Belarus's flax industry is set to become one of the best in the world in the coming years - A.Lukashenko

March 6, Minsk /BELTA/. Belarus' flax industry is set to become one of the best in the world in the coming years. This was stated by Head of State Alexander Lukashenko on March 5 during a working trip to the Vitebsk region, BELTA was informed by the press service of the Belarusian leader. The President was briefed on the socio-economic development of the region. Chairman of the Vitebsk Regional Executive Committee Alexander Kosinets reported to the Head of State that based on the results of 2009, the region met the target forecast parameters for commissioning housing, growth rates of paid services in physical culture and sports, production of vegetables, fruits and berries, sale of livestock and poultry, and egg production. In January 2010, only the targets for the production of consumer goods by organizations subordinate to local executive and administrative bodies were met. However, as the governor assured Alexander Lukashenko, by the end of the year the region will reach all planned indicators. This year, the region's leadership is making efforts to increase exports (if in 2008 enterprises of the Vitebsk region traded with 67 countries, today it is 112), sets tasks for the development of mechanical engineering, and works on methods for attracting foreign investment to the region. At the same time, a number of shortcomings were noted: for example, at some enterprises in the region, stocks of finished products many times exceed the average monthly production volume. However, the central theme during the visit to the Vitebsk region was the development of the Belarusian flax industry. In recent years, a clear trend of increasing demand for products made from natural fabrics has emerged in the global market. The demand in European and American markets for flax products is met by no more than 80%. As a consequence, over the past few years, Chinese manufacturers, even against the backdrop of the global economic crisis, have managed to increase their production of flax products by one and a half times. At the same time, in Belarus, this industry operates at a loss: 33 out of 49 flax mills have negative profitability. Over the past five years, the Head of State has given 68 instructions to the government on the development of the flax industry. The state has invested about Br560 billion in this sector, solely in the form of subsidies. To familiarize himself with the actual state of affairs in the industry today, Alexander Lukashenko visited the Orsha Flax Mill on March 5. This enterprise is the most important link in the entire production and marketing cycle – from raw material procurement to the sale of finished flax products. The flax mill includes five factories, and the production of flax fabrics involves about 100 technological processes. During 2007-2009, the enterprise underwent technical re-equipment of production and installation of new equipment. However, currently, the Orsha Flax Mill operates with negative profitability. In addition, the high level of inventory remains, with warehouses storing products worth Br66 billion. The reasons for the unprofitable operation of the enterprise, according to the general director of the flax mill, Vladimir Nesterenko, include the loss of key markets due to the global crisis, high wear and tear of production assets (56.6% for the flax mill as a whole), lack of a distribution network and qualified marketing specialists, and high competition from Southeast Asian countries. However, the main problem remains the low quality of flax fiber supplied to the mill. Alexander Lukashenko became fully acquainted with the entire production cycle, inspected product samples, assessed the state of the enterprise, and monitored the implementation of his previous instructions. The President expressed firm confidence that the flax industry and the production of flax products in Belarus can and must be competitive. "I was convinced that we could not produce malting barley at the proper level, and then we saw that it was quite possible. I was told that sugar beet would not grow in Belarus, and today it is a strategic reserve. I am sure that the same applies to flax," noted Alexander Lukashenko, emphasizing the unacceptability of a decrease in the quality of flax raw materials. In order to study the situation at the Orsha Flax Mill in detail and objectively, the President deviated from the route prepared for him by the enterprise's administration and went to those "corners" that the plant managers would have preferred to hide from the Head of State's view. The picture in these areas was far from as rosy as the speakers tried to portray. Employees here work on outdated equipment in unacceptable sanitary conditions. Alexander Lukashenko expressed extreme indignation at what he saw and set the task to bring the enterprise into full order by the end of the year, creating normal conditions for the health of the workers. The Head of State demanded that new equipment be installed at the Orsha enterprise as soon as possible, allowing for a simplified procurement procedure (the State Control Committee will monitor the efficiency of procurement). In addition, Alexander Lukashenko instructed to increase the state order for flax products. After familiarizing himself with the work of the flax mill, the President held a meeting on the development of the flax industry in Belarus. In general, the Head of State gave an unsatisfactory assessment to the government for how they fulfilled presidential instructions. Alexander Lukashenko sharply criticized the effectiveness of all elements of the industry: from raw material procurement to the marketing strategy for finished products. "Let's take the initial link of the cycle – the production of tow. We have 208 flax-sowing farms and 49 flax mills involved in this. It would seem that such a number is capable of fulfilling annual targets for the collection and production of flax fiber. However, over 5 years, we have not produced more than 40 thousand tons of fiber, with a plan of 60 thousand tons," the President noted. "Due to the low quality of raw materials, the share of the most valuable long fiber is only about 20%," he emphasized. "And this is because the technology of growing flax is violated everywhere. In addition, we do not have a mechanism to stimulate farms to give flax-suitable land to specialized detachments of enterprises." The Head of State noted the negligent attitude towards observing the optimal sowing and harvesting times for flax, and for retting and lifting the tow (it is often lifted not in September, but in November, when it significantly loses quality due to rain). The President instructed the Ministry of Agriculture and Food to take all measures to improve the quality of flax raw materials – to the level of France and Belgium. He also emphasized the need to strictly adhere to flax sowing rates – no more than 10 days. The Head of State expressed extreme dissatisfaction with the work of Belarusian flax mills. "I have the impression that you yourselves do not really know what needs to be done with the industry today," said Alexander Lukashenko, addressing the participants of the meeting: members of the government and heads of enterprises. "You have not conducted proper market research." The President drew attention to the huge stocks of finished products in warehouses. "This is tens of billions of rubles frozen for years in unsold fabrics," he exclaimed. "This happens because you produce uncompetitive products that do not satisfy consumers in terms of quality, size, or color." The re-equipment of the flax mill turned out to be fragmented and piecemeal: "Something was updated, something was patched up, but there is no effective technological policy." "There is no integrated approach to go from corner to corner and say exactly: we are demolishing this, we are modernizing that, etc. Nobody knows this. And this saddens me more than anything. I am primarily addressing the Prime Minister and the government," said Alexander Lukashenko. "I'm not even talking about the head of the concern. At first, you were so eager to tell me about some achievements... But the further we went through the mill, the quieter you became," noted the Head of State. "You probably brought me here to show how beautifully you work, but when we went through the back alleys, it was like we found ourselves in the Stone Age." The President again pointed to the unacceptable working conditions under which people work at the Orsha enterprise. "Your primary duty – this applies to the head of the concern and the head of the enterprise – is to immediately, within 2-3 months, create normal conditions for people where they have nothing to breathe – they breathe tow, garbage, junk, dust," emphasized the Head of State. According to him, "there can be no talk of any efficiency of the flax mill, I have not seen any reasonable consideration of the issue here." "They say that there is no effective management structure for the flax industry today. Perhaps there is, but you have not tried to use it properly," noted Alexander Lukashenko. "Well, let's create a holding company, a production association, or something else – but if you don't get moving, you won't succeed with a new management structure either." "Put the flax mills in order, grow normal tow – and we will sell normal products both on the domestic market and for export," said the Head of State. "If this new structure needs to be created – create it. But it should not be just a new haven for bureaucrats," he added. Alexander Lukashenko emphasized the unacceptability of curtailing the flax industry in Belarus. "Talk about the need to reduce flax sowing, that we need to produce not 60 thousand tons of flax fiber, but 40, that we need to destroy half of the flax mills – these are brainless, stupid conversations of incompetent people who do not hear what the President is saying," he stressed. "We are a fragment of a huge empire, which had a rationally thought-out division of labor. When we became a sovereign state, we were left with the production that, if we existed outside this empire, we would never have built. But it remained with us, and 15 years ago we agreed that we would not abandon anything, because schools, production facilities, and jobs for people were created," explained Alexander Lukashenko. "At the same time, we agreed to develop primarily those industries for which Belarus has raw materials. These are industries such as woodworking and agriculture," he recalled. The Head of State emphasized that Belarus has everything for the production of quality flax products: suitable climatic conditions, human resources, and technologies. "Flax is on the coat of arms of our country. And it's not about emotions. Tell me, can I agree with the government's proposal to destroy flax processing?" Alexander Lukashenko exclaimed indignantly. According to the President, the number one task today is to produce the optimal amount of flax fiber that can be processed and sold. "The flax industry of Belarus will exist! – the President summarized. – I am confident that we can create a flax industry that will be one of the best in the world." In turn, Prime Minister Sergei Sidorsky announced that the government plans to fully re-equip all flax-growing farms in Belarus with modern flax harvesting equipment within two years. Agreements have already been reached to produce such machines jointly with Belgium and France. The share of Belarusian localization in this production will be about 60%. Sergei Sidorsky also pointed to a serious problem with personnel. The Belarusian flax industry lacks specialists in basic and engineering professions, as well as qualified marketers. Regarding warehouse stocks, the head of government believes that by the end of 2010, it will be possible to completely clear the flax mill's warehouses. Gennady Vyrko, head of the Bellegprom concern, also assured the President that by the end of the year, all industry warehouse stocks will be brought to a normative level. As one of the options for clearing the warehouses of the Orsha Flax Mill, it was proposed to involve the governors of all regions in this process. Gennady Vyrko also informed about the development of programs for re-equipping production and moving to a modern process, and increasing flax fiber processing volumes. The meeting participants voiced a number of specific proposals for the development of the industry. For example, it was proposed to grant flax mills the status of agricultural enterprises – this would allow them to build housing for their employees using preferential loans. This is intended to retain valuable personnel in their jobs. Governors drew attention to the quality of flax seeds. In their opinion, imported varieties yield significantly higher harvests compared to domestic ones. In turn, Mikhail Myasnikovich, Chairman of the Presidium of the National Academy of Sciences, said that Belarus has a stock of excellent seeds of 1.5 thousand tons, which can be used in production. Chairman of the State Control Committee Zenon Lomate and Presidential Aide Sergei Tkachev emphasized the need to improve flax cultivation technologies in Belarus. As a vivid example, Sergei Tkachev demonstrated samples of flax fiber grown from seeds of the same variety in Belgium and Belarus. The comparison was clearly not in favor of domestic farmers. Vitebsk Governor Alexander Kosinets proposed introducing new, much stricter standards for flax raw materials this year. However, this proposal did not find support: according to Deputy Prime Minister Ivan Bambiza, the priority task today is to improve the agricultural culture of flax cultivation, and only then can we talk about raising the bar for raw material standards. During the meeting, a dispute arose about which manufacturers' equipment should be purchased for the industry today. In particular, Russian and Western European flax processing lines were discussed. The Head of State commented on this matter, stating that in each individual case, the issue should be resolved according to the situation – the opinion of the head of the specific enterprise should be prioritized. After hearing the opinions of the meeting participants, Alexander Lukashenko set the task to completely modernize the Orsha Flax Mill by 2012. By this time, the enterprise should process 30 thousand tons of flax fiber per year: 10 thousand tons of long fiber and 20 thousand tons of short fiber. "This should be a state-of-the-art production facility. Everything must be brought to an ideal condition. The workshops should be like a toy," emphasized the Head of State. He also drew attention to the need to solve the problem with personnel in the industry. "I assess the government's work in this direction as unsatisfactory only," the President concluded. "Everything was going haphazardly. And we don't have extra time!" Alexander Lukashenko emphasized: "The result is one – flax will exist in Belarus! The main thing is that we know how to do all this, and thousands of people are involved in it. Therefore, we have raw materials, we have personnel, we have equipment. Where we don't, we soon will, responsible parties