In its latest report, Poles Apart, Netherlands-based Rabobank suggests that dairy manufacturers with Polish ambitions enter the country by forming partnerships or acquiring domestic businesses, not by “dropping a foreign model into the existing market”
“…consumer suspicion still exists of anything without a recognizable Polish name,” it said.
Despite this and other barriers, opportunities do exist for established players to tap into the country's dairy industry, said Rabobank. Poland could also be looked upon as a supply base for external processing rather than a market to develop, it added.
"Opportunities will be realized by those outside companies that look to adapt their methods and partner with domestic companies in the Polish dairy supply chain."
Further investment will, however, be required if the Polish dairy sector is to meet its “full potential” after the removal of the European Union (EU) milk quotas in 2015.
Since joining the EU in 2004, Poland has become one of the largest milk producers in the region.
For the year ended 31 March 2013, the country marketed 9.8m tonnes of milk and was one of only five EU Member States to exceed their quota.
With the EU milk quotas set to end in April 2015, Poland represents a significant opportunity for investment, said Rabobank analyst and author of Poles Apart, Matthew Johnson.
“The abolition of milk quotas in the European Union (EU) from April 2015 will be a watershed moment for the EU dairy industry, with an expected supply increase of 7% to 8% by 2020,” said Johnson.
“Favorable conditions for milk production in Poland, together with a comparatively underdeveloped domestic market, give it an advantage over other EU countries," he said.
To meet this potential, the sector and those looking to enter will face a number of barriers.
At farm level for example, the informal dairy sector is still considerable, said Rabobank. The 2015 quota abolition will likely see these farms absorbed into the formal sector, but producer consolidation will remain an issue, it added
“Land availability is restricted by landowners unwilling to sell land which is perceived as an insurance policy, thereby restricting farm consolidation. The current fragmented supply chain also requires consolidation in order for production to concentrate on larger, more efficient farms, and increase average yields per cows and labor efficiency per employee.”
Going full circle, trust issues local farmers have with international dairy players is also another challenge to overcome, Rabobank added.