Aleksandr Lukashenko holds session to discuss prospects of consumer cooperation system

Enterprises of the consumer cooperation system need to improve their financial performance and build up positions in the domestic consumer and foreign markets, Belarusian President Aleksandr Lukashenko said at a meeting held on 28 January to discuss the state and prospects of the consumer cooperation system in Belarus.

Aleksandr Lukashenko recalled that when appointing new Chairman of the Board of Belcoopsoyuz last December, it was agreed that at the beginning of 2014 he would present a report on the ways of development of the system and measures to be taken to improve financial results.

"Belcoopsoyuz has never done very well. It was granted competitive advantages. Yet nothing has been done on this front, except for the fight against corruption," the head of state said.

The President emphasized that cooperative trade is an important source of supplying rural residents with food and consumer products, things necessary for life and maintaining personal subsidiary farms. According to him, it is almost a quarter of the population. "The quality and variety of services offered to people in the district centers are largely determined by the work of consumer cooperative enterprises. This is another million people,” the head of state added.

“Belcoopsoyuz is a multipronged organization specializing in different lines of activity: from acquisition and primary production to processing and sales, provision of services. Therefore, the state is interested in good performance of Belcoopsoyuz and cannot stay aside,” the President remarked.

Aleksandr Lukashenko stressed that Belcoopsoyuz was repeatedly criticized. At the previous meeting in February 2013 the President outlined the main painful points and shortcomings in the system. “The previous management, however, failed to address the issues,” the head of state said.

The President demanded detailed answers, first of all, to the question as to what measures will be taken to improve the fiscal situation in the consumer cooperation system and to enhance the scale and quality of services, improve its positions on the domestic and foreign markets. According to the Belarusian leader, marginally profitable companies account for about 80% of the consumer cooperation system.

The President emphasized that the products and services offered by Belcoopsoyuz should meet today’s needs of rural residents and be affordable. “The work to find internal reserves to reduce prices should be systemic, it should be a matter of course for the companies affiliated with Belcoopsoyuz,” the President stressed.

Aleksandr Lukashenko believes that it is particularly important to come up with an efficient system of wholesale trade. This system should envisage centralized purchase of goods and improvement of the commodity distribution schemes. The head of state gave an instruction to analyze how consumer cooperatives sell wholesale products to state-owned companies. The President reminded that he had given this instruction earlier and demanded to provide a report what has already been done to fulfill it.

Aleksandr Lukashenko drew attention to the fact that the procurement branch of Belcoopsoyuz misses a great deal of profitable produce. “You had the competitive edge! You were the first in the country to embark on this business. Having unrestricted access and a number of preferences from the state, being highly mobile in the countryside, Belcoopsoyuz should not give way to private procurers,” the President emphasized. He asked the senior officials of Belcoopsoyuz what measures were taken and will be taken in the future to address this issue. The head of state reiterated that they should not only procure wild-growing raw materials, but also process them efficiently with a high added value.

The President said he was dissatisfied with the ongoing modernization of processing companies. Aleksandr Lukashenko demanded that the work should be done fast. He noted that the companies with the shortest payoff period should be the first in line for modernization.

“Belcoopsoyuz’s manufacturing branch is technically and technologically backward. Products made by some companies are extremely antiquated and uncompetitive, which leads to the increase in the finished goods inventory. Often they produce things that nobody needs. And this is criminal,” the President said.

The President touched upon one more topic – the establishment of high-yield companies making finished products from the fur of caged animals and the sale of these products on the domestic and foreign markets. The President asked about the prospects of this line of business.

Addressing Chairman of the Board of Belcoopsoyuz Valery Ivanov, Aleksandr Lukashenko demanded all-out effort to eliminate the existing issues. “You are not a stranger to me; you are among those who are always sent to the frontline to deal with most challenging issues. Yet, this does not mean that I should condone and assess Ivanov’s work through the prism of his past achievements. Therefore, you have no other option but to start working,” the President emphasized.

“The situation in Belcoopsoyuz and the performance of Belcoopsoyuz are unacceptable,” the head of state said. He added that the same can be said about the governors: “You should also get involved. You are ultimately responsible for the agribusiness where Belcoopsoyuz gives food, clothing and footwear for your people”.

“The government should take it under control. [Vice Premier of Belarus] Mikhail Rusy is not doing it. Total neglect! The same can be said about the Prime Minister,” the President emphasized.

Chairman of the Board of Belcoopsoyuz Valery Ivanov informed the President about the operation and prospects of the consumer cooperative system. Among the reasons for the ineffective operation of the system Valery Ivanov mentioned lack of business acumen and entrepreneurship.

The instruction to set up a centralized procurements operator has not been fulfilled yet. “Items of critical import are now purchased from resident companies of the Republic of Belarus. As a result, these goods are more expensive in consumer cooperative shops than in the shops of our competitors. The consumer cooperative system does not fully use the reserves of increasing procurement of agricultural and wild-growing products from the population. The share of Belcoopsoyuz in the country’s trade turnover is descending. As a result, the system becomes less significant. Unless drastic measures are taken it will ne necessary to consider how the system should be changed,” the Chairman of the Board of Belcoopsoyuz explained.

Valery Ivanov said that the organization will step up efforts to raise the competitiveness of the consumer cooperative network. These measures envisage the evaluation of the personnel efficiency in modern conditions, optimization of management, expansion of the network of large stores and convenience shops in district capitals and big towns.

There are also plans to establish a single wholesale operator to boost competitiveness and improve the structure of trade. This work will be done in Q1 2014.

According to Valery Ivanov, in the future the organization will optimize the operation of mobile shops which are will deliver goods to small and remote villages at least three times per week. Apart from that, certain measures will be taken to eliminate violations of trade rules.

The Chairman of the Board of Belcoopsoyuz said that that there are huge reserves for increasing the volume of purchasing agricultural and wild-growing products from the population.

There are also plans to promote other areas of the consumer cooperative system, including the manufacturing sector, fur farming, processing industry, public catering and roadside facilities.

As for the optimization of the organizational structure, Valery Ivanov asked for the President’s assistance in turning local consumer cooperative societies into inter-regional ones.

Prime Minister Mikhail Myasnikovich said that the consumer cooperative system should also provide consumer services which are in great demand. There are unused reserves for the export of goods.

Brest Oblast Governor Konstantin Sumar emphasized a growing competition with big trading networks and stressed the need to give the priority to the development of convenience stores.

“I have already warned the governors and the Minsk Mayor that they will answer for every hypermarket if corner shops are destroyed. We have enough such trading networks and we should keep some sort of a percentage ratio. Otherwise we will become totally dependable on them,” the Belarusian leader stressed. “Where we need a hypermarket, build it. We should look and calculate, especially for Minsk and maybe other big cities, and say “stop” if we have enough of them there already. The rest should be SMEs. It will create competition and secure our independence in trade,” Aleksandr Lukashenko said.

Aleksandr Lukashenko said that problems in trade in general should be studied in the nearest time. “This has nothing to do with this meeting. We are now going to carry out serious inspections in agriculture and then switch to utility facilities. However, nobody wants to check how things are going in trade. In due time we liberalized trade, and it was a bad mistake on our part. Even now all economists say that prices should be subject to regulation unless we have a fierce competition in manufacture,” the President underlined.

“I think that we should take a close look at trade and study the processes that are taking place there. Of course this should not harm trade and other market trends to, but we need to make some decisions. This may be a law or some other document but we should tackle the problems in trade,” the head of state noted.

Aleksandr Lukashenko said that he had earlier instructed the Prime Minister to review the work of the Trade Ministry. “You suggested dissolving it but this is what I suggest: let us try to save it and load it with work. I ask you to revisit this issue and vest the Trade Ministry and Belcoopsoyuz with the authority to bring order to trade. They should do it. Both the Trade Ministry and Belcoopsoyuz should be responsible for the management and control over trade relations in our country,” the Belarusian head of state underscored.

Addressing Valery Ivanov, Aleksandr Lukashenko said: “You have no other option but to start working.” He added that the same can be said about the governors.