Business news

14 Feb 2023

Lukashenko against indiscriminate merger of struggling collective farms

MINSK, 14 February (BelTA) – Belarusian President Aleksandr Lukashenko rejected proposals providing for indiscriminate incorporation of poorly performing agricultural organizations into state-owned enterprises. He gave his take on the proposals as he hosted a meeting with the leadership of the Council of Ministers on 14 February, BelTA has learned.

The government suggested passing a presidential decree to put in place another set of measures to deal with struggling agricultural companies. To be more specific, the government wants these companies to become part of state-owned enterprises.

“You want collective farms to merge with industrial enterprises. You were instructed to keep this problem on your radar and work on it. I told you not to lose sight of this matter and submit proposals, if needed. You are introducing a proposal. What kind of proposal? What will we merge with what today?” the president asked.

Agriculture and Food Minister Igor Brylo explained that there are 127 poorly performing agricultural organizations today, of which 117 are located in three regions - Gomel Oblast (more than 50), Mogilev Oblast and Minsk Oblast. According to him, the draft decree submitted for discussion proposed to formalize the terms that will apply to those state-owned enterprises that would undertake to turn around poorly performing companies. In line with the proposals, such enterprises are to be entitled to preferences, debt restructuring, payment deferrals, and so on.

However, the head of state asked a reasonable question: why change anything in the existing system when there is already a mechanism for incorporating collective farms into enterprises. “What is your problem with the existing system?” Aleksandr Lukashenko asked. For example, additional terms for specific enterprises incorporating agricultural companies can be laid out in a presidential executive order without altering the effective system. “A governor knows what enterprises he needs to bring to consistently positive performance, he submits a proposal, and a draft decision of the president [is prepared taking into account this proposal and] is signed. This executive order specifies deadlines, details of restructuring, some preferences,” the head of state said.

“Our revenues from selling food products last year were estimated at $8.3 billion (in foreign currency), because we paid a lot of attention to agriculture and upgraded it, brought it into shape, and improved discipline,” the president noted.

The head of state pointed out that the ministry and the government did not thoroughly work out the details of proposed mergers, and most importantly, whether benefits and preferences should be the same for state-run enterprises that take over agricultural organizations. Aleksandr Lukashenko absolutely rejected such an indiscriminate approach.

“Probably, the one-size-fits-all approach will not do,” the minister said.

“When it comes to our most valuable asset, land, resources, ‘probably’ is not the word to use,” the Belarusian leader responded.

“Maybe some need preferences, but others don’t. We are talking about merging collective farms (that is state property) with state-owned enterprises,” the president stressed. He cited Belaruskali as an example. The company was instructed to take over several agricultural enterprises. But in this case there is no need for additional preferences from the state.

In addition, Aleksandr Lukashenko criticized the draft decree for creating conditions for avoiding personal responsibility for company performance. The existing system provides for tougher control, especially in the area of property decisions. During the work on presidential ordinances, documents are scrutinized by the Belarus President Administration. “Of course, it is necessary to go through certain filters and substantiate why you think privatization, figuratively speaking, of an agricultural enterprise is a good idea,” the Belarusian leader noted.

“It was necessary to make Turchin take decisions on under-performing agricultural companies in his region: he has 20 such farms, here are 20 investors, state-run enterprises that will take over these farms. One presidential ordinance will have an attachment listing what will be merged with what, as well as preferences, whenever necessary,” Aleksandr Lukashenko said.