Cash boost for ag markets
By : Juliet D. Golden
Wholesale agriculture markets could get a financial injection worth roughly zl. 100 million ($25 million) as early as this month to keep them running and ensure the survival of a key government program aimed at modernizing the sector.
The move follows a June government decision to make a last-ditch effort at saving the program. As a result, 11 markets will receive a total of zl. 99.8 million ($24.9 million), a third of which will go to one market in Wroclaw, the Dolnoslaskie Centrum Hurtu Rolno-Spozywczego (DCHRS).
Agriculture Ministry officials said last week that the funds are aimed not only at pulling the wholesale markets out of their economic doldrums, but at rounding out investments to help them function more efficiently on their own.
The additional funding also marks the beginning of the end of the government's involvement in the markets. The ultimate goal of the revamp plan is the divestment of state assets in the markets and moving ownership to the local level.
The state's share in the markets is held mainly through the Treasury Office of Agriculutural Property (AWRSP), the Agency for the Restructuring and Modernization of Agriculture (ARiMR) and the Agriculture Market Agency (ARR). It was through these agencies that the government invested in the markets, either by handing over treasury land or capital to carry out the investment. In exchange, the agencies received varying amounts of shares in markets around the country.
A valuable foothold
"The idea is to intensify investments in such a way so that the markets can gain their footing in a financial sense," said Aleksander Bielski, deputy director of the Department of Agricultural Markets and Commodity Exchanges at the Agriculture Ministry. "When the markets' attractiveness improves, the agencies will want to pull out of them by getting rid of their shares."
Modeled after similar markets in Western Europe, Poland's program was devised not only to assist farmers and their cooperatives with getting their products to the market. The idea was also to improve product standards and enforce sanitary conditions required once Poland joins the European Union (EU).
By 2000, the government had paid more than zl. 149.8 million ($37.5 million) to launch 33 markets around the country. But both the funds and the program itself did little to assist in reforming Polish agriculture or give the government a good return on its investment. A harsh Supreme Board of Inspection (NIK) report published in 1999 found that only seven of 22 markets audited yielded a profit during 1996-1998. In contrast, NIK reported that almost a quarter of the markets the government had set up had squandered at least zl. 13 million ($3.17 million) in public money through mismanagement and misappropriation.
While in the aftermath of the NIK report ministry officials announced that a plan to overhaul the program would be in place by the winter of 2000, haggling over the details meant that final government approval only came at the beginning of last month. For many markets, the government decision comes at the last possible moment.
"Some markets have knives at their throats," Bielski said.
Wroclaw's DCHRS stands to receive roughly zl. 37 million ($9.25 million) in government assistance to pay off creditors and complete construction work on buildings located on site. In the absence of government funds, earlier this year cash-strapped DCHRS' management handed over one-quarter of its prime 80-hectare real estate to a local building contractor to clear its debts incurred on building the state-of-the-art facilities.
"With the zl. 37 million we will finally be able to break even," said Janusz Jewsiewicki, DCHRS president.
Sink or swim
But the government has made clear that this latest decision means sink or swim for the markets. When this last financial injection runs dry, officials have said the markets will have to be able to stand on their own.
"This is the final support for the wholesale markets," the government said last month in a written statement. "Additional financing will have to exclude (assistance) from government agencies."
The markets have already started looking for alternative sources of income. In Lublin, on Sundays the agriculture market is home to a burgeoning used-car market. Wroclaw is looking to launch a similar venture later this summer.
Warsaw's Bronisze wholesale market on Sundays is a venue for an antique market.
"All the markets are trying to do anything to raise money from alternative sources," Bielski said.
In the NIK report the government was also criticized for watering down public assistance by disbursing funds to too many markets around the country. In moving to fund only 11 of the original 33 markets, the government appears to be streamlining the program and enforcing a survival-of-the-fittest approach. Already only 22 of the original 33 markets are still in operation. According to Bielski, as some markets become stronger they will absorb weaker markets located in the region. Alternatively, other weak markets, like the one in Lodz, will close down.
"The tendency will be toward a consolidation on a territorial basis," Bielski siad. "Some smaller markets will be closed altogether, while others will become regional branch offices of larger centers."
While the ultimate goal of the program is government divestment, Bielski said the final pullout of government agencies will not happen for at least another two years.
