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POLAND: National Foodstuffs Holding

Since 2016, the ruling PiS party has indicated that it plans to create a single umbrella entity, which would merge several state-owned foodstuff producers, as well as new companies that the government would buy. The Ministry of Agriculture, which was in charge of this project, made little visible progress. Recently the Ministry of State Assets, which took over the State Sugar Company, has intensified works on the so-called National Foodstuffs Holding. The State Sugar Company, which will be at the very core of the new entity, has been tasked by the Ministry with leading preparations. The State Sugar Company has requested the assistance of KPMG in assessing potential legal obstacles, the form and functioning of the holding, as well as prospective companies, which could be incorporated. The assessment is supposed to be delivered shortly. The government hopes to launch this new entity in Autumn of this year.

Currently, the government has several companies, which already operate in the food sector. Considering the current assets of these companies, the government would be present, amongst others, in the sugar and potato industries. Initial indications suggest that the government would also consider its presence in the production and processing of fruit, and potentially tobacco. Commentators have also indicated that the government may want to put its eye on the retail sector. Although Deputy Minister of State Assets Artur Soboń suggested the possibility of an acquisition of a retail chain, the State Assets Ministry denied such plans.

In March 2019, PM Morawiecki suggested that the current situation in retail chains prevents Polish producers from achieving a decent margin and signalled that his government is hoping to cooperate with farmers to increase their position in Polish trade. The creation of the National Foodstuffs Holding would allow the government to extend the scope of its presence, and consequently to exert more control over the foodstuffs market. Additionally, the government would be able to respond to the recurring issue of low wholesale prices offered to farmers for their produce. At this time it remains uncertain whether the government will decide to focus on the consolidation of producers and processors only. Additionally, a state-owned foodstuffs giant would provide the government with valuable response flexibility in times of crisis – similar to PKN Orlen launching the production of disinfectants at the beginning of the COVID-19 epidemic. Still, the National Foodstuffs Holding is also heavily criticised. Many experts believe to be unnecessary interventionism of the government and argue that if agricultural producers want to achieve higher wholesale prices they should start forming their own collectives, rather than relying on the government.