WARSAW -- Polish President Lech Walesa over the weekend vetoed a controversial government bill on the sugar industry, calling it incompatible with a market economy.


The bill, passed by Parliament in July, would group 70 state-owned refineries into four regional holdings and introduce annual production quotas and minimum prices.


His office, in a statement justifying the veto, said the bill was permeated with solutions typical of a command economy, adding that its authors seemed to have ignored the change of system in Poland.


The lower house of Parliament, the Sejm, now must obtain a two-thirds majority in a new vote to overrule Walesa.


Walesa said the bill was serving the interest of the sugar lobby but was harmful to consumers because it would lead to higher prices and subsidized exports.


The peasant-leftist coalition government of Prime Minister Waldemar Pawlak contended the bill would diminish seasonal production swings and create stable conditions for sugar beet growers.


Under the bill, all refineries would pay contributions to a Sugar Market Stabilization Fund which would subsidize sugar exports up to 7 percent of the domestic price.


The four regional holdings would be fully owned by the treasury and compete for production quotas for the domestic market and for exports operating alongside six refineries which have already been privatized.


Poland produced about 2 million tons of white sugar from sugar beets in the 1993/1994 crop year but domestic demand accounts for only 1.5 million tons.