Bronisze buys underperforming Targ Pol to eliminate competition
Hoping to breathe new life into its own struggling operations, the government-sponsored Warsaw agricultural wholesale market in Bronisze last week swallowed its local competitor, Targ Pol.
Since opening doors last June, Bronisze has struggled to attract traders into its state-of-the-art facilities. Part of a cornerstone government plan to modernize Polish agriculture, the market cost $57 million to build. Nine months into operations farmers and merchants have rented only half of its halls. Only a quarter of the expected 5,000 cars and trucks arrive to buy or sell each day.
In the works since last autumn, Bronisze's buyout of Targ Pol eight kilometers away is the first step in saving the former of the two by eliminating an obsolete but vigorous competitor and consolidating wholesale food sales in the Warsaw region. Bronisze's management thus acts to take their fate in their own hands rather than wait for government help.
"A supra-regional wholesale market makes sense only when the whole of supply... meets the whole of demand" in one location, said Janusz Bylinski, president of Bronisze. "With two (supra-regional) markets (in Warsaw) that didn't happen, that's why we made the decision."
In the agreement announced last week, Bronisze acquired both Targ Pol and the neighboring EkoGreen car market located on twelve hectares in the Okecie district of Warsaw. While Bylinski refused to disclose the sale price, he said that as a part of the deal by the end of last week all trading at the Okecie site would come to a halt. "As of March 10, we will move sales of all goods on to the Bronisze grounds," Bylinski said.
That alone might boost trading for Bronisze by nearly 60% overnight. While 46,000 buyers and sellers vehicles arrived at Bronisze in January and February, the much older, "mom and pop" style Targ Pol market reported that it sold 80,000 tickets in that period.
While last week's announcement could signal a turnaround for Bronisze, it does little for the 33 other agricultural wholesale markets the government sponsored around the country, most of which are in trouble. Envisioned as vital to reforming a moribund sector, such markets, in theory, give farmers direct feedback from major wholesale buyers about which goods consumers want, in which quantities and at which prices.
But the 33 markets have already absorbed upward of zl. 150 million ($37 million) of public subsidies. And the government's money and efforts have lead neither to modernizing agriculture in the regions surrounding each market, nor to hopes of actual return on government's investment. A harsh State Audit Office (NIK) report published last summer found that of 22 markets audited, only seven yielded profits from 1996 to 1998. In contrast, the NIK report asserts that almost one-quarter of the markets have squandered at least zl. 134 million in total of public funds through mismanagement and misappropriation.
Since the NIK issued its report, pressure has come on the government to come up with a rescue program. No later than the end of last month, the government was expected to announce its "stage two" plan aimed at revamping its wholesale agricultural market's concept. "I think that the issue will be resolved by the end of February." Slawomir Oltarzewski, deputy director of the Department of Agricultural Markets and Commodity Exchanges at the Ministry of Agriculture, told the WBJ early last month.
While already anticipating change, wholesale market managers last week said the government's fix is still on the drafting board. "It is still being worked out in the ministry of agriculture," Bylinski said.
