Cost increases and investment: the Polish dairy sector

Although the Polish dairy sector’s financial performance remains under pressure, companies are showing willingness to invest in their operations, a report from the Polish Chamber of Milk indicated.

During the first three-quarters of 2023, the dairy sector in Poland generated a net revenue of PLN 38.3 billion (US$9.62 billion), down 10.1% compared with the previous year. Exports revenue dropped by 6.9% to PLN 6.8 billion (US$1.71 billion). The sector’s financial performance is mixed, with the cost of milk delivered to dairy plants totalling PLN 11.6 billion (US$2.91 billion), up 2% compared with the previous year. Meanwhile, the average purchase price dropped by 8.3% to PLN 2.07 (US$0.52) per litre, the Chamber of Milk reported.

Cheaper raw milk was one of the key factors bolstering the dairy processing segment’s profitability. Overall, operational costs stood at PLN 38.3 billion (US$9.62 billion), which was 6.2% below the previous year, while energy costs jumped 13.7%. Costs associated with external services like transport and logistics jumped 7.2% and wages and salaries increased 7.9%.

In the first half of 2023, the Polish dairy industry generated a net loss, laying the ground for negative forecasts about the industry’s future. However, new statistical data shows that the Polish dairy industry is back above the breakeven point. The Chamber of Milk calculated that only 49.5% of dairy companies generated a profit, which compares to 79% in the previous year.

Remarkably, the worsening financial results did not discourage dairy companies from keeping up with their investment plans. In the first three-quarters of 2023, Polish dairy businesses invested PLN 563.9 million (US$141.6 million), almost equal to the same period of the previous year.