Voluntary Report - public distribution

**Date:** 7/11/2005

**GAIN Report Number:** PL5013

PL5013

**Poland**

**Tobacco and Products**

**Update**

**2005**

**Approved by:**

![](media/image1.wmf)Charles Rush

U.S. Embassy

**Prepared by:**

Natalia Koniuszewska, Agricultural Specialist

**Report Highlights:**

Unfavorable weather conditions in 2004 caused a much lower crop than was
forecasted. About 50 percent of the 2004 quota of 37,682 tons was
allocated. The 2005 quota of 37,933 tons was allocated in full,
reflecting farmers\' optimism for better weather and improved crops.
Meanwhile, imports of raw tobacco doubled in 2004, yet the production of
cigarettes rose only by 6 percent.

Includes PSD Changes: No

Includes Trade Matrix: Yes

Unscheduled Report

Warsaw \[PL1\]

\[PL\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#tobacco-production-and-trade)

[Cigarettes -- Production and Trade 3](#cigarettes-production-and-trade)

[Unmanufactured tobacco - PSD 5](#unmanufactured-tobacco---psd)

[Unmanufactured tobacco -- Exports 6](#unmanufactured-tobacco-exports)

[Unmanufactured tobacco -- Imports 7](#unmanufactured-tobacco-imports)

[Tobacco, Manufactured -- Cigarettes, PSD
8](#tobacco-manufactured-cigarettes-psd)

[Tobacco manufactured -- Cigarettes -- Exports
9](#tobacco-manufactured-cigarettes-exports)

[Tobacco manufactured -- Cigarettes -- Imports
10](#tobacco-manufactured-cigarettes-imports)

# Executive Summary

According to preliminary data, tobacco production in 2004 was 30 percent
lower than in 2003 reaching 14-15,000 tons. By the end of March 2005,
less than half of the allocated 2004 quota was used. Farmers hope that
with their higher guaranteed production quota they will achieve even
higher production levels. The guaranteed production quota of 37,933 tons
has already been allocated reflecting farmers' hopes for better weather
conditions which would enable them to receive higher yields in 2005.

Since May 1, 2004 there have been lower import taxes on raw tobacco
(18.4 percent compared to 105 percent) and cigarettes (57.6 percent
compared to 173 percent minimum 19EUR/1,000 pcs) in Poland which
resulted in double the quantity of imported raw tobacco, mostly from EU
suppliers. Unfortunately, the imports of raw tobacco from the United
States represented only 1/3 of the volume imported in 2003. As in
previous years, cigarette manufacturers have agreed to buy all
contracted quantities of local tobacco in 2005 as well. As the excise
tax on cigarettes is much higher in the EU, Poland will slowly adjust
its excise tax on cigarettes through 2008 when it should mirror the EU
rate. Prices for some cigarettes, primarily expensive varieties,
increased in the first quarter of 2005. For some consumers, cigarettes
prices are too expensive. Cigarette smuggling continues to be a problem
for Polish law officials.

# Tobacco -- Production and Trade

In 2004, the number of tobacco producers slightly decreased from about
17,000 to about 15,000. The tobacco area planted increased from 10,300
hectares in 2003 up to 11,721 hectare in 2004. No accurate data for
total tobacco production in 2004 is available. According to the Agency
for Agricultural Markets, farmers have received payments for 14,100 tons
of within quota tobacco (total 37,682 tons registered). As of March 30,
2005, PLN 70.4 million (U\$ 21.67 million) has been paid from PLN 200
million (U\$ 61.6 million) in available funds. The 2005 production quota
of 37,933 tons of tobacco was allocated to 916 individual farmers and 10
producer groups representing 13,940 farmers.

The most important buyers of raw tobacco are Universal Leaf Tobacco
Poland Ltd., Philip Morris Poland S.A., Tobacco Plants in Lublin, and
Tobacco Company Merkury Ltd.

The Act on fruit and vegetables, hops, and feed markets, also regulates
the tobacco market and adjusts Polish regulations to EU regulations.

The Act covers:

-   conditions of preliminary processing of raw tobacco,

-   limiting the production of tobacco,

-   area of tobacco production.

Imports of raw tobacco in 2004 doubled compared with 2003 levels, mostly
to augment weather-damaged crops, but also due to lower import duties.
There was a significant increase in imports from other EU countries:
Belgium, Germany, France, and Italy. Imports from the United States were
60 percent lower than in 2003 (1,093 tons), and almost 10 times lower
than in 2002 (3,270 tons). According to FAS Warsaw sources, American
tobacco is not imported directly to Poland, but through Switzerland,
Belgium or Netherlands.

# Cigarettes -- Production and Trade

According to the Main Statistical Office, the production of cigarettes
in 2004 was 6 percent higher than in 2003 and increased to 86.8 billion
cigarettes.

Both exports and imports of cigarettes and tobacco products were much
higher in 2004 than in 2003. Exports of cigarettes more than doubled,
from 5 billion pieces in 2003 up to 12.6 billion in 2004. Imports
increased from 9 million pieces in 2003 up to 465 million pieces in
2004. The main buyers of Polish tobacco products were France, Iraq,
Germany, Hungary, Mauritania, Cambodia and Egypt. The main suppliers of
cigarettes to Poland were Germany, Denmark, Netherlands and Russia.

Exports of cigars were 25,000 pieces (30 percent down from 2003), while
imports increased considerably in 2004 and reached 230,000 pieces
compared with 76,000 in 2003 and 20,000 in 2002. This is a new tendency
in tobacco products consumption.

+-----------------------------------+-----------------------------------+
| **Description**                   | **Excise tax in PLN per 1000 pcs  |
|                                   | and/or in percent:**              |
+-----------------------------------+-----------------------------------+
| Tobacco products:                 |                                   |
+-----------------------------------+-----------------------------------+
|                                   |                                   |
+-----------------------------------+-----------------------------------+
| cigarettes                        | PLN 68.35 + 28.48 % of the        |
|                                   | maximum retail price              |
|                                   |                                   |
|                                   | but the minimum excise tax rate   |
|                                   | is PLN 129.44 per 1000 pcs        |
+-----------------------------------+-----------------------------------+
| cigars, cigarillos from tobacco   | PLN 134.00                        |
| or tobacco substitute             |                                   |
+-----------------------------------+-----------------------------------+
| other tobacco products            | PLN 46.53 per kilogram + 19.39 %  |
|                                   | of the maximum retail price       |
+-----------------------------------+-----------------------------------+
| imported smoking tobacco          | 60 % of the maximum retail price  |
+-----------------------------------+-----------------------------------+

US\$1 = PLN 3.25

According to the Ministry of Finance the average increase of excise tax
on tobacco products in 2005 was 14.7 percent. The excise tax will
increase through 2008 when it equal the overall EU rates.

# Unmanufactured tobacco - PSD 

  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------
  PSD Table                                                                           

  Country         Poland                                                              

  Commodity       Tobacco,                                      (HA)(MT)              
                  Unmfg.,                                                             
                  Total                                                               

                  2003         Revised    2004       Estimate   2005       Forecast   UOM

                  USDA         Post       USDA       Post       USDA       Post       
                  Official     Estimate   Official   Estimate   Official   Estimate   
                  \[Old\]      \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  Market Year                  01/2003               01/2004               01/2005    MM/YYYY
  Begin                                                                               

  Area Planted    10300        10300      10300      11721      0          11721      (HA)

  Beginning       45227        45227      44027      44303      42527      42685      (MT)
  Stocks                                                                              

  Farm Sales      25000        25000      25000      20000      0          20000      (MT)
  Weight Prod                                                                         

  Dry Weight      22000        22000      22000      14000      0          18000      (MT)
  Production                                                                          

  U.S. Leaf       2000         1093       2000       349        0          350        (MT)
  Imports                                                                             

  Other Foreign   17800        18566      20000      42085      0          40000      (MT)
  Imports                                                                             

  TOTAL Imports   19800        19659      22000      42434      0          40350      (MT)

  TOTAL SUPPLY    87027        86886      88027      100737     42527      101035     (MT)

  Exports         6000         6490       6000       6703       0          7000       (MT)

  Dom. Leaf       23000        20000      23000      15000      0          15000      (MT)
  Consumption                                                                         

  U.S. Leaf Dom.  2000         1093       1500       349        0          350        (MT)
  Consum.                                                                             

  Other Foreign   12000        15000      15000      36000      0          36000      (MT)
  Consump.                                                                            

  TOTAL Dom.      37000        36093      39500      51349      0          51350      (MT)
  Consumption                                                                         

  TOTAL           43000        42583      45500      58052      0          58350      (MT)
  Disappearance                                                                       

  Ending Stocks   44027        44303      42527      42685      0          42685      (MT)

  TOTAL           87027        86886      88027      100737     0          101035     (MT)
  DISTRIBUTION                                                                        
  --------------- ------------ ---------- ---------- ---------- ---------- ---------- ---------

#  Unmanufactured tobacco -- Exports

  ------------------- ------------------------- --------------- ----------
  **Export Trade                                                
  Matrix**                                                      

  **Country**         Poland                                    

  **Commodity**       Tobacco, Unmfg., Total                    

  Time Period         Jan-Dec                   Units:          000 MT

  Exports for:        2003                                      **2004**

  U.S.                                          U.S.             

  Others                                        Others          

  Lithuania           1490                      Russia          2023

  Russia              1348                      Germany         1369

  Germany             899                       Ukraine         1232

  Ukraine             770                       Sweden          562

  France              568                       Kazakhstan      308

  Kazakhstan          405                       Yugoslavia      252

  Norway              395                       France          252

  Belgium             160                       Czech Republic  152

  Sweden              113                       Lithuania       126

  Romania             83                        Norway          102

  Total for Others    6231                                      6378

  Others not Listed   259                                       325

  Grand Total         6490                                      6703
  ------------------- ------------------------- --------------- ----------

# Unmanufactured tobacco -- Imports 

  ------------------- ------------------------- --------------- ----------
  **Import Trade                                                
  Matrix**                                                      

  **Country**         Poland                                    

  **Commodity**       Tobacco, Unmfg., Total                    

  Time Period         Jan-Dec                   Units:          000 MT

  Imports for:        2003                                      **2004**

  U.S.                1093                      U.S.            349

  Others                                        Others          

  Brazil              8014                      Belgium         11379

  Zimbabwe            2011                      Germany         7662

  India               1185                      Brazil          6112

  Italy               1168                      France          4603

  France              1139                      Italy           2063

  Argentina           941                       India           1530

  Turkey              863                       Spain           1095

  Malawi              685                       Zimbabwe        911

  Greece              490                       Malawi          868

  China               370                       Hungary         706

  Total for Others    16866                                     36929

  Others not Listed   1700                                      5156

  Grand Total         19659                                     42434
  ------------------- ------------------------- --------------- ----------

# Tobacco, Manufactured -- Cigarettes, PSD

  -------------- ------------- ---------- ---------- ---------- ---------- ---------- ---------
  PSD Table                                                                           

  Country        Poland                                                               

  Commodity      Tobacco,                                       (MIL PCS)             
                 Mfg.,                                                                
                 Cigarettes                                                           

                 2003          Revised    2004       Estimate   2005       Forecast   UOM

                 USDA Official Post       USDA       Post       USDA       Post       
                 \[Old\]       Estimate   Official   Estimate   Official   Estimate   
                               \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  Market Year                  01/2003               01/2004               01/2005    MM/YYYY
  Begin                                                                               

  Filter         78240         78240      78500      83800      0          83800      (MIL PCS)
  Production                                                                          

  Non-Filter     3260          3260       3000       3000       0          3000       (MIL PCS)
  Production                                                                          

  TOTAL          81500         81500      81500      86800      0          86800      (MIL PCS)
  Production                                                                          

  Imports        84            9          84         465        0          500        (MIL PCS)

  TOTAL SUPPLY   81584         81509      81584      87265      0          87300      (MIL PCS)

  Exports        5081          5045       5081       12597      0          13000      (MIL PCS)

  Domestic       76503         76464      76503      74668      0          74300      (MIL PCS)
  Consumption                                                                         

  TOTAL          81584         81509      81584      87265      0          87300      (MIL PCS)
  DISTRIBUTION                                                                        
  -------------- ------------- ---------- ---------- ---------- ---------- ---------- ---------

# Tobacco manufactured -- Cigarettes -- Exports

  ------------------ --------------------------- -------------- ----------
  **Export Trade                                                
  Matrix**                                                      

  **Country**        Poland                                     

  **Commodity**      Tobacco, Mfg., Cigarettes                  

  Time Period        Jan-Dec                     Units:         MLN PCS

  Exports for:       2003                                       **2004**

  U.S.               9                           U.S.            

  Others                                         Others         

  Djibouti           849                         France         2160

  Mauritania         718                         Iraq           1520

  Egypt              653                         Hungary        1235

  Czech Rep.         430                         Germany        1161

  Ghana              378                         Mauritania     1029

  UAE                349                         Cambodia       1018

  Iraq               434                         Czech Rep.     808

  Panama             103                         Djibouti       653

  Slovenia           71                          Egypt          544

  Jordan             63                          Ghana          286

  Total for Others   4048                                       10414

  Others not Listed  988                                        2183

  Grand Total        5045                                       12597
  ------------------ --------------------------- -------------- ----------

# Tobacco manufactured -- Cigarettes -- Imports

  ------------------ --------------------------- -------------- ----------
  **Import Trade                                                
  Matrix**                                                      

  **Country**        Poland                                     

  **Commodity**      Tobacco, Mfg., Cigarettes                  

  Time Period        Jan-Dec                     Units:         MIL PCS

  Imports for:       2003                                       **2004**

  U.S.                                           U.S.            

  Others                                         Others         

  Germany            5                           Germany        355

  Czech Rep.         1                           Netherlands    50

                                                 Denmark        46

                                                 Russia         11

                                                                 

                                                                 

                                                                 

                                                                 

                                                                 

                                                                 

  Total for Others   6                                          462

  Others not Listed  3                                          3

  Grand Total        9                                          465
  ------------------ --------------------------- -------------- ----------