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National Dry Bean Council Undertakes Market Development Programs in Eastern Europe
May 02, 2003
In March of 2003, Johanna Stobbs of the National Dry Bean Council, traveled to Poland, Hungary and the Czech Republic to review the potential of these markets for US dry beans.
In Poland, one-on-one visits with Polish companies were carried out with Wayne P. Molstad, Minister-Counselor for Agricultural Affairs, and Wlodek Makowski, the FAS Agricultural Specialist.
In Hungary, a seminar was conducted with Hungarian import-export companies, canners and dry packagers, in the FAS offices in Budapest, with the help of Paul Spencer, US Agricultural Attaché, and Ferenc Nemes, the FAS Agricultural Specialist.
In the Czech Republic, Stobbs conducted a formal seminar on US dry beans in the presence of Czech import-export companies and dry packagers, organized by Petra Choteborska, the FAS Agricultural Specialist.
In total, 16 companies were contacted during the trade mission over the three countries.
Conclusions and Recommendations
After careful consideration regarding the levels of local dry bean production, consumption, and distribution networks, only the Czech Republic would appear to offer US dry bean exporters a serious commercial opportunity in Eastern Europe at this time. The Czech Republic combines a number of positive factors for US dry bean exporters: zero import tariffs on dry beans, a well-developed infrastructure of distribution networks and supermarket outlets, and a strong middle class with disposable income and a growing taste for better, more quality-oriented food products. This is a market that consumes principally three classes of dry beans: navy beans, large lima beans and pinto beans, with a growing interest in dark red kidney beans for the restaurant trade.
However, the Czech Republic also presents challenges. Cheap imports from China, Burma and Ethiopia are already in the retail sector and price pressures from the large supermarket chains mean low profit margins for importers, dry packagers and canners.
Any future official NDBC trade mission to this market should include talking to supermarket purchasing directors, as well as importers, dry packagers and canners – since it is the supermarkets that control the type of products that make it to the shelves.
Another strategy would be to send a mixed container on consignment to a major importer, so that product samples would be readily available for multiple presentations to supermarket buyers, in an effort to get a toehold in the retail market.
Supermarkets in the Czech Republic are looking for products that are backed up by funding for store promotions. An NDBC-sponsored retail promotion program may be the best, and the perhaps the only, way for US exporters to penetrate this market.
The case for Hungary is very different. Hungary may someday grow into a fertile market for US dry bean exporters. However, at present, US product is hampered by a crippling 40% import tariff. In the immediate term, the National Dry Bean Council might do better to spend its time and effort on developing strong relationships with the German and Dutch traders who traditionally supply the Hungarian market with dry legumes. These traders (see contact list on page 45) are the current gatekeepers to the Hungarian market. It is recommended, therefore, that the NDBC representative for Eastern Europe travel to the Netherlands and Germany, in order to introduce the NDBC to these traders and encourage them to be in contact with US exporters.
The situation in Poland represents still another picture for US exporters. Poland is protected from dry bean imports by a 25% tariff. The country is clearly a dry bean producer-nation, bent on developing its own local production, with a ‘buy-Polish first’ policy. Again, the same all-powerful Dutch and German traders are also key players in sourcing product for Poland during years in which there is a short crop in domestic production. As an emerging agricultural power for the European Union, Poland will probably remain outside the parameters of NDBC market development efforts for the foreseeable future.
Country Notes
Notes regarding the findings of the trade mission, including production and consumption data and information on the companies contacted follow:
Poland
Country profile:
- Population: 39 million
- GDP per capita: $8,800
- Population below poverty line:18%
- Unemployment rate: 17%
- Agriculture: 4% of economic activity
- Agricultural products: potatoes, fruits, vegetables, wheat, poultry, eggs, pork
- Imports from Germany (24%), Russia (9%), Italy (8%), France (6%), UK (4%) US (4%)
- Currency: zloty
- Does not receive economic aid
- Tariffs on dry beans: 25%
- Entry into European Union: planned for May 2004
- Dry beans consumed – extra-large white beans
Facts on Dry Beans - Poland
Dry bean production and consumption in Poland are currently limited, although there is huge potential for agricultural development. Official statistics on dry legumes do not give separate production numbers for beans. The official data show an area of 43,000 hectares used for edible pulse production in 2000 and 41,0000 hectares in 2001. It is estimated that out of total edible pulses, roughly 20,000 hectares is used for dry bean production, a level that has been fairly steady over the last decade. Production of all edible pulses was 93,000 MT in 2000 and 88,000 MT in 2001. Assuming that dry beans represent about 50% of total pulses, annual dry bean production is estimated at around 45,000 MT.
Relatively small amounts of dry beans are traded. During 1998-2001, dry bean exports ranged from 6,000 MT to 15,000 MT, while imports during the same period were 600 MT to 1,650 MT.
Consumption -- The Polish National Statistics Office puts total annual dry bean consumption at 1.08 kg per capita, or 41,000 MT, which virtually matches domestic production.
A 2002 report from the Polish Institute of Agricultural Economics, puts total canned vegetable production (dry beans, green beans, peas and corn) at 77,000 MT, of which the FAS office estimates 15,000 MT to 20,000 MT to be dry beans.
Tariffs -- Dry beans imported into Poland carry a 25% duty for WTO countries, 17.5 % for ‘Developing Countries’, and are duty-free for ‘Least Developed’ countries, the European Union and Lithuania.
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