03.10.2012
Lukashenko wants iron discipline in loss-making agricultural companies
MINSK, 3 October (BelTA) – President of the Republic of Belarus Alexander Lukashenko has ordered to establish iron discipline in loss-making agricultural companies of Belarus. The instruction was given at a session to discuss ways to improve management in the domestic agribusiness on 2 October, BelTA learnt from the press service of the Belarusian head of state.
Among the issues discussed at the session was the cost of credit resources, as well as reduction of interest rates for agricultural producers. “A lion’s share of support is channeled into repaying the interest rate,” First Deputy Minister of Agriculture and Food Leonid Marinich said. He noted that the reduction in interest rates would stimulate production.
“Let it be, I do not mind, but it should not be like it was in the past (“buy us a tractor, build a farm, a bulk grain storage, process, sell and give zero-interest loans”). A certain amount of funds was earmarked for Mikhail Rusy for the development of agribusiness. Go ahead and use them. If you want, you can spend them all to repay the interest rate. Or you can buy machinery. Or you can give them to farms. Money has a price. A bank purchased this money, let it be, under the interest rate of 25%. A bank cannot sell it cheaper. If a bank gives it to you under 10% interest rate, the remaining 15% has to be compensated by someone,” Alexander Lukashenko said.
The head of state warned that the credits will have to be repaid; otherwise this will not be fair towards company chiefs who are trying to operate on their own and generate profits.
“Keep in mind, the situation will change. I have said it many times, before you get something, you should do everything you are required to do, cut costs, and after that we will give you a little bit,” Alexander Lukashenko said.
“There are some promising projects, import substitution and so on. Of course, we will support them using all kinds of sources, as much as we can,” the President added.
“Iron discipline should be established in loss-making companies. The company chief should be the lord and master and military commander there. So, make it happen. And companies should be neat from outside. Because it is terrifying to look at some companies from above,” Alexander Lukashenko said.
According to Minister of Agriculture and Food Leonid Zayats, there are still many farms in the country (more than 900, according to the Ministry of Agriculture and Food) which can boost the performance by just improving the technological discipline: “You just have to be willing to do it. No special investment is required here”.
According to Vladimir Gusakov, the Deputy Chairman of the Presidium of the National Academy of Sciences of Belarus, a group of well-performing companies accounts for 21.8% of the total and produces about half of the entire gross domestic product and generates 71% of return. The second group, medium-performing companies (38.2%), generates approximately 30% of the total output. There is also a group of farms working with little or no profit. "Therefore it is necessary to focus on the rapid development of the last two groups. It is through them that we can raise overall production volumes,” said Vladimir Gusakov.
In this connection Alexander Lukashenko noted that almost one-third of domestic farms can do without any substantial support from the government: "I say one third, because with little support from the government some farms can easily improve the performance or come close to this 22%. So one-third can do well. Of course, we will have to watch out for them, give them a little help, but they need to go on their own. Life forces us to do. We are not the EU, we have no huge money.”
“This year and next year we need to help the remaining 40% to make it to the first group so that in a year or two they would do well on their own, without the government support. Thus we will get almost 70% of well-performing farms. 25-30% will remain to rely on government support,” added the head of state.
Regarding the compliance with the technical regulations in agriculture, Alexander Lukashenko stressed: "It must be the iron rule for economic entities. We will need to revisit this issue at the highest level and communicate this to everyone. They need to fulfill this requirement.”
Among the issues discussed at the session was the cost of credit resources, as well as reduction of interest rates for agricultural producers. “A lion’s share of support is channeled into repaying the interest rate,” First Deputy Minister of Agriculture and Food Leonid Marinich said. He noted that the reduction in interest rates would stimulate production.
“Let it be, I do not mind, but it should not be like it was in the past (“buy us a tractor, build a farm, a bulk grain storage, process, sell and give zero-interest loans”). A certain amount of funds was earmarked for Mikhail Rusy for the development of agribusiness. Go ahead and use them. If you want, you can spend them all to repay the interest rate. Or you can buy machinery. Or you can give them to farms. Money has a price. A bank purchased this money, let it be, under the interest rate of 25%. A bank cannot sell it cheaper. If a bank gives it to you under 10% interest rate, the remaining 15% has to be compensated by someone,” Alexander Lukashenko said.
The head of state warned that the credits will have to be repaid; otherwise this will not be fair towards company chiefs who are trying to operate on their own and generate profits.
“Keep in mind, the situation will change. I have said it many times, before you get something, you should do everything you are required to do, cut costs, and after that we will give you a little bit,” Alexander Lukashenko said.
“There are some promising projects, import substitution and so on. Of course, we will support them using all kinds of sources, as much as we can,” the President added.
“Iron discipline should be established in loss-making companies. The company chief should be the lord and master and military commander there. So, make it happen. And companies should be neat from outside. Because it is terrifying to look at some companies from above,” Alexander Lukashenko said.
According to Minister of Agriculture and Food Leonid Zayats, there are still many farms in the country (more than 900, according to the Ministry of Agriculture and Food) which can boost the performance by just improving the technological discipline: “You just have to be willing to do it. No special investment is required here”.
According to Vladimir Gusakov, the Deputy Chairman of the Presidium of the National Academy of Sciences of Belarus, a group of well-performing companies accounts for 21.8% of the total and produces about half of the entire gross domestic product and generates 71% of return. The second group, medium-performing companies (38.2%), generates approximately 30% of the total output. There is also a group of farms working with little or no profit. "Therefore it is necessary to focus on the rapid development of the last two groups. It is through them that we can raise overall production volumes,” said Vladimir Gusakov.
In this connection Alexander Lukashenko noted that almost one-third of domestic farms can do without any substantial support from the government: "I say one third, because with little support from the government some farms can easily improve the performance or come close to this 22%. So one-third can do well. Of course, we will have to watch out for them, give them a little help, but they need to go on their own. Life forces us to do. We are not the EU, we have no huge money.”
“This year and next year we need to help the remaining 40% to make it to the first group so that in a year or two they would do well on their own, without the government support. Thus we will get almost 70% of well-performing farms. 25-30% will remain to rely on government support,” added the head of state.
Regarding the compliance with the technical regulations in agriculture, Alexander Lukashenko stressed: "It must be the iron rule for economic entities. We will need to revisit this issue at the highest level and communicate this to everyone. They need to fulfill this requirement.”