Zamojskie Zakłady Zbożowe Sp. z o. o. recorded a record loss on their operations in 2023. Due to the great importance of ZZZ for the agricultural region of Zamość and the concern and fear for further development, profitability and maintaining the agricultural character of the region, especially the profitability of grain production, Jarosław Sachajko, MP of the Zamość region , asked the Ministry of Agriculture about the future of this company.
Zamość Zakłady Zbożowe sp. z o. o. is wholly owned by Elewarru sp. z o. o. Apart from the mill and elevator in Zamość, the plant also has warehouses in Skierbieszów and Tuczapy. It operates in south-eastern Poland, purchasing raw material mainly from the counties of Biłgoraj, Hrubieszów, Krasnystaw, Tomaszów and Zamość, where cereals dominate in the crop structure. In 2022, the company generated a profit of approximately PLN 8 million, but the last financial year of Zamojskie Zakłady Zbożowe ended with a record loss of the company amounting to PLN 26.4 million.
Is there a chance to heal the financial situation of ZZZ?
– You will probably agree with me – writes MP Jarosław Sachajko (Kukiz’15) in an interpellation to the Minister of Agriculture – that this is a huge loss, and it was influenced by, among others, “a sudden increase in grain supply as a result of the armed conflict in Ukraine”, which caused grain prices on the domestic market, but especially the local market, to drop sharply. This trend resulted in a decline in the level of margins, both in commercial and production activities, and the increase in interest rates, which increased the costs of servicing loans and leasing, also contributed to this loss.
According to the financial report of Zamojskie Zakłady Zbożowe, in the last financial year (the period from July 1, 2022 to June 30, 2023) they purchased almost 99,000. tons of cereals, the vast majority of which was wheat – approx. 65 thousand tone. Despite this record loss, the Extraordinary Meeting of Shareholders of Zamojskie Zakłady Zbożowe adopted a resolution in the summer regarding the continued existence of the company, assuming that the deficit would be covered approximately in half by reserve capital and profits earned in the future.
– But is there a real chance? – MP Sachajko wonders.
And he asks the minister:
– Due to the great importance of Zamość Grain Plants for the agricultural region of Zamość and driven by concern and fear for the further development, profitability and maintenance of the agricultural character of the region I come from, especially the profitability of grain production, I am kindly asking you to answer the questions below:
- Is the ministry willing to consider allocating and directing financial resources for a thorough renovation of the mill of Zamojskie Zakłady Zbożowe, aimed at modernization and thus increasing production capacity? If so, what would be the amount and when, if approved, would the renovation begin?
- Is it realistic, in the opinion of the ministry, to establish the headquarters of a state-owned enterprise integrating grain purchasing plants at the Zamość Grain Plants? The previous government made such plans in 2022. Please formulate your position on this issue.
- What actions does the ministry intend to take to prevent future losses of state-owned companies purchasing grain raw materials? In other words, what protective mechanisms will be used in the future to prevent losses resulting from declines in grain prices caused by external factors, such as war and related increases in interest rates? ?
One big secret
The answer was provided by Deputy Minister Michał Kołodziejczak.
He recalled that Zamojskie Zakłady Zbożowe sp. z o. o. is a company belonging to the capital group of Krajowa Grupa Spożywcza SA, which is supervised by the Minister of State Assets. But – so as not to leave the MP with nothing – he sought some information from the Minister of State Assets.
And he shared it.
– The Ministry of State Assets, by exercising the rights attached to shares owned by the State Treasury in companies, exercises the rights arising from corporate rights, which are strictly defined in legal provisions, in particular in the Act of September 15, 2000 – Commercial Companies Code (Ksh). Pursuant to the provisions of Art. 368 of the Commercial Companies Code, managing the company’s affairs is the responsibility of the Management Board, and in accordance with Art. 3751 Ksh The General Meeting and the Supervisory Board cannot issue binding instructions to the Management Board regarding the management of the company’s affairs.
As follows from the above, the Minister of State Assets has no authority to interfere in the activities of companies with State Treasury participation or their capital groups. Ownership supervision over companies by the Ministry of State Assets, including obtaining information on current operations, is carried out in accordance with its competences. Due to the fact that Zamojskie Zakłady Zbożowe sp. z o. o. (ZZZ) is a company that is part of the capital group of Krajowa Grupa Spożywcza SA (GK KGS SA), the competences of the Ministry of State Assets allow for shaping the activities of companies of this capital group through the competences of the General Meeting provided for by law. Meeting of the National Food Group SA
As part of the exercise of ownership supervision, the Minister of State Assets monitors the company’s economic situation on an ongoing basis and makes appropriate ownership decisions regarding, among others, implementation of the “Strategy of the National Food Group SA Capital Group until 2035” – emphasizes Deputy Minister Kołodziejczak in his response.
Referring in more detail to the questions contained in the interpellation, he replied:
Ad. 1:
Zamojskie Zakłady Zbożowe sp. z o. o. is a company belonging to the Grain and Milling Segment within the KGS SA Group, which also includes Elewarr Sp. z o. o. and Przedsiębiorstwo Zbożowo – Młynarskie “PZZ” in Stoisław SA GK KGS SA has developed the “Strategy of the National Food Group SA Capital Group until 2035”, an important element of which is support for the grain and milling segment through:
• development of storage and grinding capacities, including expansion of the production portfolio, including: o corn milling products
• development of grain exports, especially by sea,
• extending the value chain through capital investments in the bakery and confectionery market and investments in FoodTech projects.
An element of the KGS SA Capital Group Strategy until 2035 is the Development Program of the National Food Group SA Capital Group. The Development Program identifies key investment directions within the currently defined business segments of the KGS SA Capital Group (including those expanding the current defined segments with new types of business).
The Development Program includes projects related to the grain and milling segment, which include, among others: construction of a modern mill in south-eastern Poland. The implementation of this investment may involve the expansion of the existing ZZZ complex, however, this decision will be made on the basis of economic efficiency analyzes conducted. The cost of the investment is a business secret.
Ad. 2:
According to information from the Minister of State Assets, the KGS SA Group has not yet considered establishing the headquarters of an enterprise integrating grain purchasing plants at the Zamość Grain Plants. Within the KGS SA Group companies, three companies belonging to the grain and milling segment, which have purchase points throughout the country, deal with the purchase of grain for trade and milling purposes.
Ad. 3:
The grain market is a global market. Cereal prices on the domestic market are closely related to world grain prices. Poland is a large producer and exporter of cereals, it must export them in order to balance the domestic market and not accumulate surpluses that would destabilize this market. Exports take place at world prices, because only then can buyers be found. This also affects prices on the domestic market. Currently, price declines are being recorded around the world, following increases to historically high levels that occurred following Russia’s aggression against Ukraine as a result of market panic. The price declines are the result of the large supply of grain on the world market and the fact that Russia, as the largest exporter of wheat in the world, sells it at very low prices, which lower prices. Moreover, the financial condition of the largest grain importers is deteriorating (especially in Africa and the Middle East) and, as a result, they are limiting their grain purchases.
Nevertheless, in order to minimize the negative impact of price fluctuations caused by unpredictable factors, as part of the KGS SA Group Strategy until 2035 and the KGS SA Group Development Program, it has identified investment activities that will potentially prevent unfavorable results of companies in the future. Detailed information regarding the investments of the KGS SA Group is a business secret.
All initiatives are coordinated by Krajowa Grupa Spożywcza SA in order to achieve the synergy effect of cooperation between the companies of the KGS SA Capital Group and optimal use of raw materials.
So mystery follows mystery, and just as it was not known what the future awaits ZZZ and the farmers cooperating with them, it is still unknown. But changes are coming to KGS SA itself. According to the latest reports, the company is to “take over” the port in Gdynia. Let this help heal the difficult situation on the grain market and in the ZZZs themselves.
