Re-making a market
In his new job, Tomasz Bakowski is facing a particularly difficult task: before the onset of this year's harvest, he must coax Wroclaw's agricultural wholesale market back from the edge of bankruptcy.
Brought in last month as the new president of the Lower Silesian Agricultural and Foodstuffs Wholesale Center (DCHRS) in Wroclaw, he must try to replicate the success of the Wielkopolska Agri-Horticultural Wholesale Market (WGRO) - a similar, but thriving market in Poznan.
"We need to get this market going within three months," Bakowski said, stressing the severity of the situation facing Wroclaw's market.
To save the market, Bakowski will have to draw on the lessons of Poznan's wholesale center, which is the only one of its kind in the country operating on a profitable basis. With 4,000 vehicles a day pouring in and out of the crammed, 12-hectare site on the main road leading from Poznan to Katowice, WGRO is bustling with activity and bursting at the seams. On its grounds, 70% of the fruits and vegetables and up to 40% of other foodstuffs consumed in the Poznan area are traded. In addition, products from the horticulture market are re-sold in flower shops throughout the country's western quarter.
Wroclaw's market, on the other hand, is saddled with zl. 29 million ($7.25 million) in debt and needs an additional zl. 8 million ($2 million) to complete construction. And creditors aren't the only ones closing in. Developers would like to see the market close, thus freeing up 78 hectares of prime real estate.
This means that while looking for help, Bakowski must be careful in sorting out who is a friend and who is an enemy.
"We need to be very careful because this land is attractive enough that there are people who (already) have their eyes on it," Bakowski said.
Bakowski's ability to save the market isn't only crucial for Wroclaw, though. There are four other regional wholesale markets around the country that are fraught with their own do-or-die difficulties. The government has so far assigned zl. 90 million ($22.5 million) to help bail out the five markets.
Whether Wroclaw is able to apply the lessons learned in Poznan is likely to be an indication of how well these other floundering regional wholesale markets will do at forging a niche for themselves and the farmers in their regions.
While Wroclaw's agricultural wholesale market is in crisis, it doesn't mean that the concept can't work. It also doesn't mean that such markets won't help to restructure the ailing agriculture sector.
Promoters of such markets point to Poznan as an example of how to build a success story.
The market there opened in 1992. At the time, the WGRO's president, Jan Ciesielski, didn't have to wait long to figure out whether his CHF 20 million experiment was going to work or not. Because of the high volume of trading that took place within the first three months of operations, Ciesielski and his team were preparing blueprints for additional buildings.
"We didn't expect such success, if we had, we would have secured more land," Ciesielski said in retrospect. "Look, there is way too little space here, this market should be at least two times larger than it is now."
The popularity of Poznan's market led to the creation of other wholesale operations around Poland. These markets were intended to help domestic products compete with foreign goods on local and international arenas. By offering modern venues for the sale and processing of domestic agricultural products, these exchanges were to give local food and flower producers the impetus and wherewithal to refit their outfits into modern agricultural schemes that would be ready to compete at home and abroad.
But as Wroclaw has shown, such plans can go awry. Based in part on Poznan's success, Wojciech Jaremko expected a repeat performance when his DCHRS market opened in 1997. But his hopes were dashed.
"When we opened the first building, for the first couple of weeks we were really scared," Jaremko said recently before being replaced as head of the market. "The place was empty."
The reason for that may lie with the fact that in Poznan significant planning and work went into the creation of the market. Without similar pre-opening coordination, which was lacking in Wroclaw, the success would have been far from assured.
The germ of the idea to create a modern agriculture market in Poznan, called WGRO, started in 1989. The first hurdle it had to overcome was to secure financing. To do so, the market's organizers competed against similar groups in lodz and Warsaw for CHF 10 million in assistance from the Swiss Parliament. Poznan won.
This was a key part of its future success, Ciesielski said.
"All of this meant that everything had such a high standard," he said. "Also, (the Swiss) brought experience, the company that built this had experience building the wholesale market in Zurich."
But the competition didn't just bring the market outside assistance, it also solidified a key local partnership with city officials. Before submitting its plans for the Swiss money, the WGRO received a pledge from the city regarding infrastructure investments for the proposed greenfield site for the market.
"There was nothing here before, but we managed to get the installations brought to the edge of the land (by the city)," Ciesielski said. "That was the reason why the Swiss agreed, because (WGRO) was the most advanced with its implementation part of the project."
The city pitched in later to improve the dual carriageway roads that lead to the site. "That was also a reason why we were successful," Ciesielski said. "Roads are an important element, especially in a situation like we have here where daily we have 4,000 cars of different kinds from passenger cars to heavy trucks."
Local apathy
The need for similar external and internal cooperation in Wroclaw was unmet.
In Wroclaw today, traffic heading to the market moves slowly along ulica Karmelkowa, a narrow, worn-out, cobble-stoned byway that serves as the main access road leading to DCHRS. Competing with customers on the road are supply trucks and passenger cars heading in and out of the maze of buildings and DIY wholesale shops straddling both sides of the street. Even worse, ulica Karmelkowa is a daily shortcut for thousands of cars trekking from Wroclaw's high-rise block bedroom community on the city's west side to Poland's largest shopping complex, Centrum Bielany, on the city's southern edge.
According to Jaremko, at the time of DCHRS's establishment, the city of Wroclaw was supposed to convert the street into a modern four-lane road. That hasn't happened. As a result, Jaremko believes, sellers and buyers have avoided the congested wholesale market and headed instead to the more easily accessible Targpiast outdoor market on the city's northern edge.
"That road was supposed to be built at the same time that our buildings were being built," Jaremko said. "The road leading here is really pitiful."
Targpiast itself poses another problem for DCHRS in the form of direct competition. A less sophisticated, more traditional outdoor market on Wroclaw's northern edge, it also serves much of the Wroclaw area. Again, a lack of cooperation with the city seems to be to blame.
"At the time this market was created, the one essential assumption was that there was going to be only one type of market," Jaremko said. "At the beginning it was stated that these two markets would merge."
But when the city sold the land where Targpiast was located to French developer Apsys, the market was moved to a new location and given a new raison d'ztre.
"People in the city played very strangely by permitting that whole object to move to ulica Obornicka," Jaremko said. "The effect is that here there are not many traders, and there is a crowd. This results from an imprudent or not sensible decision on someone's part in the city permitting that the market exists. Moving (Targpiast) there gave that market a chance to develop."
Buying in
But cooperation from outside investors and the city wasn't the only edge that Poznan had in getting started. It also got farmers to buy in.
An early assumption for building such agricultural markets was that half the funding would come from the government and the other have would be raised by selling shares to farmers and other producers wanting to sell their goods on a permanent basis in the market.
But in Wroclaw, that support wasn't there. DCHRS was unable to muster enough shareholders to complete the construction of the halls and create a lively market environment at its posh trading halls. With 65% of the original scope of the investment completed, getting people to buy shares and trade in Wroclaw's DCHRS is an ongoing problem.
"There is a fear to enter this market," Jaremko said. "This is the most difficult issue, getting to the basic producers to convince them that this isn't built just as some grand idea, but that it is made for them.
"You know what's happening in agriculture here," he added. "Farmers, and agriculture producers don't have money, so if you have to put out several thousand to tens of thousands of zlotys to have a place here, that's very difficult."
In Poznan there were also problems convincing farmers to purchase shares. "In 1990 it was a great question mark if people would be willing and capable of coping with his risk," said Tomasz Kayser, deputy mayor of Poznan.
To start trading on the site, people had to buy a basic share package valued then at zl. 13,000.
"At that time that was a lot of money. It wasn't that easy to convince people that it was necessary," Ciesielski said. "That was a time when people didn't have particular capital reserves. When they had to engage such large capital it was a problem explaining to them what they were investing in.
"There was no point of reference," he added. "We couldn't show them what we were building because there weren't any (Polish) markets to refer to."
So Poznan took its farmers to market elsewhere.
Ciesielski organized bus trips to markets in Zurich, Copenhagen and Berlin. On the way, farmers were given crash courses in the Polish commercial code and joint-stock companies. "We had the privilege that they had to listen to us because they couldn't walk out of the room," Ciesielski said. "At most they fell asleep."
Not only did WGRO have a captive audience, the farmers were able to see first-hand what a foreign market looked like.
"When that group returned, for example, from Copenhagen or Zurich, they were completely educated, they knew everything they needed to know as future shareholders and they were ready to take the risk," Ciesielski said. "We said to them. 'If you put in money, you are going to work like those people in Zurich or Copenhagen. If not, you will be left out.'"
Reforming regional agriculture
Farmers in Poznan who did take the risk not only turned a profit, they expanded and improved their operations and started competing more along the lines of the competitors to the west rather than their sometimes brothers in arms to the east.
And according to many, that change happened quickly.
Deputy Mayor Kayser said the switch could be seen within two months of the start of trading at WGRO. "They very quickly changed into modern traders," he added.
For Ciesielski, the impulse for change came from competition between Polish goods sold alongside international products. WGRO introduced an open-market principle that allowed any type of good to be traded regardless of where it was produced. When Polish producers saw that imported products were grabbed up faster despite higher prices, they quickly changed gears.
"The confrontation of (Polish) goods with imported goods, which were well prepared, well packaged, well cleaned, beautiful, healthy varieties, meant that during the first three months customers bought the imported products despite the higher prices," Ciesielski said. "Our producers learned very quickly that goods have to be cleaned; packaged in special packaging."
Farmers also learned to produce goods that brought profit. They started to turn production away from standard, low intensive fare such as pigs, cows and wheat and went into more specialized areas.
Ultimately, the improvements helped many farmers grow their farms. According to the economics department at the Agriculture Academy in Poznan, half of the regular traders at WGRO have increased the size of their farms by at least 10 hectares. While in 1994 only 30% of the regular traders at WGRO said they wanted to increase the size of their farms, in 1999, 70% said they wanted to increase.
Henryk Murczak, a large producer of gerbera (African Violets) in Baranowo near Poznan who began selling at WGRO in 1992, has increased his hot-house space by more than 200%, from 2,000 square meters to 6,300.
"Without the market I would have (had) no way to expand my company," Murczak said. "With the market I was able to increase the size of my acreage, without the market, there wouldn't have been possibilities for such elegant selling. The only possibility was under umbrellas in the open air."
But that wasn't all. So that smaller fruit and vegetable producers have a chance to sell their goods in large supermarket chains springing up across the country, WGRO opened a packing station, Paker, that sorts and packages fruits and vegetables in portions specifically ordered by individual stores. Paker receives orders from a large chain in the afternoon and overnight the fruits and vegetables are processed through two special packaging lines and in the morning the goods are sent out to the supermarkets all over Poland.
"We are doing something that is not necessarily done in Western European (wholesale) markets. Those markets limit their activities to administration," Ciesielski said. "We went much further, we are creating the market. We buy the goods from smaller producers, prepare it according to the requirements of our customers and we send it out. We help the producers to sell their goods."
Fresh start
The question remains whether Bakowski and Wroclaw will be able to reap enough from the lessons Poznan has sown.
After a little more than a month at the helm of DCHRS, Bakowski seems to be confident the market can get on track. Taking some of Poznan's lessons to heart, he is first reforging ties with the city and getting support to move forward.
"The road that comes here does not meet European norms," Bakowski said. "The city has funds and it is going to build a new access road."
And the city of Wroclaw now seems to be a DCHRS cheerleader as well.
"I am very uplifted after my meeting with the new president," said Marek Winkowski, head of the economic initiatives office in Wroclaw city hall. "This market is very important for the city of Wroclaw."
Bakowski is also making headway at defining the specific role his market is going to fill in the region. In addition to creating a logistics and packaging center for goods brought in from all over the country, Bakowski wants to provide low-cost, high-quality goods that will serve small stores in poorer areas outside the metropolis.
"This market has the aspiration to supply those small stores all over Lower Silesia," Bakowski said. "That's my niche. Small business is the future in Poland."
If that will be enough to save the Wroclaw market has yet to be seen.
Brought in last month as the new president of the Lower Silesian Agricultural and Foodstuffs Wholesale Center (DCHRS) in Wroclaw, he must try to replicate the success of the Wielkopolska Agri-Horticultural Wholesale Market (WGRO) - a similar, but thriving market in Poznan.
"We need to get this market going within three months," Bakowski said, stressing the severity of the situation facing Wroclaw's market.
To save the market, Bakowski will have to draw on the lessons of Poznan's wholesale center, which is the only one of its kind in the country operating on a profitable basis. With 4,000 vehicles a day pouring in and out of the crammed, 12-hectare site on the main road leading from Poznan to Katowice, WGRO is bustling with activity and bursting at the seams. On its grounds, 70% of the fruits and vegetables and up to 40% of other foodstuffs consumed in the Poznan area are traded. In addition, products from the horticulture market are re-sold in flower shops throughout the country's western quarter.
Wroclaw's market, on the other hand, is saddled with zl. 29 million ($7.25 million) in debt and needs an additional zl. 8 million ($2 million) to complete construction. And creditors aren't the only ones closing in. Developers would like to see the market close, thus freeing up 78 hectares of prime real estate.
This means that while looking for help, Bakowski must be careful in sorting out who is a friend and who is an enemy.
"We need to be very careful because this land is attractive enough that there are people who (already) have their eyes on it," Bakowski said.
Bakowski's ability to save the market isn't only crucial for Wroclaw, though. There are four other regional wholesale markets around the country that are fraught with their own do-or-die difficulties. The government has so far assigned zl. 90 million ($22.5 million) to help bail out the five markets.
Whether Wroclaw is able to apply the lessons learned in Poznan is likely to be an indication of how well these other floundering regional wholesale markets will do at forging a niche for themselves and the farmers in their regions.
While Wroclaw's agricultural wholesale market is in crisis, it doesn't mean that the concept can't work. It also doesn't mean that such markets won't help to restructure the ailing agriculture sector.
Promoters of such markets point to Poznan as an example of how to build a success story.
The market there opened in 1992. At the time, the WGRO's president, Jan Ciesielski, didn't have to wait long to figure out whether his CHF 20 million experiment was going to work or not. Because of the high volume of trading that took place within the first three months of operations, Ciesielski and his team were preparing blueprints for additional buildings.
"We didn't expect such success, if we had, we would have secured more land," Ciesielski said in retrospect. "Look, there is way too little space here, this market should be at least two times larger than it is now."
The popularity of Poznan's market led to the creation of other wholesale operations around Poland. These markets were intended to help domestic products compete with foreign goods on local and international arenas. By offering modern venues for the sale and processing of domestic agricultural products, these exchanges were to give local food and flower producers the impetus and wherewithal to refit their outfits into modern agricultural schemes that would be ready to compete at home and abroad.
But as Wroclaw has shown, such plans can go awry. Based in part on Poznan's success, Wojciech Jaremko expected a repeat performance when his DCHRS market opened in 1997. But his hopes were dashed.
"When we opened the first building, for the first couple of weeks we were really scared," Jaremko said recently before being replaced as head of the market. "The place was empty."
The reason for that may lie with the fact that in Poznan significant planning and work went into the creation of the market. Without similar pre-opening coordination, which was lacking in Wroclaw, the success would have been far from assured.
The germ of the idea to create a modern agriculture market in Poznan, called WGRO, started in 1989. The first hurdle it had to overcome was to secure financing. To do so, the market's organizers competed against similar groups in lodz and Warsaw for CHF 10 million in assistance from the Swiss Parliament. Poznan won.
This was a key part of its future success, Ciesielski said.
"All of this meant that everything had such a high standard," he said. "Also, (the Swiss) brought experience, the company that built this had experience building the wholesale market in Zurich."
But the competition didn't just bring the market outside assistance, it also solidified a key local partnership with city officials. Before submitting its plans for the Swiss money, the WGRO received a pledge from the city regarding infrastructure investments for the proposed greenfield site for the market.
"There was nothing here before, but we managed to get the installations brought to the edge of the land (by the city)," Ciesielski said. "That was the reason why the Swiss agreed, because (WGRO) was the most advanced with its implementation part of the project."
The city pitched in later to improve the dual carriageway roads that lead to the site. "That was also a reason why we were successful," Ciesielski said. "Roads are an important element, especially in a situation like we have here where daily we have 4,000 cars of different kinds from passenger cars to heavy trucks."
Local apathy
The need for similar external and internal cooperation in Wroclaw was unmet.
In Wroclaw today, traffic heading to the market moves slowly along ulica Karmelkowa, a narrow, worn-out, cobble-stoned byway that serves as the main access road leading to DCHRS. Competing with customers on the road are supply trucks and passenger cars heading in and out of the maze of buildings and DIY wholesale shops straddling both sides of the street. Even worse, ulica Karmelkowa is a daily shortcut for thousands of cars trekking from Wroclaw's high-rise block bedroom community on the city's west side to Poland's largest shopping complex, Centrum Bielany, on the city's southern edge.
According to Jaremko, at the time of DCHRS's establishment, the city of Wroclaw was supposed to convert the street into a modern four-lane road. That hasn't happened. As a result, Jaremko believes, sellers and buyers have avoided the congested wholesale market and headed instead to the more easily accessible Targpiast outdoor market on the city's northern edge.
"That road was supposed to be built at the same time that our buildings were being built," Jaremko said. "The road leading here is really pitiful."
Targpiast itself poses another problem for DCHRS in the form of direct competition. A less sophisticated, more traditional outdoor market on Wroclaw's northern edge, it also serves much of the Wroclaw area. Again, a lack of cooperation with the city seems to be to blame.
"At the time this market was created, the one essential assumption was that there was going to be only one type of market," Jaremko said. "At the beginning it was stated that these two markets would merge."
But when the city sold the land where Targpiast was located to French developer Apsys, the market was moved to a new location and given a new raison d'ztre.
"People in the city played very strangely by permitting that whole object to move to ulica Obornicka," Jaremko said. "The effect is that here there are not many traders, and there is a crowd. This results from an imprudent or not sensible decision on someone's part in the city permitting that the market exists. Moving (Targpiast) there gave that market a chance to develop."
Buying in
But cooperation from outside investors and the city wasn't the only edge that Poznan had in getting started. It also got farmers to buy in.
An early assumption for building such agricultural markets was that half the funding would come from the government and the other have would be raised by selling shares to farmers and other producers wanting to sell their goods on a permanent basis in the market.
But in Wroclaw, that support wasn't there. DCHRS was unable to muster enough shareholders to complete the construction of the halls and create a lively market environment at its posh trading halls. With 65% of the original scope of the investment completed, getting people to buy shares and trade in Wroclaw's DCHRS is an ongoing problem.
"There is a fear to enter this market," Jaremko said. "This is the most difficult issue, getting to the basic producers to convince them that this isn't built just as some grand idea, but that it is made for them.
"You know what's happening in agriculture here," he added. "Farmers, and agriculture producers don't have money, so if you have to put out several thousand to tens of thousands of zlotys to have a place here, that's very difficult."
In Poznan there were also problems convincing farmers to purchase shares. "In 1990 it was a great question mark if people would be willing and capable of coping with his risk," said Tomasz Kayser, deputy mayor of Poznan.
To start trading on the site, people had to buy a basic share package valued then at zl. 13,000.
"At that time that was a lot of money. It wasn't that easy to convince people that it was necessary," Ciesielski said. "That was a time when people didn't have particular capital reserves. When they had to engage such large capital it was a problem explaining to them what they were investing in.
"There was no point of reference," he added. "We couldn't show them what we were building because there weren't any (Polish) markets to refer to."
So Poznan took its farmers to market elsewhere.
Ciesielski organized bus trips to markets in Zurich, Copenhagen and Berlin. On the way, farmers were given crash courses in the Polish commercial code and joint-stock companies. "We had the privilege that they had to listen to us because they couldn't walk out of the room," Ciesielski said. "At most they fell asleep."
Not only did WGRO have a captive audience, the farmers were able to see first-hand what a foreign market looked like.
"When that group returned, for example, from Copenhagen or Zurich, they were completely educated, they knew everything they needed to know as future shareholders and they were ready to take the risk," Ciesielski said. "We said to them. 'If you put in money, you are going to work like those people in Zurich or Copenhagen. If not, you will be left out.'"
Reforming regional agriculture
Farmers in Poznan who did take the risk not only turned a profit, they expanded and improved their operations and started competing more along the lines of the competitors to the west rather than their sometimes brothers in arms to the east.
And according to many, that change happened quickly.
Deputy Mayor Kayser said the switch could be seen within two months of the start of trading at WGRO. "They very quickly changed into modern traders," he added.
For Ciesielski, the impulse for change came from competition between Polish goods sold alongside international products. WGRO introduced an open-market principle that allowed any type of good to be traded regardless of where it was produced. When Polish producers saw that imported products were grabbed up faster despite higher prices, they quickly changed gears.
"The confrontation of (Polish) goods with imported goods, which were well prepared, well packaged, well cleaned, beautiful, healthy varieties, meant that during the first three months customers bought the imported products despite the higher prices," Ciesielski said. "Our producers learned very quickly that goods have to be cleaned; packaged in special packaging."
Farmers also learned to produce goods that brought profit. They started to turn production away from standard, low intensive fare such as pigs, cows and wheat and went into more specialized areas.
Ultimately, the improvements helped many farmers grow their farms. According to the economics department at the Agriculture Academy in Poznan, half of the regular traders at WGRO have increased the size of their farms by at least 10 hectares. While in 1994 only 30% of the regular traders at WGRO said they wanted to increase the size of their farms, in 1999, 70% said they wanted to increase.
Henryk Murczak, a large producer of gerbera (African Violets) in Baranowo near Poznan who began selling at WGRO in 1992, has increased his hot-house space by more than 200%, from 2,000 square meters to 6,300.
"Without the market I would have (had) no way to expand my company," Murczak said. "With the market I was able to increase the size of my acreage, without the market, there wouldn't have been possibilities for such elegant selling. The only possibility was under umbrellas in the open air."
But that wasn't all. So that smaller fruit and vegetable producers have a chance to sell their goods in large supermarket chains springing up across the country, WGRO opened a packing station, Paker, that sorts and packages fruits and vegetables in portions specifically ordered by individual stores. Paker receives orders from a large chain in the afternoon and overnight the fruits and vegetables are processed through two special packaging lines and in the morning the goods are sent out to the supermarkets all over Poland.
"We are doing something that is not necessarily done in Western European (wholesale) markets. Those markets limit their activities to administration," Ciesielski said. "We went much further, we are creating the market. We buy the goods from smaller producers, prepare it according to the requirements of our customers and we send it out. We help the producers to sell their goods."
Fresh start
The question remains whether Bakowski and Wroclaw will be able to reap enough from the lessons Poznan has sown.
After a little more than a month at the helm of DCHRS, Bakowski seems to be confident the market can get on track. Taking some of Poznan's lessons to heart, he is first reforging ties with the city and getting support to move forward.
"The road that comes here does not meet European norms," Bakowski said. "The city has funds and it is going to build a new access road."
And the city of Wroclaw now seems to be a DCHRS cheerleader as well.
"I am very uplifted after my meeting with the new president," said Marek Winkowski, head of the economic initiatives office in Wroclaw city hall. "This market is very important for the city of Wroclaw."
Bakowski is also making headway at defining the specific role his market is going to fill in the region. In addition to creating a logistics and packaging center for goods brought in from all over the country, Bakowski wants to provide low-cost, high-quality goods that will serve small stores in poorer areas outside the metropolis.
"This market has the aspiration to supply those small stores all over Lower Silesia," Bakowski said. "That's my niche. Small business is the future in Poland."
If that will be enough to save the Wroclaw market has yet to be seen.
