The impact of the COVID-19 pandemic on the risk of bankruptcy of enterprises in the agri-food sector in Poland

ABSTRACT

The COVID-19 pandemic has become the cause of one of the greatest crises in the modern history of the global economy, including the agri-food sector. Business suspension and administrative restrictions on movement worsened business conditions and affected both the demand and supply of food products. On the other hand, state aid improved the financial liquidity of enterprises and limited the risk of their bankruptcy. In order to assess the impact of this situation, using the Altman Z-score index, changes in the level of bankruptcy risk in the 1000 largest enterprises in the agri-food sector in Poland in 2018-2020 were examined. The results indicated that during the period of the impact of the pandemic in 2020, the changes in bankruptcy risk were mild. Moreover, the directions of these changes varied depending on the section in which the enterprises operated. In 2020, out of the sixteen examined sections, the Z-score increased in nine and decreased in seven. The risk of bankruptcy decreased the most in the following sections production of bread and bakery products and production of animal feed. It grew the most in the following sections processing, preserving fruit and vegetables and refining fats and oils.