Farmers allege Bakoma is trying to corner grain market
Charged with allegedly trying to control the grain market in Poland, yogurt maker Bakoma last week found itself under investigation by the Competition and Consumer Protection Agency (UOKiK) for anti-competitive practices.
The UOKiK launched an inquiry of Bakoma following an appeal from the Lower Silesian Agriculture Chamber of Commerce. The Wroclaw-based chamber charged that Bakoma's desire to buy the country's largest grain elevators in Brzeg (PZZ Brzeg) would give the company undue influence over grain prices.
While Bakoma is primarily a yogurt maker, four members of the family that own the company, the Komorowskis, could control up to 50% of Poland's grain market if they acquire PZZ Brzeg.
"We are afraid that a monopolist could appear on the market (and) could use its dominant role," said Leszek Grala, vice president of the Lower Silesian Agricultural Chamber of Commerce. "That's why we turned to the UOKiK to check out how much of a danger exists."
For its part, the UOKiK said that it has launched a clarification procedure to determine if there is any validity to the agriculture chamber's claim. "We have to see whether there is a reason to start a case against anyone at all," said Iwona Zaczek, spokesperson at UOKiK.
With elevator capacity of roughly 400,000 tons of grain, PZZ Brzeg is the largest wheat company in Poland. The company's storage facilities and factories can produce enough grain products to meet half the annual demand in Poland. The government's desire to sell the complex, and Bakoma's alleged interest, sparked a storm of protest. With initial offers turned in two weeks ago, the government is due to announce its short list of contenders for strategic investors no later than March 15. While PZZ Brzeg is laden with an estimated zl. 85 million ($20.73 million) in debt, whoever ends up in command of Brzeg could in essence control one of the richest wheat producing areas of the country.
"Lower Silesia and Opole are the regions where the most wheat for consumption is produced in Poland," Grala said. About one-fifth of grain grown in Poland is purchased by PZZ Brzeg. The company also commands at least 10% of the market share in grain processing.
While somewhat late in the uptake, farmers want their share of the market. Having caught wind that Bakoma founder and President Zbigniew Komorowski has his eye on the elevators, farmers turned to the UOKiK in attempt to derail the privatization process. In addition, last week a delegation from Lower Silesia and Opole lobbied government ministries to halt the privatization process. The farmer's advocates want the government to sell PZZ Brzeg to employees and grain growers in the region.
The advocacy group may have a difficult time proving its case to the UOKiK, however. While Bakoma and its partner Danone dominate the domestic yogurt market, the producer itself is not at all involved in the grain market.
Although the Komorowskis could not be reached for comment last week, the family was quoted in daily newspaper Rzeczpospolita as saying that accusations that they were out to control the grain market were off base.
Bogna Sikorska, an analyst at CDM Pekao Securities, pointed out though that the Komorowskis are looking to branch out into other food businesses. "They want to buy Brzeg," she said. "This is not their first investment in the wheat sector. They see business and it looks like they want to place an emphasis on something more than dairy products."
The Komorowskis' first venture in the wheat business came when the family bought shares in the wheat processing plant in Szymanow, Sikorska said. The company is profitable, and the Szymanow brand flour is heavily promoted in supermarkets, Sikorska said.
The family's position in the industry was strengthened in late December when Barbara Komorowska bought a controlling stake in PZZ Bydgoszcz, another key elevator and mill in Poland. Komorowska bought one-third of the controlling stake from NIF Hetman for a price of zl. 2.4 million, said Pawel Boksa, assistant director for investments at NIF Hetman.
"We sold 33% of the shares," Boksa said. "Other NIFs joined in on the agreement and sold their packages too."
Boksa estimated that Komorowska now has about a 60% stake in PZZ Bydgoszcz. "Maybe she has less than 60%," Boksa said. "But generally Mrs. Komorowska acquired a controlling package."
