On August 19, an amendment to the Act on the Restructuring of Debt of Agricultural Enterprises came into force. Under the new rules, farmers in financial difficulty gain additional protection – submitting an application to the National Support Centre for Agriculture (KOWR) to assume debt will now suspend ongoing enforcement proceedings until the application is reviewed. The legislative changes are designed to facilitate restructuring and protect farmers from sudden asset losses, thereby supporting food production security in Poland.
“The amendment responds to the needs of farmers and demands raised by farm owners. Previously, when a farm was in financial trouble and an application was submitted to KOWR to take over the debt, enforcement proceedings were not suspended,” said Piotr Włodawiec, Senior Partner at the Prokurent Law Firm, in an interview with Newseria. “The change that has now entered into force allows enforcement proceedings to be suspended for the time needed for KOWR to consider such an application.”
Suspension of Enforcement Proceedings
According to the amendment, submitting an application to KOWR for debt assumption suspends enforcement proceedings related to that debt until the request is either resolved or dismissed. Farmers had reported that under the old rules, the procedure was ineffective – applications to KOWR did not prevent bailiffs from conducting enforcement actions.
“The new rules will allow farmers, creditors, and KOWR to negotiate in a safe environment, because enforcement proceedings will be suspended. Interestingly, this applies not only to future cases but also to ongoing ones. This gives farmers time to work out a viable solution, which – with creditors’ consent – will allow KOWR to take over the farm in exchange for covering its debts,” explained Włodawiec.
Who Benefits from the Changes
According to the explanatory memorandum of the bill, Poland has around 1.3 million farms, of which roughly 100,000 may benefit from the new legislation. The changes aim to prevent farmers from suddenly losing their assets, giving them instead a chance to restructure and continue operations.
“I see these regulations as positive, although there were some critical opinions during the legislative process. Some legal experts argued that the new provisions favor indebted farmers over other categories of debtors. However, I believe agriculture must be viewed more broadly. Food production is an element of national security, and in most European countries, mechanisms are in place to prevent farms from collapsing too easily. Poland should also think about a 30–40 year plan for agriculture, not just policies for the next government term,” noted the Prokurent partner.
He emphasized that such legislative changes should be coordinated with the financial sector, especially banks. A well-structured compromise could improve creditworthiness assessments of farming businesses and reduce financing costs.
Sector Debt Levels
According to BIG InfoMonitor and BIK data, overdue debt in the crop farming sector (PKD 011) stood at nearly PLN 57.6 million at the end of June. This was 17.6% less than a year earlier. However, debt among producers of cereals, legumes, and oilseeds increased significantly – from PLN 12 million to more than PLN 20 million. In total, 202 crop producers had overdue debts to suppliers and banks, compared with 226 in June last year.
