmed milk powder. In the period there were 2 136,5 thousand tons of cereals bought-in for intervention. The greatest amounts of cereals were bought-in for intervention in the marketing years: 2004/2005, 2005/2006 and 2009/2010, in which there were bought-in respectively: 978,8 thousand tons, 711,2 thousand tons and 366,0 thousand tons. In the same period on the milk market for intervention there were 6,5 thousand tons of butter and 20,5 thousand tons of skimmed milk powder bought in. As regards skimmed milk powder, the intervention buying-in took place only in The sale of agricultural products stored as intervention stocks was launched on the basis of European Commission decisions. Intervention stocks of cereals, butter and skimmed milk powder held in Poland were sold for export (cereals) or they served to increase supply on domestic market, or were intended for use within the programme Supply of food for the most deprived persons in the Community. PRIVATE STORAGE The Agency ensures the stability of market prices for selected agricultural and food products by granting payments to beneficiaries choosing to temporarily refrain from introducing defined quantities of products onto the EU market by retaining them in storage pursuant to conditions put forth by EU law. This method of market stabilization may be applied primarily to the markets of butter, white sugar, beef and veal products, pigmeat, sheepmeat and goatmeat. 11

14 PRODUCTION QUOTA SYSTEMS The Agency undertakes activities concerning granting producers the right to produce within defined limits (production quotas) and monitoring of their output with respect to the markets in milk, sugar 1 and potato starch. The purpose of setting production quotas is to restrict supply to levels ensuring balance on a given market, as well as to restrict support to such a level of production as is appropriate to market requirements. It may also be based on other social and economic factors appearing in a given region of the EU. Milk and sugar producers are subject to mandatory quotas. Producers of potato starch, whose participation in the scheme is voluntary, receive support in the form of aid for production. The Agency distributes payments to producers of potato starch under the potato starch production quota scheme of approx. PLN 10 mln annually. In the framework of the administration of milk production quotas the ARR undertakes a range of activities such as: registration of milk purchasers, registration of applications and issuing decisions on granting or taking back individual milk quotas, authorising transfers and conversion of individual quotas, monitoring of the number of wholesale and direct suppliers, control of the quantity of milk introduced for sale in a given quota year, monitoring of the fat content of purchased milk, and the distribution of the national quota reserve among suppliers. COMPLEMENTARY PAYMENTS The system of direct complementary payments adopted in Poland allows the application of additional support on selected agricultural markets, in the form of payments financed from the State budget. The ARR is responsible for: coupled payments for starch potato growers and for raw tobacco producers (realization of payments related to tobacco production ceased permanently in July 2010), National milk quotas allocated to EU Member States (in total: EU ,687 thousand tons) for quota year 2010/11 (in thou. tons) Malta Cyprus Luxembourg Slovenia Estonia Latvia Greece Bulgaria Slovakia Lithuania Portugal Hungary Finland Czech Republic Austria Romania Sweden Belgium Denmark Ireland Spain Poland Italy The Netherlands Great Britain France Germany ARR expenditure for complementary payments to potato starch and tobacco from Poland s accession to the EU (in PLN thousand) The Agency does not participate in granting production sugar quotas. 0 V-XII * * forecast 12

15 Agricultural Market Agency decoupled payments for agricultural producers in the potato starch and tobacco sectors, in the framework of financial limitations established by the European Commission for a given marketing year. Since the accession of Poland to the EU, out of the total amount of the funds for complementary payments, 90% has been distributed to raw tobacco producers and 10% to starch potato growers. AID FOR PRODUCTION, PROCESSING AND CONSUMPTION Each year, at the request of interested operators, the Agency may grant aid for the production of dried fodder, and for the processing of flax and hemp for fibre. When difficult market conditions occur, subject to a decision from the European Commission the Agency may also grant aid for skimmed milk powder used in the production of feed and for the production of casein and caseinates. In the past the Agency also granted aid for sugar used in the chemical industry, for the purchase of butter by non-profit institutions, for the processing of butter, concentrated butter and cream, and for the use of olive oil in processing. The aid is intended to stabilize markets for such products, as well as to improve relations and cooperation between suppliers of raw materials and processors. Aid for production Aid for processing 6989 ARR expenditure by aid groups in the period from May 2004 to May 2010 (in PLN thousand) Aid for consumption (incl. School Milk and School Fruit ) ARR expenditures on School Milk programme since Poland s accession to the EU (PLN thousand) EU aid V-XII 2004 To increase consumption of selected food products, as well as to shape healthy eating habits in the society, the ARR supports the consumption of milk, yoghurt and cheese products by children of school and preschool age. At present there are three sources of funding of these goals: the EU budget, the State budget and the Milk Promotion Fund. Payments made by the ARR allow children and the youth attending preschool and school (excepting institutions of higher education) to consume 250 ml of milk and other dairy products per day, at no fee or for a symbolic payment. The School Milk programme is the subject of growing interest of beneficiaries, expenditures related to the programme are growing systematically, and the basic assumptions of the programme are being implemented on an increasingly larger scale * State budget aid Milk Promotion Fund Since September 2009 the majority of EU states, including Poland, have operated the School Fruit programme which has been developed by the European Commission as one of its priorities and is aimed at the improvement of health condition and eating habits of EU inhabitants. The * forecast 13

16 main goal of the programme is to change children s eating habits by increasing the proportion of vegetables and fruit in their daily diet, as well as promotion of proper eating habits by educational programmes in primary schools. The following fruit are distributed to children attending class s I-III of primary schools: apples, pears and strawberries; vegetables delivered are: carrots, sweet pepper and radishes. Fruit, vegetable, and blended juices are also supplied. In the second semester of the 2009/2010 school year 570 thou. children participated in the programme. By 1st June 2010 the Agency spent over PLN 9.7 mln, of which PLN 7.2 mln was supplied by the EU. STATE AID Articles of the Treaty on the functioning of the European Union (articles of the former Treaty establishing the European Community) foresee the possibility of state aid provision by EU Member States, adapted to local needs and financed fully from the Member State s budget. ARR beneficiaries have been able to take advantage of the following forms of state aid: compensation for renouncing individual milk production quotas, aid to consumption of milk and milk products in primary schools, aid for establishment of permanent plantations of willow, poplar, miscanthus and Virginia fanpetals, aid for sowing or planting basic or certified seeds for agricultural producers who in 2006 and 2008 suffered losses relating to drought, aid for sowing or planting basic or certified seeds in the form of de minimis assistance. SPECIAL support INSTRUMENTS In the occurrence of threatening diseases in populations of cattle, pig herds, sheep, poultry and goats, as well as in the event of difficult circumstances on the markets for agricultural production, the ARR may upon the European Commission decision grant financial support to operators and other participants in the market. So far the Polish market has seen the need to assist poultry breeders who suffered losses resulting from H5N1 influenza virus. Assistance in the form of aid was provided to cover losses resulting from destruction or processing of hatching eggs, the slaughter of breeding flocks, and leaving stables without stock during the three-week epidemic period. In 2010 the Agency paid out PLN 82.9 mln from special support fund in the milk sector for nearly 92 thou. milk producers who suffered severe losses and a lack of liquidity as a result of the crisis which took place in 2008/2009. De minimis support in agriculture, i.e. support which does not disturb the functioning of the Single European Market, in the form of aid for sowing or planting basic or certified seed, has been provided by the ARR since Aid has been granted to areas of arable land sown or planted with basic or certified seed of bread wheat, rye, barley, triticale, oat, cereal and forage mixtures, lupine (yellow, narrow-leaved or white), pea, faba bean, common vetch and potatoes. SUPPLY OF FOOD FOR THE BENEFIT OF THE MOST DEPRIVED PERSONS IN THE EU Cooperating with Polish charity organisations such as the Federation of Polish Food Banks (Federacja Polskich Banków Żywności), Caritas Poland (Caritas Polska), The Polish Red Cross (Polski Czerwony Krzyż) and the Polish Social Assistance Committee (Polski Komitet Pomocy Społecznej), the Agricultural Market Agency, in conjunction with a wide range of local organizations, participates each year in the delivery of food to the most deprived persons entitled to social assistance. 14

17 Agricultural Market Agency SCHEMES OF MONITORING AND CONTROL OF PRODUCTION AND PROCESSING The Agency s ongoing activities include supervision of the fulfilment of responsibilities imposed by national and Value of financial resources and food assistance from intervention reserves directed by EC for use in the food aid programme in Poland in ,0 330,0 275,0 220,0 165,0 110,0 55,0 0 Structure of agricultural and food products delivered by ARR as food aid from May 2004 to May 2010 Powdered milk 1.2% Corn flakes 4.5% Rennet and processed cheese 4.5% Barley groats and semolina 6.5% White sugar 8.2% V-XII * Funds allocated to Poland by the European Commission to be used in Jam 1.6% Prepared meals 2.3% 2010* Muesli 1.1% Instant Grain Coffee 0.1% Biscuits 0.6% Barley soup 1.0% Butter 0.6% Tomato soup 0.3% Fruit syrup 0.2% EU legislation on participants in particular sectors of the agricultural and food market and of renewable energy. The ARR: carried out the distribution of fruit and vegetables not intended for sale, through granting approval e.g. to charitable organizations to distribute fruit and vegetables received from producers and associations of producers; carried out the production potential of wine and vines in Poland through registering wine and grape must producers whose products are manufactured using grapes from domestic vineyards; may issue authorisations for the use of casein and caseinates in cheese production; monitors and controls the use of out-of-quota sugar and isoglucose in deliveries to EU outermost regions and exports to non-eu countries; monitors and controls the use of industrial sugar, grants approval to operators processing industrial raw materials into defined end products, as well as performs ongoing controls of the use of industrial sugar imported from third countries by approved processors; monitors and controls the refinement of sugar imported from third countries; performs oversight of the processing of energy crops harvested in areas covered by payments for their cultivation, into energy end products liquid biofuels, electric energy and heat; monitors the market for biocomponents and liquid biofuels produced by farmers for their own use, runs a register of producers and of farmers, as well as conducts controls of all entities registered. Until the EU Council abolished the requirement to set-aside a part of agricultural land, the Agency had also monitored the use of raw materials cultivated on set-aside land. Rice 4.7% UHT Milk 39.6% Wheat flour 13.8% Pasta 11.6% Total 493 thousand tons of products SECTORAL SUPPORT PROGRAMMES Support for the market of apiary products Each year the Agency, acting on the basis of the National Apiary Support Programme, grants financial support for a range of projects carried out by unions and apiary coop- 15

18 eratives, associations of apiarists and other groups of beekeepers, as well as by research and development institutions involved in beekeeping issues. Assistance given in the framework of this programme is intended to improve honey quality, as well as strengthen particular factors related to the production and sale of bee-related products. Projects recei- ving financing from the ARR are directed at the purchase of bees and medical treatment against varroosis, training sessions, quality analysis of honey and the rental of transport for moving hives ARR expenditures to support beekeeping in and projections for 2010 (PLN thousand) The Temporary Restructuring Fund also provides funding for diversification activities in the sugar sector covered by the National Restructuring Programme carried out by the ARR. This aid can be obtained for co-financing of the purchase of new machinery and equipment intended to enable change of production range to other than sugar beet growing. Aid is also granted for investments in the building or mo- dernization of companies oriented at bioenergy markets which process agricultural products for energy production purposes. Aid for restructuring and diversification in the sugar sector in the period Modernisation of agricultural holdings 3.2% Adding value to agricultural and forestry products 7.5% Restructuring and diversification of the sugar industry In result of the reform of the EU sugar industry the Temporary Restructuring Fund was established. The Fund s incomes originate from contributions made by sugar and isoglucose producers subject to a production quota. The total amount granted to Poland from this Fund is EUR 322 mln. The funds collected were used to finance restructuring aid for those producers who have decided to partially or fully renounce their sugar production, and also for 27 thousand sugar beet growers involved in the delivery of sugar beets to those producers. Restructuring aid was also awarded to machinery contractors who provided growers undergoing the restructuring process with services of harvesting or cleaning of sugar beets. Sugar beet growers, producers and machinery contractors received in 2009 in total PLN 1,287 bn. Growers 33.1% Machinery contractors 0.2% Sugar producers 56.0% Diversification aid Restructuring aid Total value of funds from the Temporary Restructuring Fund earmarked for Poland 322 mln EUR (until 30 May 2010 ARR has paid out mln EUR) The amount of assistance granted by the European Commission for activities in the framework of the National Restructuring Programme amounts to EUR 34.4 mln. II. TRADE WITH THIRD COUNTRIES Poland and the other Member States of the European Union form a customs union. This means that trade between Member States is internal trade (without customs barriers) and requires only the submission of a statistical 16

19 Agricultural Market Agency Sugar Amounts of agricultural and food products subject to ARR export refunds from May 2004 to May 2010 V-XII I-V 2010 Pigmeat Non-Annex I processed products Beef and veal declaration concerning the flow of goods to the INTRASTAT system. However, trade between EU Member States and third countries, i.e. those outside the EU, is considered to be external trade. In the framework of CAP trade schemes, the Agency administers trade with third countries, which involves issuing export and import licences as well as payment of export refunds to support the export of agricultural and food products (in the period in total exported were thousand tons of products). Export refunds serve to cover partially or fully the differences between prices on the world markets and prices on the Community market. On the basis of decisions taken by the European Commission, the Agricultural Market Agency may pay export refunds for products such as: cereals, beef and veal, pigmeat, eggs, poultry and dairy products, and also to agricultural products included in the production of processed goods exported to third countries (sugar, milk and milk products, cereals, rice and eggs). Poultry and eggs Milk and milk products Fresh fruit and vegetables Cereals (including potato starch) licence. The scope of a licence and the amount of a security being a guarantee for fulfilling obligations connected with issuing of a licence, are specified by EU legislation. In order to ensure prior oversight of quantities of agricultural and food products to be exported to third countries, the ARR issues obligatory export licences which enable the fulfilment of customs formalities necessary for the completion of export transactions. Operators interested in receiving export refunds are required to hold an export licence with advance fixing of a refund. Such a licence entitles an operator to apply for an export refund in the amount arising from the licence. During the licence s validity period its holder may submit goods (in quantities covered by a licence) for the customs procedure of export along with an export refund application. In the framework of administration of import of agricultural and food products, the ARR issues: obligatory import licences for ensuring oversight of the volume of agricultural and food products that are to be released for free circulation in the EU, import licences that convey on the operator the entitlement to import into the EU a particular quantity of commodities under an import tariff quota on favourable conditions (at zero rate/reduced import duties). Milk and milk products market 8% Poultry and egg market 14% Market structure of products for which ARR issued import licences from May 2004 to May 2010 Pigmeat market 10% Fresh fruit and vegetables market 20% Other 1% Cereals market 16% Trade with third countries in some agri-food products is subject to the requirement to possess an export or import Beef and veal market 22% Sugar market 9% 17

20 III. PROMOTION ON AGRICULTURAL PRODUCTS MARKETS PROMOTION AND INFORMATION ACTIVITIES Agency s operations to carry out promotion and information activities concerning various kinds of Polish agricultural and food products are becoming more important. The ARR individually runs promotion activities mainly concerning products produced according to the food quality system, i.e. regional and traditional products, as well as organic food. Such activities are conducted in European Promotion and information activities are financed from both the EU and State budgets mainly under the scheme Support for promotion and information measures. Beneficiaries of the scheme may apply for up to an 80% refund of costs incurred from conducting promotion campaigns. Polish producers (producer groups and entities acting upon cooperative law) who carry out activities connected Market structure of products for which ARR issued import licences from May 2004 to May 2010 Banana market 9.8% Rice market 8.0% Fresh fruit and vegetables market 11.6% Other 0.7% Cereals market 14.2% Sugar market 15.3% EU ecological agriculture logo with the System of Protected Designation of Origin and Protected Geographical Indications, the System of Traditional Speciality Guaranteed, products of organic farming and products manufactured within other approved quality systems, may apply for support in the framework of the measure 133 of the Polish Rural Development Programme for the years which provides for beneficiaries of such programmes possibility of applying Beef and veal market 1.4% Promotion and information campaigns budgets in by product (thou. EUR) Wine market 35.8% Milk and milk products market 1.1% Poultry and egg market 2.1% Union countries, where the ARR attempts to reach both domestic consumers and citizens of other EU states and transmit an image of exceptional Polish products. As the ARR possesses various instruments for supporting promotion activities, it is a valuable partner for producer groups and sector organisations which associate producers and processors. The Agency s support allows them to conduct promotion and information campaigns concerning a large number of agricultural and food products produced in Poland including milk and milk products, fruit and vegetables, honey, pigmeat and beef milk and milk products beef and pigmeat 3149 organic products 1999 fruit and vegetables 1769 carrot juice 1481 regional and traditional products honey and apiary products frozen vegetables * These categories include realization of four promotion and information campaigns regarding beef, pigmeat, veal and products based on those ingredients

21 Agricultural Market Agency for up to a 70% refund on costs incurred during promotion campaigns. AGRI-FOOD PRODUCTS PROMOTION FUNDS To increase the use of EU funds available in the framework of support schemes for information and promotion activities, the Agency manages promotion funds for selected agricultural products. These funds allow Polish producers to increase their share of involvement in promotion activities supported financially by the EU as well as conducted independently by their sector. The funds budgets come from payments made by operators conducting particular types of activities on markets encompassed by individual funds. Currently this contribution comes from about operators. In each quarter on average - to the accounts of the Promotion Funds there is transferred about PLN 8 mln. By virtue of the Act on promotion funds of agri-food products nine promotion funds have been established for: milk, pigmeat, beef, horse meat, sheepmeat, grains of cereals and processed cereal products, fruit and vegetables, poultry and fish. In accordance with the decisions of the Management Commissions formed for each of the promotional funds, the money gathered is earmarked for information and promotion projects. These activities are oriented toward such goals as: providing information on the quality and characteristics of products, market surveys and promotion of the consumption of fresh and processed agricultural products, research and development intended to improve quality and increase consumption of products, training for producers and processors, participation by producers and processors in exhibitions and fairs, domestic sector organisations activities. ACTIVITIES DIRECTED AT SUPPORT OF EXTERNAL TRADE EXCHANGE A key strategic task, taking into account changes in trade and agricultural policy as well as in agriculture itself, is the Biofach Trade Fair, Nuremberg search for new trade partners and new markets for certain portions of agricultural production. The Agency s promotion and information activities concerning agricultural and food products and the Common Agricultural Policy are supplemented by activities related to providing information concerning markets for such products to operators interested in cooperation with international trading partners. To this end, the Agency obtains, analyzes and distributes materials and information received from other domestic and international institutions (including diplomatic services) concerning institutional, economic and trade cooperation with foreign partners. It also provides and obtains information for entities interested in trade exchange of agricultural and food products with both EU partners and third countries. Owing to the growth of activities related to the promotion of food and agricultural products as well as in support of export, the Agency is steadily increasing its involvement in the organisation of international economic conferences dedicated to the agricultural and food sectors, industry seminars and in promotion campaigns for Polish food. 19

22 IV. INTERNATIONAL COOPERATION From the moment Poland joined the EU and the ARR received the status of an accredited paying agency, the Agency has participated in EU and Polish assistance programmes designed to deliver expert support to developing countries as well as to countries aiming at becoming members of the European Union. TWINNING While preparing to fulfil the function of an EU paying agency and to implement the Common Agricultural Policy, the ARR undertook 5 pre-accession programmes under the Phare programme involving twinning projects to support the administration of CAP schemes. During this period we used the expertise and experiences of British and Dutch paying agencies, as well as of experts from Italy, France, Austria, Denmark, Greece and Sweden. The experience gained during the pre-accession phase has allowed us to participate from the moment of accession to ment have allowed us to join leading British partners in supporting the Romanian paying agency in obtaining accreditation. ARR INVOLVEMENT IN POLISH DEVELOPMENT ASSISTANCE Since 2005 the ARR has also been involved in supporting developing countries, especially those striving for tighter integration with the EU. The Agency supports agricultural market reforms in these countries. The Ministry of Foreign Affairs coordinates a programme of Polish development assistance in which the Agency has ensured expert assistance for institutions such as the Ukrainian Ministry of Agricultural Policy, the Ministry of Agriculture and Food Industry of the Republic of Moldova and the Ministry of Agriculture of the Palestinian National Authority. Visit to ARR by representatives of the Ministry of Agriculture, Fisheries and Rural Development of the Republic of Croatia as led by Secretary of State Josip Kraljičković September I Polish-Russian Agricultural and Food Industry Entrepreneurs Forum in Kazimierz Dolny November the EU in similar projects addressed to countries preparing for membership in the European Union. The Agricultural Market Agency is an active and visible player in twinning partnerships, and also a valued partner for other institutions. Our experts knowledge and involve- PARTNERSHIP COOPERATION After becoming an accredited paying agency, ARR operations relating to international cooperation were significantly expanded. At present we cooperate with institutions and other international entities and organizations, often in the framework of bi- and multi-lateral agreements. On a daily basis we cooperate with representatives of paying agencies from other Member States performing partnership exchanges of experience concerning realization of CAP schemes. We actively participate in meetings of EU paying agencies bringing together new Member States, 20