Natalia Bortnik on the situation in the meat and dairy market and the prospects for the industry's development in the Vitebsk region
Interim results of the decree's implementation were summarized at a recent meeting of the regional executive committee. In an interview with "Vitebskiye Vesti," the General Director of the concern, Natalia Bortnik, discussed what needs to be done to make the created agro-industrial associations work even more intensively, the overall situation in the meat and dairy products market, and the prospects for the industry's development in the Vitebsk region.
– What events in the meat and dairy products market in 2020 can be highlighted? How was the challenging year 2020 managed overall? We would also like to focus on the impact of the coronavirus pandemic. How are you adapting to working in the new conditions?
— Undoubtedly, one of the most significant events of 2020 for the enterprises of the Vitebsk region was the signing of Decree No. 70 and the creation of seven agro-industrial associations (APAs). This has undoubtedly had a positive impact on the activities of the concern's enterprises.
I would like to remind you that leading processing enterprises of the region are at the head of the agro-industrial associations. They include 142 economic entities, including 18 processing enterprises, 10 service enterprises, three trade enterprises, and 111 agricultural organizations. The concern coordinates the work of the APAs, provides methodological, advisory, and, in agreement with the regional executive committee, financial assistance from the special account.
The main challenge of the past year was operating under large-scale quarantine measures caused by the coronavirus pandemic. The adaptation period during the first wave, when enterprises were learning to work in new conditions, was the most difficult. Against the backdrop of quarantine restrictions, consumer demand decreased, including for certain types of food products, which enterprises had to respond to. For example, with the onset of the pandemic, the consumption model changed, meaning many people started cooking at home more. Taking this into account, our enterprises offered many new products – launched a new line of semi-finished products, expanded the range of yogurts, milk preserves, ice cream, cheeses, and other products. Vitebskhlebprom OJSC is expanding its production of frozen bread, and Vitebskmyasomolprom OJSC, through its branded retail chain Vitebskiye Produkty, has created an online store and launched delivery of ready-made meals.
Therefore, despite the difficulties, the organizations managed to adapt to working in challenging conditions and achieve a positive financial result. In 2020, the volume of industrial production (works, services), taking into account the cost of tolling raw materials, amounted to 1.2 billion rubles, or 108.9% compared to 2019. The revenue from sales of products exceeded 1.9 billion rubles (growth rate – 129%). Net profit of 610 million rubles was obtained. I would like to note that our milk processing enterprises rank second in the country in terms of product output per ton of processed raw materials and in terms of sales profitability ("plus" 8.9%).
The enterprises of the Agro-Industrial Complex expanded the geography of foreign supplies to 26 countries. A total of 194 million dollars worth of products were exported, which is 6.7% more than the same indicator in 2019. Increased activity in foreign markets was achieved through key product categories. For example, exports of milk powder increased 1.9 times, dry whey – 1.4 times, cheese – 1.2 times, milk preserves and beef semi-finished products – 1.1 times. The focus in sales policy is on expanding markets for high-margin products.
– Natalia Pavlovna, how is the creation of a common product sales system under the single brand "Vitebsk Eco-product" progressing? Do you plan to adapt the brand for promotion in foreign markets?
— A few years ago, the chairman of the regional executive committee, Nikolai Sherstnev, had the idea of uniting the products of the Vitebsk region under a single brand, so that our enterprises would be recognizable not only in Belarus but also in ближнем и дальнем зарубежье (near and far abroad). There were many options, but we settled on "Vitebsk Eco-product." By doing so, we want to inform consumers: this is a natural product, and by choosing it, one can be sure that they are acquiring a high-quality, tasty, and healthy product.
In 2020, we implemented a set of advertising activities aimed primarily at increasing the recognition of products from Vitebsk region enterprises. Undoubtedly, adapting the brand to foreign markets is an important stage in product promotion, as it allows us to conquer new markets taking into account the specifics of national culture. At the same time, the tools used are the same, but the specifics of the foreign market are higher competition and the need to consider many aspects of the country of presence. Nevertheless, our enterprises have managed to occupy a niche and, thanks to consistently high quality, gain the trust of foreign buyers. More than 94% of products are supplied to the EAEU and CIS countries – these are markets where our trademark and its concept are close and understandable to the consumer.
– What is being done and what still needs to be done to make the concern's enterprises feel more confident in the domestic market? What are the plans for developing foreign markets, particularly far abroad?
— To feel more confident in the domestic market, the concern's enterprises are constantly developing their own sales network, which currently comprises 320 retail outlets, about 60% of which are stationary stores. Plans include modernizing existing and opening new outlets, including in rural areas, and increasing the number of mobile stores for mobile trade. We will increase the number of trade marketing events (tastings, promotions) at retail outlets across the country and enhance advertising activities, including online.
At the end of 2020, Rosselkhoznadzor lifted restrictions on the supply of products from our enterprises, so plans also include increasing the volume of product supplies to the Russian market and expanding the product range.
Undoubtedly, our main foreign economic partners remain organizations from Russia and the EAEU member states. At the same time, we are exploring opportunities to increase supplies to the markets of the Persian Gulf countries and the Asian region as a whole, with a special focus on cooperation with China. I would like to note that in 2020, direct exports of our enterprises to the Chinese market reached $6 million, more than doubling compared to 2019. An important part of the marketing strategy of Belarusian exporters will be to ensure the effective functioning of the National Pavilion at the G-Hub exhibition complex in Shanghai, which will contribute to increasing the recognition of our products and boosting their exports to China.
— In 2021, the EAEU countries plan to introduce labeling of dairy products with identification means. What is the readiness of the concern's enterprises for the upcoming changes? How will this affect the export performance of producers from the Vitebsk region as a whole?
— According to our Russian partners, more than 6 million units of counterfeit products have been identified since 2018. Tracking their movement and sale without a special system is difficult. To minimize counterfeiting and hold distributors of such products accountable, Russia has created the national system for marking and tracing goods from various categories, "Chestny ZNAK". Belarus has also established a regulatory framework for creating a similar system. In addition, measures are envisaged to develop electronic document flow, prevent "grey" import of goods, and increase the transparency of goods movement both within and outside the country.
Preparatory work for marking has been underway at all milk processing enterprises of the concern since October 2020. A comparison has been made between the list of dairy products manufactured and the list and planned timelines for the introduction of marking. In parallel, possible methods for applying identification means are being worked out, both with the help of special software and by printing. Electronic cards for the product range have been updated in the EPASS.by Electronic Goods Passport Bank. All milk processing enterprises of the concern are registered in the GIS "Electronic Mark" system, and the necessary equipment is being purchased and software is being installed for the implementation of the first stage of marking.
— What are the concern's goals for the current five-year period, including investments, processing volumes, exports, and innovation implementation? What are the main investment projects planned for implementation?
— The five-year program, developed by the concern in conjunction with the regional agricultural committee and enterprises, primarily envisages the development of raw material zones to provide producers with high-quality, inexpensive raw materials. The main investment projects in rural areas will be the construction of seven dairy farms, each with 2,000 head of dairy herd, and two pig breeding complexes, each with 5,000 head of main sows. Approximately 900 million rubles are planned to be allocated for these purposes.
A dairy farm is already under construction near the village of Churilovo, Orsha district (90% completion), as well as two pig farming complexes in Orsha (near the village of Goryany) and Liozno (near the settlement of Pushki) districts. In addition, this year the reconstruction and modernization of 167 agricultural facilities will begin under a simplified financing and commissioning scheme approved by the head of state.
In the processing industry, a number of innovative projects will be implemented to increase the capacity of cheese and canning production with an investment volume of about 280 million rubles. All this will allow enterprises to reach a qualitatively new level. And the strategic goal of the transformations remains unchanged – the development of the region's economy and the improvement of the well-being of people living and working in the Vitebsk region.