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Trends of Agro-industry
• Economic Development
BELARUS
Belarus is a landlocked and upper middle income country with GNI per capita as of US$ 5,560 in 2009. Total number of
population is 9.7 million inhabitants, of which 26 percent live in rural area, and the annual population growth is -0.18
percent. Belarus enjoyed strong economic performance from 2001 to 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 economy was, and remains
authoritarian, which maintains state planning and control in all sectors of the economy. The agricultural sector
contributed with 10 percent of value added to GDP employing around 10 percent of the total labour force in 2009 and
growing in productivity and production with an annual rate ranging between 1.0 and 13.2 percent since 2000. Among
other CIS countries Belarus has the smallest share of individual farmers and the highest share of state owned
enterprises. A 2009 WB Report on the agriculture sector noted that the international competitiveness of the farm
sector remains low. Manufacturing industry is a large part of the economy accounting about 30 percent of GDP with
an average annual growth by 11% between 2001 and 2008 with a negative growth as of -1.4% in 2009.
• Food and Beverages Demand
A share of total household expenditure has declined to 42 percent in 2009 with a tendency to further decrease
compared to 60 percent on 90th. The highest share in food consumption refers to bakery & macaroni (12.5%), fruits
(6.5%), meat and meat products (6.2%) but fish and seafood consumption is still low sharing only 2.4% that even
higher than for dairy products making 1.8%. Share of expenditures on alcoholic beverages has decreased from 3.5%
in90th to 2.2% in 2009.
Food and Agriculture Organization of the United Nations
Regional Office for Europe and Central Asia
Agro-industry Outlook
The food, beverages and tobacco industry forms a large part of the economy, generating RYB22.8 trillion (US$ 4.55 bln), that
represents about 18% of industrial output or 70% of manufacturing output increased by 189% to the 2000 level and making
7.8 percent of annual growth in average between 2004 and 2009. It employed 151.8 thousand people (or 16.1 percent of
manufacturing labor force) in 2009, working at 872 enterprises (or about 7 percent of total number of manufacturing
enterprises). 81% of output made by private enterprises compared with 64% in 2000. Important subsectors include the meat
and dairy processing that increased the output more than twice to the 2000 level. Another fast growing sector is fish and fish
processing that has increased by above 500 percent since the year 2000. There are the state quotas on manufacturing of
tobacco products and of alcoholic beverages and non-food alcoholic products. Investments in fixed capital accounted 13.6
percent of total investments decreased by 28% to the 2006 level. R&D represents 3.7 percent of total R&D expenditures
where 90% goes for technological innovation, 8% for marketing and 2% for organizational issues, 40% of which comes from
their own funds, sharing 11.7% of total number of research entities in 2010. Domestic retail market is underdeveloped and
fragmented across the country. Retail trade of food products generated RYB 28 trillion (US$ 5.6 bln) in 2009 sharing 51.1
percent of the total retail turnover. Local companies continued to dominate the retailing market.
Chart 1: Food and Beverages Industry Performance
Chart 2: Products Output Share in 2008
2011
Key Economic Indicators
2009
Food, Beverages & Tobacco
GDP, US$ billion
49.04
Output, % of manufacturing
2009
69.7
Manufacturing VA, % of GDP
30.0
Value Added, % of manufacturing
n/a
Agriculture VA, % of GDP
10.0
Enterprises, % of manufacturing
6.8
Employment in Agric., % of total
9.7
Employment, % of manufacturing
16.1
Gross Fixed Capital F., % of GDP
36.9
Investments, % of industry
13.6
FDI net inflows, % of GDP
3.84
FDI inflows, % of total FDI inflow
1.5
R&D, % of GDP
0.96
R&D, % of total R&D
3.7
Merchandise Trade, % of GDP
101.7
Net Trade, US$ billion
0.25
Merchandise Exports, US$ billion
21.3
Exports, %of merchandise exp
7.7
Merchandise Imports, US$ billion
28.6
Imports, % of merchandise imp
4.9
Global Merchandise Exports rank
63
Exports annual growth, %
-5.6
Agro-industry National Policy Framework
National Development Programme. The key documents setting out the Government policies for
the country, agriculture, rural and agro-industry development include: (i) the National Strategy for
Sustainable Development to 2020 (adopted in 2004) and the Programme of Social Economic
Development for 2011– 2015; (ii) the State Programme for Strengthening Agriculture Economy and
Rural Development 2011–2015; (iii) the State Investments Programme; (iv) the Programme of
Poultry Development for 2011-2015; (v) the Strategy of Information Society Development up to 2015.
With the UN organisations Belarus has elaborated the first joint strategy – UNDAF for the Republic of
Belarus for 2011–2015. Belarus has no ENP Action Plan with the EU but the European Neighbourhood
Policy covers Belarus with an adopted National Indicative Programme.
The Government has the Agricultural Producer Support Fund that provides grants to governmentselected enterprises for investments in accordance with the annually adopted plan by the
Government of the direct State investments as well as it covers 95% of an insurance premium to the
agricultural producers, which, since 2008, have a mandatory insurance for crops and livestock with
the State Agency. Besides, the share of agricultural spending in the national budget is high about 8
percent, including subsidized credits and cross-subsidizing of inputs and applied tax concessions for
agriculture as a support tool.
Belarus has a large percentage of government or state ownership in firms with mixed ownership in
agriculture and in general. As a step of progress the Government established the Agency for
Investment and Privatisation in 2010 that is under the Ministry of Economy since 2011. The
Government has approved two plans: on privatization of objects owned by the Republic of Belarus
and on the transformation of the republican unitary enterprises into joint stock companies
during 2011–2013 where 245 and 134 entities are listed, including agro-industrial enterprises.
Legal Framework. Belarus has implemented a number of development programmes during 2006-2010 and
adopted a number of laws to encourage agricultural and agro-industry growth, rural development and trade
facilitation, those Development Programmes are: State rural revival, Dairy and meat processing, Sanitarian and
epidemiological situation of population, Fruit&vegetable processing, Sugar processing, Poultry industry, Dried milk
products from whey, Equipment and machinery production for agro-industry, Import substitution and Brewery
industry.
Tr ad e L i be r al i zat i o n , W TO A c c e ssi o n an d Tr ad e Per fo r m anc e
Foreign Direct Investments
Regulation. The investments regime has been
Trade Regulation. In Nov 2009 Belarus, Kazakhstan and Russia signed documents establishing a
Customs Union (CU) with incorporates a common external tariff structure for the three countries,
came into force in July 2010 and the Custom Code coming into force in July 2011. Internal border
controls are expected to be eliminated by the end of 2011 and the tariff rate have to be brought in
line with the CET by 2015With the Law as of Jun 2011 Belarus has ratified the Agreement on
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). Belarus is seeking WTO membership and taking steps to further boost
exports, especially with the markets of the non-CIS countries. In compliance with the WTO
Agreement, Belarus set up a National Information Center on Technical Barriers in Trade, Sanitary
and Phytosanitary Measures. Excise applies to excisable goods, such as original alcohol drinks, wines,
soft drinks, ethyl alcohol from food raw material and other alcoholic production. Belarus is more
integrated in international trade than most countries in EECA.
WTO accession. Belarus has been negotiating accession to WTO for 18 years since Sep 1993, and it has gone
through various steps of the WTO accession procedure (application, Working Party creation, memorandum of
external trade, no export subsidies, 7 meetings, and agreements). The current status of Belarus in WTO is an
observer. The last meeting with the WTO Working Party (in May 2005) considered that more progress in negations
is needed. Three leaders of the Custom Union have indicated that negotiations with WTO will take place in parallel,
but with a separate accession.
Trade Performance. Exports of merchandise products accounted for just over 8 percent of Belarusian GDP, and
imports made up around 38 percent of GDP with main export commodities as ores, precious stones and steel
products, which provide around 65 percent of total export revenue in 2009. In 2009 a trade balance of F&B&T was
US$0.25bln with 4.9% and 7.7% of merchandise imports and exports, respectively. After experiencing a negative
growth of both exports and imports in 2009 the situation has improve already in 2010 showing annual exports
growth of 46% and imports of 25%. Belarus overall continues to be a net importer of agri-food products depending
on Russia as an exports partner. The main exporting products are: dried skimmed milk, casein, butter, canned milk,
meat preparations; and the main importing products are: animal fodder, sugar & confectionery and beverages.
Top destinations for F&B products: Russia (74%), Ukraine (6%) and Kazakhstan (5%) in 2009;
Top origins for F&B products: Russia (33%), Ukraine (16%), Argentine (7%) and Brazil (6%) in 2009
Chart 3: Food and Beverages Trade Performance over time
facilitated last years by adopting a number of
laws and decrees as follows: the Investment
Code with amendments (2009) Presidential
Decree on Creating Additional Conditions for
Investment Activities and on Some Measures to
Stimulate Innovation Activities (2009), the Law
on Measures to Protect Economic Interests at
Foreign Trade of Goods (2004), the Law on Free
Economic Zones (2008); Presidential Decree
Promotion of Production and Realization of
Goods (Works, Services) (2008); Presidential
Decree on some issues of regulation of
entrepreneurial activity in rural areas (2007).
Belarus opened up banking, retail and
telecommunications
to
partial
foreign
participation and it is seeking to attract buyers
for their big State-owned industrial enterprises.
FDI inflows. In 2009 Belarusian FDI inflows
accounted 3.8 percent of GDP grown in 4 times
since 2006 and continued to increase by 15% in
2010. Agriculture accounted US$24 mln of FDI
that is only 0.3% of total amount compared to
23% of FDI in industry. FDI to food sector
generated about US$74.2 million in 2009 or
1.5% of the total FDI making 2.9% of foodindustry output.
Main investor is Russia (72%) and other
investors are Austria (10%), Cyprus (3%), the
Netherlands (3%) and U.K. (3%). In 2008 there
were 71 foreign affiliates located in Belarus.
Major TNTs are: Inko-Food (Poland) in meat
processing, Coca-Cola, Heniken and Carlsberg.
Chart 4: Share of Exported Product Groups of
F&B in total exports, in 2009
F o od S afe t y , C e r t i fi c at i o n & Qu al i t y C on t ro l
Food Safety regulation. Belarus is a member of the Codex Alimentarius
Commission and of the International Organisation of Standardization
(ISO). Belarus is aiming to bring safety standards to international level.
Foodstuff products are a subject to the Law on “Technical Regulations
Norms and Standardisation (2004), the Law On the Assessment of
Conformity to Technical Regulations in the Field of Technical Norms and
Standards the Decision of the Council of Ministers on Some Measures to
Inform the Consumers on Food Stuff and Food Products (2005) and the
Resolution of the Council of Ministers State Programme on Ensuring
Sanitary and Epidemiological Well-Being of the Population of Belarus
(2006). In accordance with the Custom Union as well as with the EU
requirements Belarus will elaborate 7 Technical Regulations (TRs) related
to agro-industry and ensuring a safety of products at all stages of supply
chain. In 2010 two TRs have been adopted: on milk, dairy products, and
pre-packed foods. Belarus is working on a new food safety system called
from farm to table. Since 2010 projects of IFC is helping Belarus to
harmonize food safety regulations with international standards and the EC
is providing support to quality infrastructure in Belarus – food safety.
Currently the legislation provides no incentives for companies to
implement HACCP food safety management systems. As of 2010 there are
208 enterprises with HACCP system certified and 13 - with ISO 22000.
Certification. Belarus has two systems of standards: the governmental standards
of 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 5 GOST for
agriculture and foodstuffs, out of which 63% of state standards have been
harmonized with international and European requirements by 2010. Fifty state
standards will be designed to ensure the compliance with TRs on milk and dairy
products and fats and oils, most of which will deal with testing methods.
Business Environment and Competitiveness
Business Environment. According to the Doing Business Report 2011 Belarus is
considered as one of the top 10 economies that made the largest strides in making
their regulatory environment more favorable to business by implementing more
than a dozen reforms over the 5 years, and being ranked (out of 183 economies)
as 68 in 2011 (down by 4 points to 2010). Trading across the borders is ranked as
of 128, paying taxes – 183, protecting investors – 109, getting credit – 89 (up 20),
and starting business - 7.
Taxation Relieving. Belarus is in the list of the last ten countries of the world
where paying taxes is most difficult. In spite this fact the country has adopted a
new Tax Code coming into force from 2010 that eased paying taxes by lowering
the turnover tax, social security contributions and the base for property taxes,
and by simplifying tax system for small businesses and introducing an online
payment system. However, the VAT rate was increased from 18% to 20% on Jan
2010 with an exception of 10% reduced rate that applies to a limited range of
basic food items, children’s goods, medicines, etc. Belarus is also a party to 62
double tax treaties that are generally based on the OECD Model Convention. Mojor
agricultural products are subject to 10% VAT rate. The 10% VAT rate is applied to
food products for children in accordance with the lists approved by the
President. Exports of goods and the provision of certain export-related services
are subject to zero-rate VAT.
Competitiveness. No information on Belarus is available in the Global
Competitiveness Report 2010-2011.
Agr o- indu str y Br ief