Prices of many foods skyrocket

in Poland with membership in EU

Farmers reaping benefits

WARSAW, Poland (AP)--Poles' biggest fear over joining the European Union is coming true: New statistics show food prices--from bananas to beef to butter--are going up sharply.

But the country's farmers, who had resolutely opposed joining the trade bloc for fear of being eclipsed by new competition, are flourishing as Western European traders rush to purchase comparatively inexpensive Polish livestock and produce.

It is the foreign demand that is largely responsible for the price hikes since Poland joined the EU on May 1, according to economists. Statistics released in early July by Poland's central bank show poultry prices up 22 percent from mid-April to mid-June, with beef prices up 21.7 percent and pork up 9.4 percent in the same period.

"Before I always bought poultry and we used to enjoy having beef once a week," said Elzbieta Sulimierska, a 63-year-old with a pension of 1,500 zlotys (US$410) per month, a fairly nice sum by Polish standards.

"But now I am just not buying beef anymore," she said after purchasing turkey breasts at a packed outdoor Warsaw market on July 9.

Though average Poles saw the price hike coming, the new statistics have come as a surprise to officials at the central bank and economists more generally. The experts largely failed to foresee that European traders--mainly Germans--would seize upon cheaper Polish farm products.

The hike in food prices has increased inflationary expectations, prompting the central bank to announce a half-percentage point increase in interest rates on July 7.

"We did not take into consideration the increased demand--that Germans would be buying so much," central bank head Leszek Balcerowicz said July 8, acknowledging that his bank's forecasts underestimated the price rise. "It would have been very difficult to do so."

At the small tin-roofed stalls in the Hala Banacha market on July 9, cuts of beef that butchers were selling for 14 zlotys (US$3.83) per kilogram in April were going for up to 19.50 zlotys (US$5.34). Chicken breasts that sold for 14.50 zlotys (US$3.70) per kilogram were priced at 17.50 zlotys (US$4.79).

"Everyone notices and they are complaining," said Grazyna Stachurska, a woman selling butter--up 13.7 percent. "But these are basic products and everyone has to have them."

Miroslaw Gronicki, chief economist with Warsaw-based Bank Millennium, said that while Polish consumers are hurting now, the new demand for Polish livestock and meat signals an improvement for the lot of farmers, who lost out after the fall of communism in 1989. Farmers profited from fixed prices and subsidies and easily sold their products due to the chronic shortages under communism, but many struggled later in the more competitive capitalist climate.

"The Polish farmers were affected more than anyone by the 15 years of transition and now the situation is changing dramatically in their favor," Gronicki said. "For the time being, anyway, because this situation will not last long. You can quickly saturate a market."

The new demand for meat products is not the only factor playing havoc with prices.

Rice prices have surged 27.7 percent and bananas 18 percent since April, largely the result of new import duties and other rules imposed by the EU.

"Rice, poultry and other meats like veal--everything which you need most is getting more expensive," grumbled 82-year-old shopper Helena Kozlowska. "But I have to eat."