New Eco­nomic Pol­icy for Be­laru­sian Coun­try­side

In 2011 com­pa­nies af­fil­i­ated with the Min­istry of Agri­cul­ture and Food of Be­larus ex­ported prod­ucts worth $2.479 bil­lion, or 112% as against 2010

Economy of Belarus - - CONTENTS - Diana KURILO

In 2011 com­pa­nies af­fil­i­ated with the Min­istry of Agri­cul­ture and Food of Be­larus ex­ported prod­ucts worth $2.479 bil­lion,

or 112% as against 2010

Growth Foun­da­tion

The gov­ern­ment sup­port pol­icy launched five years ago has laid a firm foun­da­tion for the sus­tain­able growth of agri­cul­tural pro­duc­tion and sup­plies of farm pro­duce.

The con­sis­tent im­ple­men­ta­tion of the gov­ern­ment ru­ral re­vival and de­vel­op­ment pro­gram helped main­tain the na­tional food se­cu­rity and make Be­larus a ma­jor food ex­porter. How­ever, to­day Be­laru­sian agri­cul­tural pro­duc­ers are fac­ing new chal­lenges: to en­hance the ef­fi­ciency of the in­dus­try, make it prof­itable and self-re­liant, and pre­serve the op­ti­mal price/qual­ity ra­tio for do­mes­tic and for­eign con­sumers. The Sin­gle Eco­nomic Space (SES) that Be­larus is part of will open new op­por­tu­ni­ties for farm­ers but will also toughen com­pe­ti­tion in the agribusi­ness.

A lot has been done to build and ex­pand the phys­i­cal in­fra­struc­ture of agri­cul­tural and pro­cess­ing com­pa­nies and so­cial in­fra­struc­ture of ru­ral com­mu­ni­ties. A fo­cus was made on the de­vel­op­ment of agro­towns.

These ef­forts made Be­larus the CIS leader in terms of per capita agri­cul­tural out­put and pro­pelled our coun­try to the top po­si­tions in the pro­duc­tion of milk, pota­toes and meat. Even in the eco­nom­i­cally chal­leng­ing year of 2011, the agri­cul­tural in­dus­try man­aged to pre­serve pos­i­tive trends.

Ac­cord­ing to the Na­tional Sta­tis­tics Com­mit­tee, the out­put by all cat­e­gories of agri­cul­tural pro­duc­ers in 2011 rose by 6.6% com­pared with 2010 and made Br56.7 tril­lion. The fig­ure in­creased by 9.6% in agri­cul­tural com­pa­nies. The lead­ing farm pro­duc­ers were Gomel Oblast ( up 9%), Vitebsk Oblast (8.4%), and Mogilev Oblast (7.1%).

In 2011 the grain out­put by all cat­e­gories of agri­cul­tural pro­duc­ers made 8.4 mil­lion tonnes (af­ter­pro­cess­ing weight), up by 1.4 mil­lion tonnes (or 19.9%) com­pared with 2010. The in­crease in grain pro­duc­tion was re­ported in all the oblasts. It rose 1.4 times in Vitebsk Oblast, 1.3 times in Gomel Oblast, 24.6% in Minsk Oblast, 13.5% in Mogilev Oblast, 9.4% in Grodno Oblast, and 3.8% in Brest Oblast.

The yield of grain and legu­mi­nous crops made 32.3 cent­ners per hectare against 27.6 cent­ners per hectare in 2010. Grodno Oblast boasted the big­gest yield of 40.2 cent­ners per hectare. A to­tal of 260 Be­laru­sian en­ter­prises (or 17% of all do­mes­tic grain pro­duc­ers)

posted the grain yield of over 40 cent­ners per hectare.

In 2010 the yield of pota­toes made 226 cent­ners per hectare vs. 214 cent­ners per hectare the year be­fore. The yield of veg­eta­bles reached 273 cent­ners per hectare vs. 247 cent­ners per hectare in 2010. It is note­wor­thy that the gross pro­duc­tion of pota­toes by all pro­duc­ers fell by 110,000 tonnes (by 1.4%), that of veg­eta­bles by 355,000 tonnes (by 15.2%). This is at­trib­uted to the re­duc­tion in potato and vegetable pro­duc­tion by in­di­vid­ual farm­ers – the land un­der pota­toes re­duced by 12.3%, the land un­der veg­eta­bles re­duced by 28.1%.

In 2011, 46,000 tonnes of flax fiber was pro­duced in Be­larus, up by 0.6% com­pared with the pre­vi­ous year. The gross pro­duc­tion of sugar beet made 4.5 mil­lion tonnes, up by 18.9% over the year be­fore. The flax fiber yield reached 7.5 cent­ners per hectare, that of sugar beet 453 cent­ners per hectare. In 2010 the fig­ures stood at 7.7 and 395 re­spec­tively.

The pro­duc­tion growth im­proved the fi­nan­cial stand­ing of agri­cul­tural pro­duc­ers. Ac­cord­ing to pre­lim­i­nary es­ti­mates, the over­all prof­itabil­ity of sales in agri­cul­ture made up about 8% pro­duc­ing a fis­cal ef­fect of about 14%. The net profit is es­ti­mated at ap­prox­i­mately Br2.5 tril­lion.

Chal­lenges

At the same time, 11 out of 16 tar­gets were not hit. The flax pro­duc­tion was un­prof­itable, just like cat­tle breed­ing.

De­spite the over­all pos­i­tive trends that emerged in 2011, the fi­nan­cial stand­ing of agri­cul­tural com­pa­nies re­mains complicated and un­sta­ble. The con­stant mon­i­tor­ing has re­vealed that about 620 agri­cul­tural com­pa­nies (47% of their to­tal num­ber) have a low prof­itabil­ity rate. Many com­pa­nies lack own work­ing as­sets; their debts, in­clud­ing out­stand­ing debts, are mount­ing, which im­pedes the de­vel­op­ment of the en­tire in­dus­try.

As of 1 Jan­uary 2012, the sys­tem debts were es­ti­mated at Br60 tril­lion, in­clud­ing about Br4.5 tril­lion of bad debts. Loans are grow­ing more ex­pen­sive, which re­mains a mat­ter of se­ri­ous con­cern. How­ever, the ma­jor­ity of loans (68%) are longterm fi­nan­cial re­sources ob­tained for in­vest­ment pur­poses.

Bridging the alarm­ing gaps in the agri­cul­tural in­dus­try will be a ma­jor chal­lenge for 2012. This is­sue was dis­cussed dur­ing the work­shop for agri­cul­ture se­nior ex­ec­u­tives in Mogilev Oblast at the be­gin­ning of the year. From now on, fi­nan­cial po­si­tion of farms should be the key is­sue on the agenda of their ex­ec­u­tives, Deputy Prime Min­is­ter of Be­larus Valery Ivanov em­pha­sized in his state­ment.

It is im­pos­si­ble to work fur­ther with­out eco­nomic cal­cu­la­tions, with­out spe­cific de­vel­op­ment pro­grams for each and ev­ery farm, un­der­scored the Vice Premier. It is clear that with­out a mar­ket-based mech­a­nism of man­age­ment, en­tre­pre­neur­ial ini­tia­tives and for­eign in­vest­ments it will be im­pos­si­ble to make the agri­cul­ture in­dus­try more ef­fec­tive, build up ex­port ca­pac­ity and, con­se­quently, in­crease in­come of ru­ral res­i­dents.

Be­larus is up­grad­ing state reg­u­la­tion of agri­cul­ture tak­ing into ac­count in­ter­na­tional prac­tices

and the reg­u­la­tory frame­work for the Sin­gle Eco­nomic Space. The fo­cus will be made on the de­vel­op­ment of mar­ket mech­a­nisms in pric­ing, mo­ti­va­tion and eval­u­a­tion of work de­pend­ing on the fi­nan­cial and eco­nomic per­for­mance of agri­cul­tural en­ter­prises, and on the im­prove­ment of the or­ga­ni­za­tional struc­ture of the agri­cul­ture in­dus­try through the de­vel­op­ment of co­op­er­a­tive-in­te­gra­tive as­so­ci­a­tions of man­u­fac­tur­ing, pro­cess­ing and trade or­ga­ni­za­tions.

Ac­cord­ing to the so­cio-eco­nomic de­vel­op­ment pro­jec­tions for 2012, gross agri­cul­tural pro­duc­tion is to in­crease by 4-5% over 2011. Rev­enue from sale of farm pro­duce and ser­vices is pro­jected to in­crease 1.8 times, re­turn on sales by 5%, la­bor pro­duc­tiv­ity by 6%.

This is some­what lower than the tar­gets spelled out in the gov­ern­ment pro­gram for sus­tain­able de­vel­op­ment of ru­ral regions in 20112015. The main rea­son is pri­mar­ily the de­cline in fi­nanc­ing avail­able for sec­toral and re­gional pro­grams in agri­cul­ture.

Given the lack of funds, it is par­tic­u­larly im­por­tant to ramp up the ef­fort to raise for­eign di­rect in­vest­ments.

In 2012 the Agri­cul­ture and Food Min­istry and re­gional au­thor­i­ties are ex­pected to raise at least $99 mil­lion in for­eign di­rect in­vest­ments ($25 mil­lion for agri­cul­ture and $74 mil­lion for the pro­cess­ing in­dus­try).

Dairy Land

En­hanc­ing the ef­fi­ciency of all branches of agri­cul­ture is one of sys­temic mea­sures aimed at in­creas­ing the ef­fi­ciency of the in­dus­try as a whole. How­ever, much at­ten­tion will be given to the live­stock sec­tor as it ac­counts for ma­jor sales and ex­port rev­enue.

To build up the pro­duc­tive ca­pac­ity in 2012, there are plans to con­struct 104 new dairy farms and up­grade 1,198 fa­cil­i­ties, cre­ate 10 new and retro­fit 80 ex­ist­ing broiler poul­try farms, set up two new and up­grade six ac­tive hog breed­ing farms. These mea­sures are ex­pected to pro­mote growth in the cat­tle, pork and poul­try pro­duc­tion.

In 2012 milk pro­duc­tion is pro­jected to in­crease to 6.5 mil­lion tonnes, up 11% as against a year ear­lier. In 2011 agri­cul­tural or­ga­ni­za­tions of Be­larus sold more than 5 mil­lion tonnes of milk, which was up 4% over the pre­vi­ous year. The qual­ity of milk is im­prov­ing thanks to the con­struc­tion of new farms, mod­ern­iza­tion of ex­ist­ing ones (87 such ob­jects were com­mis­sioned), use of mod­ern-day tech­nolo­gies, and im­proved an­i­mal feeds.

To­day supreme qual­ity milk ac­counts for nearly half of the milk pro­duced in Vitebsk and Mogilev regions, 46% in Gomel Oblast, 34.1% in Minsk Oblast, around 25% in Brest, and 21.3% in Grodno. In 2011, the sale of “ex­tra” grade milk went up 2.7 times from the year ear­lier.

How­ever, the pro­duc­tiv­ity of milk herds de­creased as com­pared to 2010 (46kg of milk down per cow). All in all, the pro­duc­tiv­ity fell in 36 dis­tricts of the coun­try. That is why it is im­por­tant to meet the tar­gets re­gard­ing con­struc­tion and up­grade of dairy farms. This will al­low in­creas­ing pro­duc­tiv­ity and re­duc­ing costs. By 2015 milk pro­duc­tion is pro­jected to in­crease to six tonnes per cow. The num­ber of herds will in­crease sig­nif­i­cantly.

Agri­cul­tural Ex­port

The Be­laru­sian agribusi­ness has a big po­ten­tial to build up ex­ports. In 2011 the Agri­cul­ture and Food Min­istry sold $2.479 bil­lion worth of prod­ucts abroad (up 12% from 2010). The bulk of de­liv­er­ies were dairy prod­ucts (58.6%), meat and meat prod­ucts (30.4%), ca­sein (3.4%), and eggs (1.5%).

Ac­cord­ing to the Na­tional Sta­tis­tics Com­mit­tee, agri­cul­tural sup­plies to the Rus­sian Fed­er­a­tion to­taled $2,208.9 bil­lion last year (up 10%). The re­cent price hikes on in­ter­na­tional food mar­kets have been ad­van­ta­geous for Be­larus. Mar­ket trends in the agri­cul­tural sec­tor, how­ever, are quite volatile, which in­creases the risks of re­ly­ing mainly on one sales mar­ket. There­fore, Be­larus does its level best to di­ver­sify sup­plies.

Last year food sup­plies to the CIS (apart from the Rus­sian Fed­er­a­tion) made up $156.8 mil­lion, up 1.4 times on 2010. De­liv­er­ies to non-cis coun­tries were worth $113.2 mil­lion

(up 20.7%), in­clud­ing $91.3 mil­lion to the EU (up 10.4%).

In 2011 the Agri­cul­ture and Food Min­istry sold into 48 coun­tries. The largest im­porters of the Be­laru­sian agri­cul­tural pro­duce be­sides Rus­sia were Kaza­khstan, Azer­bai­jan, Ger­many, Poland, Ukraine, Lithua­nia, Moldova, the USA and China. The sup­plies to the non-cis in­cluded ca­sein, flax fiber, cat­tle hide.

The Agri­cul­ture and Food Min­istry had a trade sur­plus of $1.432 bil­lion, up $76.3 mil­lion from 2010.

Be­larus is ex­pected to ex­port $5 bil­lion worth of farm pro­duce this year. Lo­cal farm­ers in­tend to build up their pres­ence on the tra­di­tional mar­kets and ex­pand into new sales ar­eas. There are plans to launch ex­ports to Iran, Egypt, and In­done­sia. Spe­cial em­pha­sis will be put on co­op­er­a­tion with the Euro­pean Union. This year the ex­port to the EU mar­ket is pro­jected to reach $100 mil­lion.

On the whole, the Agri­cul­ture and Food Min­istry is ex­pected to earn a $1.755 bil­lion trade sur­plus in 2012. Ex­port growth is likely to make up 111% as against the pre­vi­ous year.

To meet the tar­get the min­istry will have to con­sid­er­ably in­crease ex­ports and re­duce im­ports by at least 8%. There are also plans to di­ver­sity meat ex­ports, es­pe­cially prod­ucts with a higher added value.

An­other mea­sure to boost the ex­port is to in­crease the sales of potato, veg­eta­bles, potato and grain seeds, and breed­ing stock.

Pur­chase of goods out­side the coun­try will be kept un­der spe­cial con­trol. Ac­cord­ing to the Min­istry of Agri­cul­ture and Food, fi­nan­cial ex­pen­di­tures on im­ports are un­rea­son­ably high. For ex­am­ple, it does not make eco­nomic sense to pur­chase min­eral fer­til­iz­ers in the peak time. The regions fail to use the mech­a­nism of bulk pur­chases, which is an es­sen­tial re­serve for re­duc­ing im­ports.

SES: New Re­al­i­ties

En­hanc­ing ef­fi­ciency and com­pet­i­tive power of the agri­cul­tural sec­tor is get­ting cru­cial in the light of Be­larus’ com­mit­ments un­der the agree­ment of the Sin­gle Eco­nomic Space (SES) signed by the Repub­lic of Be­larus, the Repub­lic of Kaza­khstan and the Rus­sian Fed­er­a­tion. The agree­ment on sin­gle rules of state sup­port in agri­cul­ture took ef­fect on 1 Jan­uary 2012. The doc­u­ment en­vis­ages grad­ual re­duc­tion of public sup­port (which ac­tu­ally has a bad im­pact on trade ac­cord­ing to the WTO clas­si­fi­ca­tion) from 16% in 2011 to 10% in 2016.

Gov­ern­ment fund­ing of the na­tional agri­cul­tural sec­tor is en­vis­aged at Br11.4 tril­lion this year (2.3% of GDP and 8% of the con­sol­i­dated bud­get). Of them Br6.5 tril­lion will make up bud­getary re­sources and Br4.9 tril­lion will come from lo­cal bud­gets.

Tak­ing into ac­count new ap­proaches, bud­get funds will be used to fi­nance gov­ern­ment mea­sures to pro­mote agri­cul­ture. Such mea­sures will have an im­por­tant so­cial and eco­nomic im­pact and will not ham­per pro­duc­tion and trade in terms of in­ter­na­tional clas­si­fi­ca­tion prac­tices. These in­clude mea­sures to pre­serve soil fer­til­ity,

recla­ma­tion, per­son­nel train­ing, sci­en­tific re­search, anti-epi­zootic and phy­tosan­i­tary mea­sures, etc.

The gov­ern­ment will also spon­sor tar­geted pro­grams of agribusi­ness de­vel­op­ment and big in­vest­ment projects which re­quire a lot of re­sources be­cause of long pay­back pe­ri­ods. On the whole, com­pa­nies of the Be­laru­sian agro-in­dus­trial com­plex are plan­ning to im­ple­ment 15 na­tional and in­dus­try-spe­cial­ized pro­grams by 2015.

It is worth say­ing that open ten­ders will be held to choose le­gal en­ti­ties to im­ple­ment im­por­tant in­vest­ment projects us­ing state sup­port, in­clud­ing projects to build live­stock farms, fa­cil­i­ties for stor­age, pro­cess­ing, and mar­ket­ing of agri­cul­tural prod­ucts. The bid­ders will present busi­ness plans which prove that bud­get re­sources will be used ef­fi­ciently.

In 2012 agri­cul­tural com­pa­nies will also re­ceive bud­get sub­si­dies to buy fer­til­iz­ers, pro­tec­tion agents, fuel and lubri­cants, spare parts and other com­modi­ties. Funds will be pro­vided in ac­cor­dance with stan­dards re­gard­ing the pro­duc- tion vol­ume and land area with due ac­count for cadas­tral val­u­a­tion. This ap­proach will en­sure ac­cess to gov­ern­ment sub­si­dies for all agri­cul­tural com­pa­nies re­gard­less of their form of own­er­ship, subor­di­na­tion, and size.

The de­vel­op­ment of in­te­grated eco­nomic pro­cesses and tran­si­tion to mar­ket re­la­tions re­quire the im­prove­ment of pric­ing mech­a­nisms. For Be­laru­sian farm­ers it makes eco­nomic sense to grad­u­ally in­crease pur­chase prices for agri­cul­tural prod­ucts and equal­ize them with the prices in neigh­bor­ing regions of Rus­sia.

Of course, prices for agri­cul­tural prod­ucts on the Be­laru­sian mar­ket should be equal to re­spec­tive prices in Rus­sia. How­ever, ac­cord­ing to the Min­istry of Agri­cul­ture and Food, pur­chase prices for an­i­mal prod­ucts in Be­larus are 40-70% lower than those in Rus­sia. The same can be ob­served on the mar­ket of crops.

Mak­ing Prof­its

In the cur­rent five-year term Be­larus has em­barked on the project to cre­ate tech­no­log­i­cally in­te­grated struc­tural hold­ing com­pa­nies and re­search and pro­duc­tion as­so­ci­a­tions not only in in­dus­try but also in agri­cul­ture. First of all, new agri­cul­tural as­so­ci­a­tions should en­sure ef­fec­tive pro­mo­tion of agri­cul­tural prod­ucts and food to for­eign mar­kets. More­over, world prac­tices show that large food com­pa­nies can be the most ef­fec­tive form of busi­ness. Cur­rently there are plans to set up hold­ing com­pa­nies in sugar and dairy in­dus­tries. The Min­istry of Agri­cul­ture and Food has al­ready pre­pared two al­ter­na­tive projects to set up a dairy com­pany and sub­mit­ted them to the head of state.

The Coun­cil of Min­is­ters and the Na­tional Bank of the Repub­lic of Be­larus de­cided to cre­ate a linen pro­duc­tion clus­ter. Its main ob­jec­tives are to set up com­pet­i­tive linen pro­duc­tion, im­prove qual­ity, se­lect flax va­ri­eties needed to man­u­fac­ture long flax fiber in co­op­er­a­tion with sci­en­tific re­search or­ga­ni­za­tions.

The clus­ter will fo­cus both on do­mes­tic and for­eign mar­kets of Western Europe, the Baltic coun­tries, Scan­di­navia and the CIS. The com­pany will be cre­ated on the ba­sis of Or­sha Linen Mill. The new clus­ter will help at­tract for­eign di­rect in­vest­ments to pro­mote flax grow­ing and pro­cess­ing in­dus­tries. In­vestors will help mod­ern­ize ex­ist­ing en­ter­prises of the sec­tor, re­place equip­ment to in­crease short and long flax fiber pro­duc­tion ca­pac­ity, di­ver­sify the range of linen prod­ucts, and im­prove their de­sign and con­sumer prop­er­ties.

At present the coun­try’s agroin­dus­trial com­plex op­er­ates 46 hold­ing com­pa­nies, which proved to be ef­fec­tive. They pro­duce 18% of all agri­cul­tural goods in Be­larus.

Ev­ery hectare of their land is three times more ef­fi­cient than the land of other or­ga­ni­za­tions. The ab­sence of me­di­a­tors in the “pro­duc­tion-pro­cess­ing-sale” chain al­lows hav­ing ex­tra in­come that is spent on the de­vel­op­ment of the hold­ing com­pany.

It is safe to say that the pri­or­ity given to­day to qual­i­ta­tive pa­ram­e­ters will en­able the Be­laru­sian agribusi­ness to fo­cus on in­ten­sive de­vel­op­ment, and to con­sol­i­date its lead­ing po­si­tion both in the SES and global mar­kets.

Pekarchik farm busi­ness in Gomel

Oblast pro­duces veg­eta­bles and sells

them in Be­larus, Moscow and Saint

Peters­burg

The dairy farm Ch­er­nova, an af­fil­i­ate of AgroBox-zootekh, uses re­source-sav­ing tech­nolo­gies and re­new­able en­ergy, in­clud­ing so­lar bat­ter­ies and wind mills

A new broiler com­plex of the Ser­volux com­pany,

Mogilev Dis­trict, can pro­duce 20,000 tonnes of poul­try

per year

Konyukhi (Lyakhovichi Dis­trict) is the largest sheep breed­ing com­pany in Be­larus (2,500 head). The com­pany is plan­ning to start pro­cess­ing wool, hides and meat

Linen Day is the demon­stra­tion of the best com­mer­cial col­lec­tions of pret-aporter linen clothes

in Minsk. The show is held un­der

the aus­pices of Bel­leg­prom Con­cern

Newspapers in English

Newspapers from Belarus

© PressReader. All rights reserved.