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Regional Office for Europe and Central Asia
FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS
EASTERN EUROPE AND
CENTRAL ASIA AGROINDUSTRY DEVELOPMENT
COUNTRY BRIEF
BELARUS
Contents
Agro-industry national policy framework ........................................................................................................................................... 2
Economic and social development and trends ................................................................................................................................. 3
Agro-industry outlook and performance ............................................................................................................................................ 5
Trade liberalization, WTO accession and trade performance ....................................................................................................... 7
Foreign direct investments .....................................................................................................................................................................10
Food Safety, certification and quality control ..................................................................................................................................12
Retail, domestic market and international trends ..........................................................................................................................13
Business environment and competitiveness ...................................................................................................................................14
Ranking Belarus ..........................................................................................................................................................................................16
Key indicators
Key Economic Indicators1
2006
2009
2011
Food & Beverages
indicators
GDP (PPP), US$ billion
94.80
120.90
142.48
Manufacturing VA, % of GDP
32.51
30.34
29.06
Agriculture VA, % of GDP
9.75
9.43
8.13
Employment in Agric., % of
total
10.4
9.0
8.5
Gross Fixed Capital F., % of
GDP
29.66
35.90
37.60
FDI net inflows, % of GDP
0.96
3.82
7.23
R&D, % of GDP
0.66
0.64
n/a
Merchandise Trade, % of
GDP
113.9
101.7
156.3
Net Trade, US$ billion
Merchandise Exports, US$
billion
19.73
21.30
40.41
Merchandise Imports, US$
billion
22.35
28.57
Exports annual growth, %
23.5
Import annual growth, %
33.7
GNI per capita, 1’000 US$
3.47
Trade per capita, US$ 20092011
Doing Business Indicators
Rank
Global Merchandise Exports
Imports Rank
106
Output, % of manufacturing
2006
2009
2011
19.5
22.9
n/a
Value Added, % of
manufactur.
n/a
n/a
n/a
Enterprises, % of
manufactur.
n/a
7.3
n/a
Employment, % of
manufactur.
14.8
14.1
n/a
Investments, % of total
GFCF.
2.47
2.94
n/a
FDI inflows, % of total inflow
n/a
1.5
n/a
R&D, % of manufactur. R&D
n/a
3.7
3.2
-0.09
0.26
0.89
Exports, %of merchandise
Exp
5.5
7.8
6.9
45.75
Imports, % of merchandise
Imp
5.2
4.9
4.1
-35.3
59.7
Exports annual growth, %
3.4
-5.4
13.6
-27.7
31.2
Import annual growth, %
17.3
-20.9
6.7
5.59
5.83
Output per capita, US$
166.2
325.4
n/a
7,637
Exports per capita, US$
111.8
175.0
291.9
58
Agribusiness Indicators
Value
3.3
59
55
FDI Inward Attraction Index
Global Competitiveness
Index
38
n/a
Agro-industry national policy framework
National development programmes: The key documents1 that set out the Government of Belarus’s policies for overall
economic development, as well as for the development of agriculture, the agro-industry and rural areas include: (i) the
National Strategy for Sustainable Development until 2020 (adopted in 2004); (ii) the Programme of Social Economic
Development for 2011–2015; (iii) the State Programme for Strengthening Agriculture, the Economy and Rural Development
2011–2015; (iii) the State Investments Programme; (iv) the State Programme of Innovative Development for 2011-2015; (v) the
Concept of the states policy for retail and catering for 2011-2015; (vi) the State program for development of the dairy industry
in 2010-2015; (vii) the State program for the development of fisheries activities in 2011-2015; (viii) the Poultry Development
Program for 2011-2015; (ix) the State Integrated Development Programme for potato, vegetable and fruit growing in 20112015; (x) the State program of reconstruction, technical re-equipment and construction of facilities for pig farming in 20112015; (xi) the State program for the construction of new and modernization of existing grain cleaning and drying systems for
2011-2015.
1 World Bank Indicators Database and ITC accessed in October 2012. Author’s calculations
2
The Government runs an Agricultural Producer Support Fund, which provides grants to enterprises selected by
the government. These investments must be in accordance with the annual plan adopted by the Government
on direct State investments. The Government also covers 95 percent of an insurance premium to agricultural
producers, who, since 2008, have had mandatory insurance for crops and livestock with the State Agency. The
share of agricultural spending in the national budget is high, at about eight percent, including subsidized credits
and cross-subsidizing of inputs and applied tax concessions for agriculture as a support tool.
The Government has approved two plans: one on the privatization of objects owned by Belarus and one on the
transformation of the republican unitary enterprises into joint stock companies during 2011–2013, on which 245
and 134 entities are listed, including a number of agro-industrial enterprises.
With the UN organizations, Belarus has elaborated the first joint strategy – UNDAF for the Republic of Belarus
for 2011–2015. Belarus is covered by the European Neighbourhood Policy but, in view of the political situation,
no action plan is yet in place. It participates only in the multilateral track of the Eastern Partnership. EU-Belarus
relations are currently governed by the Conclusions of the Foreign Affairs Council as last set out in October 2012.
Legal framework: Belarus implemented a number of development programmes between 2006 and 2010 and
adopted a number of laws to encourage agricultural and agro-industry growth, rural development and trade
facilitation. Those development programmes were on: rural revival, dairy and meat processing, the sanitary and
epidemiological situation of the population, fruit and vegetable processing, sugar processing, the poultry industry,
dried milk products from whey, equipment and machinery production for the agro-industry, import substitution
and the brewery industry.
Supporting institutions: The main state bodies related to agriculture and agro-industry support and control in the
Republic of Belarus are the Ministry of Agriculture and Food, the Ministry of Trade and the Ministry of Economy.
The Government established the Agency for Investment and Privatization in 2010 that has been under the
Ministry of Economy since 2011. Other supporting institutions are: the National Investment Agency; the National
Information Export Support (Web-Site); the National Information Centre on Technical Barriers in Trade, Sanitary
and Phytosanitary Measures (established in 2001 for WTO accession support); the Foreign Investment Advisory
Council (set up in 2000), which was established by the Government and consists of foreign investors, international
economic and business bodies and various state agencies; the National Centre for Marketing and Price Studies
with an established portal EXPORT.BY that renders informational support to Belarusian exporters to help promote
their products on foreign markets, and to increase the export potential of local manufacturers of industrial,
intellectual and agricultural products. Finally, there is a Council for Entrepreneurship which offers a platform for
SMEs to lobby the government.
Economic and social development and trends
Economic and social development: Belarus is a landlocked and upper middle income country with GNI per
capita of US$ 5,830 in 2011. The population is 9.5 million, of which 25 percent live in rural areas, and the annual
population growth is -0.18 percent. Belarus enjoyed strong economic performance between 2001 and 2007, with
average real GDP growth of 8.5 percent. As a result of the global economic crisis, GDP declined by 19 percent in
2009. The Belarusian economy is dominated by state controlled sectors. Privatization talks were re-activated in
2009 and 2010, partly in response to IMF and World Bank recommendations, and again in 2011 in an attempt to
tackle the crisis. In 2011, the Belarusian economy faced a currency crisis, which gradually transformed into an
economic crisis.
In 2011, the agricultural sector contributed 8.1 percent of value added to GDP, employing around 8.5 percent
3
of the total labour force. Since 2000, agriculture has grown in productivity and production with an annual rate
ranging between 1.0 and 13.2 percent. In 2008 agriculture showed its highest levels of both value added and share
in GDP. The manufacturing industry is a large part of the economy, accounting about 29 percent of GDP in 2011.
Manufacturing added value made its highest contribution to GDP in 2008; it declined in 2009, increased in 2010
and fell by 10 percent in 2011.
Chart 1. Evolution of value added to GDP in Belarus (percent)
Source: WBDI, accessed in October 2012; UNIDO database; National Statistics; Author’s calculations
Growing demands and trends: The share of total household consumer expenditure that goes on food and nonalcoholic beverages fell to 41.3 percent in 2011 compared to 60 percent during the 1990s. However, it slightly
increased from 39 percent in 2010 due to rising food prices. Since 2009, household expenditure on alcoholic
beverages has accounted for 2.2 percent of total consumer expenditure, which is a decrease of 3.5 percent on
2000. Bakery and pasta accounted for the highest share of household expenditure on foodstuffs (12.6 percent),
followed by fruit (6.5 percent) and meat and meat products (5.8 percent), but fish and seafood consumption is still
low with only a 2.5 percent share. However, even this was higher than dairy products, which accounted for only 1.8
percent.2 Many price controls have been introduced, and recently many have been expanded, which means that
around 40 percent of goods in shopping baskets are subject to some kind of control.
Nearly 90 percent of foodstuffs consumed in Belarus are produced domestically. In 2010, the five top agricultural
products in terms of value in Belarus were: cow milk (ranked by commodity in the world 28), indigenous cattle
meat (ranked 33), indigenous pigmeat (ranked 27), indigenous chicken meat (ranked 48), and potatoes (ranked
26).3 Products that are important in terms of domestic production are rye, oats, sugar beet, rapeseed, and duck
meat.
2 NSC (2012) SOCIAL CONDITIONS AND LIVING STANDARDS OF POPULATION in the Republic of Belarus http://belstat.gov.by/homep/en/
households/main2.php
3 FAOSTAT, accessed in October 2012
4
Agro-industry outlook and performance
Agro-industry background and challenges: After the break-up of the Soviet Union, Belarus started the same type
of agricultural reforms as most other transition economies, although these were later discontinued, leaving the key
tools of the centrally planned economy in place. Agriculture continues to be an important sector in the Belarusian
economy and trade, with crucial contributions to rural livelihoods, food security, and rural and economic growth.
Arable farming accounts for 55 percent of output, and livestock (cows, pigs and fowl) for 45 percent. 4 Among the
CIS countries, Belarus has the smallest percentage of individual farmers and the largest percentage firms with
the state ownership as well as a high share of state ownership in firms with mixed ownership as in agriculture
so in other sectors. Cooperatives are the largest category of companies. A 2009 World Bank Report on the
agriculture sector noted that the international competitiveness of the farm sector remains low despite the fact that
productivity in the agricultural sector has improved considerably. The Government supports agricultural input use
(including subsidized credits and cross-subsidizing of inputs) rather than outputs.
Belarus has a substantial and relatively well-developed industrial base due to its history as an “assembly plant” of
the former Soviet Union. The food industry is characterized by strong export-orientation, particularly in the dairy
and meat sub-sectors, and is a major supplier of processed food to the domestic market. However, while consumer
expenditure on food has doubled in the last four years, the sector needs better infrastructure and requires greater
consolidation in production, coupled with the creation of a better distribution network.
Food and beverage industry performance: The food and beverage industry forms a large part of the Belarusian
economy, contributing 1.9 percent to GDP. In 2009 the food and beverage industry generated RYB 26.3 trillion (US$
3.1 billion) or 22.9 percent of manufacturing output. This has been steadily growing in the past decade with annual
growth of between to 13 percent. Per capita output was US$ 325.40. The food and beverage industry was one of
the industries that did not experience decreased output during the financial crisis in 2009.5
In 2009, the food and beverage industry in Belarus employed 149,400 people (or about 14.1 percent of the
manufacturing labour force), although this employment has been unstable over time. Labour productivity has
increased significantly in the past decade. In 2009, 805 enterprises were operating in the food and beverage
industry (or about 7.3 percent of all manufacturing enterprises). In the same year, private small and medium-scale
enterprises accounted for 81 percent of output compared with 64 percent in 2000. The number of operational
enterprises by sub-sector is as follows: dairy – 75, bakery more than 70, meat – 36, grain mill products and animal
feeds – 16, poultry – 26, fruit and vegetable – 11.
Investments in fixed capital in the food and beverage industry are not stable from year-to-year. In 2009 they were
US$ 18.2 billion or 2.9 percent of the total fixed capital with an annual decrease by 14 percent.
Important subsectors include meat and dairy processing, which more than doubled output to the 2000 level.
Another fast growing sector is fish and fish processing, which has increased by more than 500 percent since 2000.
There are the state quotas on the manufacturing of tobacco products and of alcoholic beverages and non-food
alcoholic products.
4 http://www.belarus.by/en/invest/key-sectors-for-investment/agriculture
5 National Statistical Committee of the Republic of Belarus, author’s calculations
5
Chart 2: Evolution of the share of the food and beverage industry in the economy of Belarus over time
(percent of manufacturing)
Evolution of share of Food & Beverages industry in economy of
Belarus over time
25
20
15
10
5
0
%
2000
2001
2002
2003
2004
Output % of manufacturing
2005
2006
2007
2008
2009
Employment % of manufacturing
Investments % of GFCF
Source: Author’s calculations are based on the national statistics
Chart 3. Distribution of output in food and beverages sub-sector of Belarus in 2009
Source: Author’s calculations are based on the national statistics
6
Trade liberalization, WTO accession and trade performance
Trade regulation and trade unions: Belarus, Kazakhstan and Russia formed the Customs Union (CU) in 2010 with
the fully introduced single economic space from January 2012. The Customs Code (2009), with amendments,
which incorporates a common external tariff structure for the three countries, came into force in July 2010. Belarus
adopted the Law on Ratification of the Customs Code of the CU in 2010. The main changes refer to tariffs and
adoption of laws on food safety and Technical Regulations related to foodstuffs.
The tariff rates have to be brought in line with the CET by 2015. In 2011 Belarus ratified the Agreement on the
creation, functioning and development of the integrated information system of external and mutual trade of the
Customs Union, singed in 2010. The legal frame of the Belarusian trade regime is regulated by the Customs Code
(2007), Custom Tariffs (1993) and the Law on State Regulation of Foreign Trade (2004) and the Law on Measures to
Protect Economic Interests at Foreign Trade of Goods (2004).
In November 2011, the Customs Union members put together a joint commission on fostering closer economic
ties, planning to create a Eurasian Union by 2015.6 In October 2011, the new free trade agreement was achieved
and then signed by eight of the eleven CIS states; namely, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova,
Russia, Tajikistan, and Ukraine (Uzbekistan, Azerbaijan and Turkmenistan may join the free trade by the end of the
year) The agreement became effective in 2012.7
Belarus is seeking WTO membership and taking steps to further boost exports, especially with markets in non-CIS
countries. In compliance with the WTO Agreement, Belarus set up the National Information Centre on Technical
Barriers in Trade, Sanitary and Phytosanitary Measures. Excise duty applies to excisable goods, such as original
alcohol drinks, wines, soft drinks, ethyl alcohol from food raw materials and other alcoholic production. Belarus is
more integrated in international trade than most countries in the EECA.
Restrictions on exports of consumer goods by individuals, introduced as a response to the balance-of-payments
crisis in Belarus, were eliminated in February 2012. The export limits had been applied to goods and commodities
with regulated prices, including cereals, pasta, cigarettes and domestic appliances.
WTO accession: Belarus has been negotiating accession to the WTO since September 1993, and it has gone
through various steps of the WTO accession procedure (application, Working Party creation, memorandum of
external trade, no export subsidies, seven meetings, and agreements). Belarus currently has WTO observer status.
The last meeting with the WTO Working Party (in May 2005) considered that more progress in negations is needed.
Bilateral market access negotiations are ongoing. The Secretariat has prepared an updated Factual Summary on
the basis of inputs submitted by Belarus, which was circulated in November 2012. Three leaders of the Customs
Union have indicated that negotiations with the WTO will take place in parallel, but with a separate accession. The
simple average of import duties for agricultural goods applied in 2011 was 15.2 percent.
Trade performance: From 2007 to 2011, Belarus’s exports increased by 13.5 percent a year on average and reached
a peak of US$ 40.3 billion in 2011. Similarly, imports increased by 12.4 percent a year on average and reached US$
45.7 billion. This resulted in a trade deficit of 5.5 billion US$ in 2011. 8
Belarus is a large exporter of food and beverage agricultural commodities with trade surpluses of US$ 890 million
and US$ 160 million respectively in 2011 (which have been steadily growing over the past decade). Food and
agricultural exports and imports together made only 9.5 percent and 6.1 percent of total merchandise exports and
6 http://en.wikipedia.org/wiki/Customs_Union_of_Belarus,_Kazakhstan_and_Russia
7 http://www.kazakhstanlive.com/2.aspx?ProdID=e0e71609-f069-4c70-bbef-eda0cc466c14&CatID=9f9f8034-6dd6-4f7e-adcf0f6a7c0406d9&sr=100&page=1
8 http://comtrade.un.org/pb/CountryPagesNew.aspx?y=2011
7
imports of Belarus in 2011. Processed food and beverage products accounted US$ 2.77 billion or 6.9 percent of
total merchandise exports and US$ 1.87 billion or 4.1 percent of total merchandise imports in 2011 with an annual
growth of 13.6 percent and 6.7 percent respectively, compared to negative growth of 5.4 percent of exports and of
20.9 percent of imports in 2009. Per capita exports of food and beverage products were US$ 114.90 in 2011.
Imports of food and beverage products are relatively diversified, but two major commodity groups still account for
half of all imports; namely, the residues and animal fodder products group (23 percent, ranking in world imports
44) and sugars and sugar confectionery (21 percent, ranked 39). Other commodity groups shared between 1.8 and
12 percent in total imports of food and beverage commodities. Dairy products account for 63 percent of exports
(ranking in world exports 13); other export-oriented commodity groups were: sugars and sugar confectionery (12
percent, ranking in world imports 27) and meat preparations (11 percent, ranking in world imports 26). 9
In 2011, trade was concentrated among a few partners: Three major partners accounted for 60 percent of imports
compared to only one major partner; namely Russia, receiving 81 percent of total food and beverage exports from
Belarus.
Top destinations for food and beverage products: Russia (81 percent), Kazakhstan (5.9 percent), Ukraine (3.3
percent), Kyrgyzstan (1.7 percent), and Venezuela (1.5) in 2011;
Top origins for food and beverage products: Russia (24 percent), Ukraine (17.5 percent), Brazil (17.1 percent),
Argentina (eight percent), and Germany (four percent) in 2011
Chart 4. Food and beverages and agricultural trade performance over time
Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012
9 ITC (UNCDAT/WTO)
8
Chart 5. Share of product groups in total exports and imports of food and beverages in 2011
Source: ITC (UNCTAD/WTO): Trade Map online, accessed in October 2012
Chart 6. Evolution of the top five destinations of exported food and beverage products by Belarus over time
Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012
9
Chart 7. Growth of national supply and international demand for exports of food and beverage products by
Belarus in 2011
Source: ITC (UNCTAD/WTO). Data is based on the selected products’ groups. Trade Map online, accessed in October 2012
Foreign direct investments
Strategies, regulations and ranking: Lately, the investment regime has been improved by adopting a number of
laws and decrees, including: the Investment Code with amendments (2009); the Presidential Decree on Creating
Additional Conditions for Investment Activities and on Some Measures to Stimulate Innovation Activities (2009,
amended in 2011), the Law on Free Economic Zones (2008); the Presidential Decree on Promoting the Production
and Realization of Goods (Works, Services) (2008); the Presidential Decree on some issues of regulation of
entrepreneurial activity in rural areas (2007).
Despite poor historical progress in privatization, the Government announced a privatization plan for 244
companies in the 2011-2013 period (including 180 companies in 2011). As part of the programme to fast-track
economic development across Belarus, there are substantial incentives for start-ups in the country’s smaller towns.
Any firm operating in a town of fewer than 50,000 inhabitants is exempt from paying taxes on its profits for five
years. Belarus is seeking to attract buyers for their big State-owned industrial enterprises.
According to WIR 201210, Belarus was ranked 38 (among 181 economies) by the FDI Inward Attraction Index in
2011, which is a significant improvement compared to 106 in 2000 (among 178 economies).
According to an IAB report11, Belarus still has restrictions on foreign equity ownership in many sectors and some
10
UNCTAD (2012) World Investment Report 2012: Towards a New Generation of Investment Policies, UN Conference on Trade and
Development NY and Geneva, Switzerland
11 IFC/MIGA/WB (2010) Investing Across Borders: Indicators of foreign direct investment regulation in 87 economies. The World Bank
10
sectors such as fixed-line telecommunications services, electricity transmission and distribution, and railway
freight transportation are entirely closed to foreign equity ownership. In addition, a comparatively large number
of sectors are dominated by government monopolies. Those monopolies, together with the perceived difficulty of
obtaining the required operating licenses, make it difficult for foreign companies to invest. It takes seven days and
six procedures to establish a foreign-owned limited liability company (LLC) in Belarus (Minsk), and requires at least
two shareholders. Unlike a domestic enterprise, a foreign LLC needs minimum authorized capital of US$ 20,000
(50 percent of which must be paid within the first year). While foreign companies are not legally prohibited from
buying publicly or privately held land, in practice, they rarely do. The most common option for foreign companies
is leasing public or privately held land (up to 99 years with no restrictions on the amount of land). Procedures
involved in leasing land do not differ significantly for foreign-owned and domestic companies.
In Belarus, six Free Economic Zones (FEZ) and a High Technologies Park (HTP) have been established to foster
business investment and growth, backed by substantial tax and regulatory incentives including a five year
exemption from any profit tax.
Foreign direct investments flows: FDI inflows into Belarus have been unstable over time, experiencing slight
increases and growth but contributing only one percent of GDP on average in the 2000-2006 period. Since 2007,
a significant increase of FDI into the Belarusian economy has been observed (US$ 1.8 billion), which is five times
more than in 2006, owing to the Government’s first steps towards liberalizing the economy; e.g. abolishing the
“golden share rule”, and the promotion of investment opportunities. In 2008, FDI continued to increase, but
decreased in 2009 and 2010 by 39.2 per cent down from the pre-crisis year 2008. In 2011, FDI inflows reached
about US$ 4 billion, which was the highest annual amount ever recorded. A significant proportion of FDI inflows
have been associated with landmark privatization transactions, rather than diversified mass investment flows into
state controlled or private businesses. 12
Agriculture accounted US$ 24 million of FDI, which is only 0.3 percent of the total. In comparison, industry
accounts for 23 percent of FDI. FDI to the food sector generated about US$ 74.2 million in 2009 or 1.5 percent of
the total FDI and accounting for 2.9 percent of food-industry output.
Over time, Belarus has attracted more than 5,000 foreign investors from 77 countries in total with large
investments directed to the banking sector, transportation (including a gas pipeline), mobile communications,
commercial real estate development, food and beverages and retail. In 2010 a major share of foreign investments
came from Russia (72 percent), Austria (10 percent), the Netherlands (3.5 percent), Cyprus (3.5 percent) and the
United Kingdom (3.1 percent). Of all foreign investments, 53.2 percent went to the transport sector, 22.8 percent to
industry, and 14.6 percent to retail and catering.
In 2011 Danone – Unimilk (France – Russia) invested EUR 24 million in milk production development in Belarus.
Coca-Cola Hellenic is one of the first licensed foreign investors (since 1994) and has already invested US$ 120
million in Belarus, it shared approximately 25 percent of the rapidly-growing soft drinks market with a turnover of
EUR 60 million and employed 550 people in 2008. 13 Since 2000, Stotz Agro-Service GmbH has invested around US$
30 million in Belarus and employed 420 people.14 In 2007 Heineken purchased Belarus’s second biggest brewery,
Syabar and, in 2008, achieved a majority stake in the Rechitsapivo brewery, accounting for 15 percent of the
domestic market share on beer in 2009. Another big investor is Inko-Food (Poland) in meat processing.
Group. Wachington
12 KPMG (2011) Investments in Belarus
13 http://www.belarus.by/en/invest/key-sectors-for-investment/food-and-drink-case-studies
14 http://www.belarus.by/en/invest/key-sectors-for-investment/agriculture-case-studies
11
Chart 8. Foreign direct investments in Belarus over time
Source: WBDI; ITC (UNCTAD/WTO); accessed in October 2012
Food Safety, certification and quality control
Food safety background and Belarus’s membership: Belarus is a member of the Codex Alimentarius Commission
and of the International Organization of Standardization (ISO). Belarus is aiming to bring safety standards up to
international levels.
Issues surrounding the protection of human health are dealt with the Veterinary Law (1994), the Law on the
Sanitary and Epidemic Well-Being of the Population (1993, amended in 2011), and Act on Consumer Rights (2002,
amended 2012). Foodstuffs are also a subject to the Law on Technical Regulations and Standardization (2004) and
the Law on conformity assessment with the requirements of technical normative legal acts in the field of technical
regulation and standardization (2011), which are based on the provisions of the WTO Agreements and take
into account aspects of the systems of technical regulation and standardization of Russia, Ukraine, the
European Union and other countries.
In 2010-2011, in compliance with the Customs Union as well as with the EU requirements, four national Technical
Regulations (TRs) related to the agro-industry aimed at ensuring the safety of products at all stages of the supply
chain were developed in order to be enacted in the 2012 - 2013 period. In accordance with the national Laws and
CU Commission Decisions (on Harmonization of CU Legal Acts in the Field of Sanitary, Veterinary and Phytosanitary
Measures with International Standards, 2011; on Technical Regulation in the Customs Union, 2010) out of total 11
technical regulations that were planned for agro-industries six, which are related to the free movement of agroindustrial commodities among the CU members, were enacted in the 2011-2012 period. They were brought to
the normative regulatory legal acts and normative-technical documentation in compliance with Customs Union
requirements (Kazakhstan, Russia and Belarus).
Belarus is working on a new food safety system called “from farm to table”. Since 2010, projects of IFC (Increasing
the Competitiveness of Belarusian Food Processing Enterprises by Improving their Food Safety Practices, June
2010 – May 2013), have been helping Belarus to harmonize food safety regulations with international standards,
as well as the EC has been providing support for improvement of quality infrastructure in Belarus. Currently, the
legislation provides no incentives for companies to implement HACCP food safety management systems. The level
12
of governmental standards harmonization with international standards is 60 percent.15
Quality control and certification: The State Department of Veterinary and Food Supervision (established in 2010) and the
State Department on Bakery products (established in 2001, it coordinates and controls the activities of milling and bakery
enterprises in Belarus), both under the Ministry of Agriculture and Food, are responsible for veterinary, phytosanitary and
general food safety control in Belarus, both internally and at Belorussia’s external borders with countries of the Customs
Union. The Republican Centre of Hygiene, Epidemiology and Public Health under the Ministry of Public Health is responsible
for sanitary-epidemiological control in Belarus but is not located on the border. As of 1 July 2010, for products transiting
Russia or Kazakhstan and destined for Belarus, sanitary, veterinary and phytosanitary controls, including the verification of
valid certificates to enter Belarus, are performed at the respective external borders of the Customs Union. The certification
institution of Belarus is the State Committee for Standardization (Gosstandart), which was established in 2006 from three
institutions that were merged. Compliance certificates are required if goods are manufactured and sold in the territory of the
Republic of Belarus and the Customs Union, or in case of the customs processing of different volumes of supplies. A transfer
of goods across the customs border of the Customs Union and production and circulation within the customs territory of the
Customs Union can only be performed if there is a state registration certificate that acknowledges the safety of the goods in
the whole customs territory of the Customs Union.
Raw materials, as well as semi-finished and final products, including ingredients and equipment shall meet the
requirements stipulated in the relevant Sanitary Rules and Regulations (SanPiN), the National State Standards
(GOSTs) and the Hygienic Requirements for Foodstuff Safety and Nutrition. Belarus has two systems of standards:
the governmental standards bear the abbreviation “STB” and GOST, which are also applied as governmental
standards and used by the Euro-Asian Council for Standardization, Metrology and Certification functioning within
CIS. There are 57 state standards and five GOST for agriculture and foodstuffs, of which 63 percent had been
harmonized with international and European requirements by 2010. Fifty state standards should be designed
to ensure compliance with TRs on milk and dairy products and fats and oils, most of which will deal with testing
methods.
Despite the fact that the Belarusian food industry is characterized by strong export-orientation, only a small
number of the food processing companies have food safety management systems in place and are able to
adequately respond to food safety threats. 16 As of 2010, there are 208 enterprises with certified HACCP systems
and 13 with ISO 22000. The IFC and the EC are helping Belarus to implement international food safety standards
and requirements, including the HACCP food safety system and practical aspects surrounding its implementation.
Retail, domestic market and international trends
In recent years, the Belarusian retail market has developed rapidly from a relatively low base, although this
development slowed significantly in the 2009 crisis year. In 2010, retail turnover in Belarus was US$ 23.4 billion,
which is 17.1 percent higher in real terms than in 2009 and is almost the same in USD terms as pre-crisis in 2008.
Retail trade of food products generated RYB 28 trillion (US$ 5.6 billion), accounting for 51.1 percent of total retail
turnover. In 2007 there were 170 chain stores operating in Belarus.17
Belorussia’s domestic retail infrastructure is underdeveloped and fragmented across the country. A third of all
money spent at retailers goes to street markets and bazaars and there are few modern shopping centres. Minsk
has the lowest percentage of modern shopping areas per resident of any capital city in Central and Eastern Europe.
To tackle this, Belarus has adopted a policy of actively encouraging the construction of modern shopping centres.
15
http://gosstandart.gov.by/en-US/Sys-tech-1.php
16
IFC: Advisory services in Europe and Central Asia. IFC BELARUS FOOD SAFETY IMPROVEMENT PROJECT: www.ifc.org/belarus/fs
17 http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Belarus
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As a result, annual turnover through shopping malls, hypermarkets and convenience stores is forecast to grow
by 30-50 percent over the next decade.18 In 2011, the market is likely to be characterised by a focus on grocery
retailing and the expansion of modern retail formats to smaller cities and regional areas of Belarus.19
Local companies continue to dominate the retailing market. Currently, the only foreign chains operating within
Belarus are Russian retail chains. However, a combination of rising income, the relaxation of property
regulations and a low density of modern outlets has started to attract the interest of foreign players and
investors in Belarus’s retail sector.
Business environment and competitiveness
SME development: According to the OECD SME Policy Index assessment 201220, Belarus is one of the largest
economies in which the SME sector is underdeveloped. The government of Belarus is increasingly supportive of
private sector participation in the economy and has taken steps to develop a comprehensive SME support policy.
State support measures and the announcement of 2011 as the Year of Entrepreneurship represent a significant
shift of state policy towards the development of a more creative, innovative and entrepreneurial society. Belarus
has no specialized agencies to promote export-oriented firms. However, it has implemented an innovation
strategy which includes support services for SMEs, provided by a number of innovation and technology centres.
SME growth has been hampered by the slow pace of economic liberalization. SMEs account for 97.2 percent
of all active enterprises and for 28.1 percent of all employment; SMEs account for 20 percent of GDP. In 2011,
manufacturing SMEs accounted for 15.3 percent of all enterprises in Belarus, contributing 38.5 percent of output
in terms of goods and services produced. SMEs, involved in food and beverage manufacturing, accounted for 9.6
percent of all industrial SMEs, contributing 16.9 percent of industrial output.21
Business environment: According to the Doing Business Report22, Belarus was ranked 58 (out of 185 economies)
in 2012 (22 points up compared to 2010 and 48 points up compared to 2006). Trading across the borders is ranked
at 151, paying taxes at 129, protecting investors at 82, getting credit at 104, and starting a business at 9. Belarus is
ranked third out of the 50 most improved economies overall (by 23.5 percent) since 2005 as well as by 60 percent
in paying taxes, by 42 percent in resolving insolvency and by 23 percent and in making property registration less
costly.
Since 2004, Belarus has advanced in the regulatory practice for paying taxes by making paying taxes easier and
less costly for companies and by reducing the profit tax rate and encouraging the use of electronic filing and
payment systems. These changes have reduced the number of annual payments from 125 to 10, the time spent
on tax filing from 987 hours to 338 hours a year and the total tax rate from 137.5 percent of profit to 60.7 percent.
These efforts are paying off, and the total number of registered entities increased by 69 percent during the period
from 2005 to 2011. While Belarus is still among the countries that provides the least protection to investors, in
2012, investor protection was strengthened by introducing requirements for greater corporate disclosure to
the board of directors and public. Belarus enhanced its insolvency process by exempting the previously stateowned property of a privatized company from bankruptcy proceedings, requiring that immovable property not
sold at auction be offered to creditors for purchase and allowing immovable property to be sold without proof
of state registration in a bankruptcy auction if there are no funds to pay for the registration. However, Belarus
made starting a business more difficult by increasing the cost of business registration and the cost of obtaining a
company seal.
18 http://www.belarus.by/en/invest/key-sectors-for-investment/retail
19 KPMG (2011) Investments in Belarus
20 OECD (2012) Eastern Partner Countries 2012. Progress in the implementation of the small business act in Europe. SME Policy Index.
Supported by EC, ETF, EBRD, CEI.
21 NSC of Belarus (2012) STATISTICAL DATA BOOK on SME business in the Republic Belarus
22 WB/IFC (2012) Doing Business 2013: Smarter Regulations for Small and Medium-size Enterprises. 10th edition. Washington, USA
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Tax Relief: According to a PwC report23, in 2012, Belarus abolished several taxes, including turnover and sales taxes. It
simplified compliance with corporate income tax, value added tax and other taxes by reducing the frequency of filing and
payments and by facilitating electronic filing and payment. For example, the flat rate of CIT was reduced from 24 percent to 18
percent. The VAT rate remains at 20 percent. A 10 percent reduced rate applies to a limited range of basic food items, children’s
goods and medicines, as well as to agricultural crops and fishing products. The export of goods and the provision of certain
export-related services are subject to a zero percent rate VAT. As of 2012, Belarus is party to 65 double tax treaties, which are
generally based on the OECD Model Convention.
Research & development and innovations: In compliance with the Programme of Social and Economic Development
of Belarus for 2011-2015, states innovations and an increase in R&D investments are a precursor to the country’s growth. By
the end of 2015, Belarus has to reach the following indices: Innovative products to account for 20-21 percent of all industrial
products shipped and innovative and high-tech products to account for 12-14 percent of all exports.
According to the analysis of the National Science and Technology Portal of the Republic of Belarus, the R&D
system has undergone only a gradual change, with the relative shares of the three key sectors – higher education,
business enterprise and government – remaining largely unchanged in terms of employment and funding
(Government funding has remained roughly unchanged at around 0.35 percent of GDP) within the last decade.
The structure of the R&D system by discipline is strongly dominated by technical sciences. This predominant
position concerns most of the sources of funding. The machine-building sector accounts for 78 percent of all R&D
organizations in industry and companies’ own funds (61 percent) are a more important source of funding than
budgetary funds (36 percent). The legal basis of the Science, technology and innovation policy for 2011-2015 is
currently formed by 440 operating legal acts issued by Parliament, the President, the Council of Ministers and state
bodies dealing with these issues.24
In 2011, R&D expenditure was BYR 2.08 trillion (US$ 240 million), which was almost double the 2010 figure (45
percent of this was from budgetary funds). Food and beverage industries included 107 companies investing in
R&D or 17.5 percent of all industrial organizations spending on innovation in 2011; about 80 percent was spent on
technological innovations. Total R&D expenditure reached BYR2 63.4 billion (US$ 30 million) or 3.2 percent of total
manufacturing expenditure on R&D.25
Competitiveness: No information on Belarus is available in the Global Competitiveness Report 2012-2013.
23 PwC (2012) Paying Taxes 2012. The Global Picture, PriceWaterHouseCoopers supported by WB and IFC
24 http://scienceportal.org.by/en/science/
25 NSC of Belarus (2012) STATISTICAL DATA BOOK on SCIENCE AND INNOVATION ACTIVITY in the Republic Belarus
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Ranking Belarus
Doing Business Indicators Ranking in 2012
Agribusiness Indicators Values in 2012
Source: Author’s estimations and calculations; WB/IFC Doing Business Rankings online, accessed in October 2012
Source: EBRD database; UNCTAD; Author’s calculations of EECA average
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The designations employed and the presentation of material in this information product do not imply the expression of any opinion
whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status
of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of
specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been
endorsed or recommended by the Food and Agriculture Organization of the United Nations in preference to others of a similar
nature that are not mentioned. The views expressed in this publication are those of the author(s) and do not necessarily reflect the
views of the Food and Agriculture Organization of the United Nations.
For more information please contact:
Stjepan Tanic
Agribusiness and Enterprise Development Officer
FAO Regional Office for Europe and Central Asia
Email: [email protected]
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