Which were the main difficulties faced by the Czech blue poppy seed market in 2023? What has changed compared to the last two years?
The price of poppy seeds in the first half of this year was generally stable, with minimal fluctuations. This year was different compared to other years, mainly due to the fact that it was not, and still is not clear, how many hectares of poppies were sown in the Czech Republic. On the one hand, poppy seed sales were known and, as every year, the sown hectares were derived from this data. On the other hand, there was the fact that farmers had seeds left over from last year (the war in Ukraine started in early 2022, and fears of a big drop in demand meant that farmers didn't plant poppies as much as they had expected, so they had seeds left in stock) and it is not known whether some farmers have used it to sow their fields this year or not… Therefore, the opinions of experts and the data of the statistical office regarding the sown areas differ widely. A severe drought in the summer months and local damage to poppy stands caused average yields to drop to a multi-year low. Here again, the crop estimates differ, with experts estimating the crop at 14.000-15.000 mt, the statistical office at 21.000 mt, this figure was reduced to 18.000 mt in the last detailed estimate. In the second half of the year, the price of poppy seeds started to rise – considering the low yields and the smaller total amount harvested. Compared to the last few years, the poppy seed market has not experienced any large or rapid price fluctuations. Taking into account the experience of the behaviour of the poppy seed market from the past years (Covid, the war in Ukraine), the behaviour of traders and processors of poppy seeds has changed so that prices are more stable and there are no significant price spirals. Overall, high inflation and problems on the financial markets were reflected in the payment moral of many trading and processing companies.
What impact do the wars in Ukraine and Israel have on the market? Are the political tensions in various African countries also a cause for concern here?
We dare to say that the war in Israel has no significant effect on the poppy seed market (poppy seed consumption in this country is small). Likewise, political tensions in African countries have no effect on the poppy seed market. However, the war in Ukraine has an effect – on the one hand, Ukraine was a large buyer of Czech poppy seeds – in recent years, exports to Ukraine have decreased considerably, another fact is that the export of poppy seeds to Russia - due to the war in Ukraine – is increasingly complicated, which also causes lower demand from this country and also the fact that Russia is starting to buy poppy seeds in other countries, even at the price of inferior quality.
In 2023, climate change and its impact on global commodity production was felt like never before. What should growers and market players be prepared for in the coming years?
Climate change is beginning to manifest itself to a greater extent in the Czech Republic as well. The Czech landscape still suffers from inappropriate large-scale agricultural management during the communist period. The government is preparing major measures in this direction, where water management, reduction of evaporation, and others should be improved. In the current situation, Czech agriculture is very sensitive to weather fluctuations, lack of water precipitation in the summer months, drought, and other extreme weather fluctuations. As a result of greater pressure to protect the environment, some effective preparations designed to support poppy growth and protect against pests are being restricted or banned. Thanks to the above, both growers and market players should expect lower yields, higher damage to the fields, and even poorer poppy seed quality. It is not excluded that the situation of 2018 and 2019 will soon be repeated, when the extreme drought caused very low yields per hectare (some farmers did not harvest anything at all and the fields had to be plowed), and as a result the price of poppy seeds rose above EUR 4/kg.
Commodity prices have risen significantly in many markets for another year in a row. Inflation and higher production costs are leaving their mark; the blue poppy seed market is no exception here. Do you think consumers will look for cheaper alternatives in the long run?
Inflation and problems in the financial markets in recent years have caused consumers to look for cheaper alternatives to poppy seeds in the long term. As a result, demand has dropped by 15-25% in recent years. Now it seems that inflation is falling, the problems are over, and thanks to this it can be concluded that demand will not fall further, on the contrary, in the long term we can hope for an increase in demand.
Looking at the current market situation, what challenges might the blue poppy seed market face in the 2024/2025 season?
The poppy seed market is very small compared to other commodities and has a tendency to react significantly to any internal or external influences. The impact of the war in Ukraine will still continue, the impact of climate change and efforts to increase environmental protection will also continue. The prices of other commodities on the agricultural market also influence the behaviour of poppy producers when selling poppy seeds. We are all impatiently waiting for the news regarding the sown areas for 2024, with a high probability that the sown area will not decrease anymore. An important role will be played – as every year – by the course of the spring and summer weather, as well as how farmers will deal with the restriction of the use of some preparations for plant protection.