Aleksandr Lukashenko pays visit to Minsk Bakery

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No big company can be sold without President’s consent in Belarus, the head of state said as he paid a visit to Minsk Bakery on 22 February.

The President denied speculations alleging that a number of Belarusian companies are set to be sold soon. “Do not worry, we will not sell anything,” the head of state said.

“Privatization is generally a very serious process. It is ten times as serious when it comes to Belarus,” he said.

The head of state said that the companies producing essential goods will not be transferred into private ownership. This pertains to bakery, meat and dairy products and clothing. “They will virtually always be a state property. If we decide to sell some shares for big money, the state should retail control over them, at least as long as I am President,” Aleksandr Lukashenko added.

State control over these companies will help keep an eye on prices for socially-important goods.

The government should retain control over the entire bread production chain that includes grain production and supply companies and bakery companies. They should never be transferred into private ownership. It is out of the question. We do not forbid private companies to bake and sell rolls and buns in supermarkets, provided all the food safety requirements are met, Aleksandr Lukashenko said.

“However, the backbone of the industry should remain state-owned. We are wary of the private sector. They are good people, but they are only concerned with their profit. However, major state-run enterprises will act as a good leverage and bring equilibrium to the market to make sure people are provided with the most essential staple food – bread,” the head of state underlined.

“This pertains to milk, clothing and other things. This is how the government takes care of its residents and the state-run companies should be part of these efforts. I do not mind having a thousand private companies in Belarus. We will not ban anything. Competition will benefit the industry. Let them demonstrate their entrepreneurial spirit, but we should be able to regulate the prices when needed, to make sure bakery products are affordable,” the President added.

The head of state assured that people in Belarus will always have enough bread. “All Belarusians will always have plenty of bread any year, and it does not matter whether the year is difficult or not. We are capable of harvesting enough grain crops to satisfy the needs of our people,” the head of state said.

Aleksandr Lukashenko remarked that the time when manufacturers were reluctant to sell bread as part of government procurement contracts is well behind. “Today it is a normal practice. People, private and state-run companies who make bread know well that government procurement contracts are a sacred thing,” the President said.

Government procurement contracts will always guarantee the demand for bakeries’ products. Therefore, bakeries will produce high-quality bread, the President said.

Minsk Bakery is one of the biggest manufacturer of flour and cereals in Belarus. The factory processes about 200,000 tonnes of grain per year. The main consumers are Minsk bakeries.

In 2008-2012 the plant funnelled Br76.4 billion into modernization of existing and construction o new facilities. In 2012 Minsk Bakery spent Br18.6 billion for these purposes. Technical upgrade allowed reducing depreciation of funds. The range of products has been expanded from 30 to 60 items. In 2013-2015 the company is planning to inject over Br120 billion into modernization.

Production development, export growth and profit increase allow timely fulfil the company’s loan obligations, develop social infrastructure, gradually raise salaries of workers.

The President was informed about the financial situation and development prospects of the company and the entire industry. Aleksandr Lukashenko praised technical upgrade efforts and remarked that the modernizations program has been already fulfilled by 70-80%. This allowed Minsk Bakery produce high-quality goods from local raw materials. Thanks to modernization, depreciation of funds of bakeries fell to 40% in 2012. Just to compare: in 2004 it was 75%.

In 2012 the export of bakeries exceeded $88 million. In 2013 it is estimated to increase to $102.5 million. In 2015 the export should reach $124 million.

Returns on sales per one employee should increase from $50,000 to $76,000 in 2015. In the near future there are plans to boost the export of flour. Belarusian companies have almost satisfied the domestic demand for cereals, except for rice.

Aleksandr Lukashenko emphasized that Minsk Bakery should keep up with modernization efforts so that it will not lag behind in the future.

Aleksandr Lukashenko warned officials against creating holding companies artificially.

Vice Premier Mikhail Rusyi informed the head of state that plans had been prepared to create agricultural holding companies in Minsk Oblast, Mogilev Oblast, and Vitebsk Oblast. In his words, every region should have two or three holding companies like that.

“Only not artificial ones,” the President stressed. “If it is a wise holding company – raw materials, forage, processing, and sales – then we will gain something. But do not do it if you just merge enterprises artificially, because that one is stronger and this one is weaker and let us merge them,” the head of state said.

According to Mikhail Rusyi, over the past 4 years two brand-new industries were created in Belarus – production of cereals and pasta. By 2015 there are plans to satisfy the local demand for pasta.

Aleksandr Lukashenko demands observance of national quality standards in the food industry.

“No technical conditions, we need only national standards,” the head of state stressed. “Natural products are our major wealth. I hear it from everywhere: Russia, Ukraine and far away from the former Soviet Union. Bread should smell like bread, meat products should be made of meat, not soya or any other substitutes,” the President added.

The President stressed that he is determined to revisit the issue later. “Our main achievement is that we have kept the standards of the Soviet times, improved and enhanced them,” the head of state believes.

According to Director of Minsk Bakery Gennady Vasilevsky, the company is successful. In 2012 the factory manufactured almost 106,000 tonnes of flour, 7,800 tonnes of cereals, 4,900 tonnes of pasta products. This year the plant is planning to ramp up output. The company accounts for 14% of the total volume of flour and pasta products manufactured in Belarus.

Every year the company is given preferential state loans to buy grain. All bread-making companies do not have enough own funds due to numerous loans and control over prices for flour, cereals and socially-important varieties of bread.

“We will deal with interest rates on loans. We will see how much these loans cost,” the head of state said.

Aleksandr Lukashenko noted that Belarusian banks offer high interest rates on deposits, thus keeping loan rates high, including for corporate clients. “Therefore, we need to look into the situation. If people want to have good dividends from deposited money, let it be so, we will take the money, but banks should think properly how to manage this money,” the President said.

“We need to come to grips with it, that is for sure. We need to discuss it at a session of the government,” the head of state added.

Aleksandr Lukashenko inspected the territory and premises of Minsk Bakery, got familiar with the technological processes and the exposition of products made the companies of the Bread Department of the Agriculture and Food Ministry.

The head of state also answered questions of reporters about modernization, situation on the foreign currency market, devaluation rumors and privatization of big enterprises. Journalists also asked the President’s opinion about failures of Belarusian athletes in team sports.

Journalists asked the President if Belarus has enough resources to implement large-scale upgrade projects. “If someone wants to destroy something, he will start criticizing what is normal and natural. If we fail to upgrade a company, this company will collapse. I have just actualized the things that should always be ongoing. Modernization should be a permanent process,” the Belarusian President said.

Aleksandr Lukashenko explained that his instructions and demands were necessitated by some slowdown in individual industries. “Secondly and most importantly, we need to move faster even in the areas where we are proceeding as planned, because competition is getting tougher, which is partly attributed to the accession of our major partners to the WTO. This is why I want to speed up modernization,” the President said.

The head of state mentioned the agricultural industry where modernization projects have been mostly finished. Belarus has invested a lot of resources in it, but also got a solid return. The population will be provided with all the necessary foodstuffs.

Modernization plans in the manufacturing industry are implemented in a similar way. Some companies are already finishing their upgrade projects, while others were making little headway until the head of state interfered.

The President believes that modernization is the number one priority for the country’s socioeconomic development.

When asked to comment on opinions of individual representatives of the so-called expert community, who believe that the country can hit intense modernization targets only by devaluing the national currency, Aleksandr Lukashenko said: “I treat it as idle talk. We have no need to devalue the national currency at present. But if someone thinks that modernization can be accomplished at the expense of devaluation, I do not want that kind of modernization. I do not want to put the society through periodic crises and shocks only for the sake of erecting a building or laying a new line. We can accomplish modernization within a longer time but calmly”.

“Some people once again want to shake the society by crying about devaluation. Let them cry. It is news for me that some idiots in the country, the so-called expert community speak about the devaluation of the national currency in the name of some modernization. We do not need modernization at such a price,” the head of state remarked.

“There are no objective reasons today to devalue the national currency,” the President assured. He mentioned reports presented by the National Bank chief that say that positive processes have been going on in the currency sphere lately. The nation and corporations now buy less foreign currency while the National Bank buys more foreign currency than it sells. “Why does someone have to make a problem out of nothing to shake the entire society?” the Belarusian head of state asked a rhetorical question.

The President denied speculations alleging that a number of Belarusian companies are set to be sold soon.

“For the time being there will be no sale and exchange of assets,” the head of state said. “This is idle talk of either, probably, certain officials or those who want to find out what Lukashenko will say about privatization of these enterprises. This will never happen! No one will sell companies for a song,” the President emphasized.

Aleksandr Lukashenko remarked that the terms of selling large Belarusian enterprises have been voiced. The President believes that Belarus and Russia should, first of all, focus on the merger of enterprises rather than on their sale. The head of state cited MAZ and KamAZ as an example. “Let’s team up as if we exchanged shares with each other. Let’s team up without sale, fine-tune the system, produce results, i.e. salaries will increase, there will be no backlog of products, sales will be stronger, prices will increase, we will not let anyone penetrate our markets and get more taxes to the Belarusian and Russian budget. After we work our this way I will not stand up against selling MAZ shares. This is the only way possible,” the head of state said.

“I will never do that if I do not see the result, if I do not see the light at the end of the tunnel”, the President stressed.

The President was asked to comment on the recent events in the Belarusian sport.

The head of state believes that in spite of failures of athletes at important tournaments there is not need to radically change the financing pattern in the industry.

At the same time, Aleksandr Lukashenko told reporters that he is ashamed of the Belarusian ice hockey. “The fact that the Belarusian ice hockey team failed to qualify for the Olympic Games is a shame. Dinamo Minsk is the country’s richest club, where players earn decent money. I am embarrassed not only to talk but even to hear how our Dinamo Minsk play,” Aleksandr Lukashenko said.

The head of state said that Belarus may cease its participation in the Kontinental Hockey League (KHL) in future. “Do we need such Minsk Dinamo in the KHL? We live in Minsk, tomorrow we are flying all the way to Khabarovsk to play against those clubs. It takes two days to get there and two days to get back, leaving no time for training or recreation. Why cannot we divide the KHL into those prior to and beyond the Urals the way the eastern and western conferences in the NHL are?” the head of state wondered.

“I suggest that Europeans should create a European league. The Russians would have KHL, the Kazakhs may join, the Ukrainians or some team of ours might, but Europe should have its own league. And we could play here. We could fly to Berlin within 2-3 hours and get back the same day. Sportsmen would be able to get some rest. For now we travel much, spending a lot of money on flights,” the President believes.

Aleksandr Lukashenko remarked that KHL has a lot of problems on its plate. “Should we cease participation in KHL, stop spending dozens of millions of US dollars in favor of investing the money in our own hockey players?” the President suggested.

Aleksandr Lukashenko noted that in the near future he intends to come to grips with the problems in the Belarusian sport. "Next week I will have a meeting with the recently appointed “troika”: Sport Minister, Aide to the President and First Vice-President of the National Olympic Committee. I will ask them to give their assessment of the situation and what they have done to rectify it,” the head of state said. “The performance of the national ice hockey team was totally bad. We will deal with this issue soon. I am not going to leave it without attention. All have been warned,” stressed the President. He added that he will also examine the issue of salaries: "Some coaches get Br70 million per month, or even more, and produce no results.”

“What is happening today in track cycling? They said once, if only we had the track we would bring lots of medals. Where are those medals?” the head of state asked.

Aleksandr Lukashenko stated that there are a lot of problems in the sports industry. "Apparently, our sports functionaries are either incapable or unwilling to do their job,” the President said.

The head of state underlined that Belarus cannot ruin the sports industry. "We should thoroughly shake it up and revitalize it," the head of state said.

“We should build a system following the best examples in the world in various sports. For example, Victoria Azarenka. She is our pride. Who will be after her? No one. Or Darya Domracheva. We cannot advance having just a couple of good athletes. Therefore, we will continue to deal with these very serious issues, and I think we have enough resources and energy to organize the process in such a way so that Belarus could retain the positions it won a few years ago.”