Nikolay Sherstnev: "To compete successfully, we need to develop high-tech business"

The Vitebsk region is actively developing foreign economic activity, expanding not only cultural and humanitarian ties, but also product markets. In cooperation with foreign countries, the region places a special emphasis on creating a production base. The development of the region is impossible without the creation of new enterprises and high-tech industries. What areas by sectors are given special emphasis, what is considered most promising, and what is the expected effect of the upcoming transformations in the agricultural production of the northern region of Belarus? This and more in an interview with the correspondent of BELTA with the Chairman of the Vitebsk Regional Executive Committee, Nikolai Sherstnev.

"Nikolai Nikolaevich, the creation of new enterprises and productions, including private ones, is one of the main tasks. How is this work progressing in the region?

"In 2015, 171 new enterprises and productions were opened in the cities and districts of the region, and 1,771 jobs were created. PE "PlissaProm" in Vitebsk began to produce metal building products, PE "Vishnevy Dvor Invest" in the Vitebsk region -

reinforced concrete structures, LLC "Akotherm Flax" - thermal insulation materials, UP "Glubokskaya Rapeseed Company" - rapeseed oil. And these are just a few examples of how success can be achieved through the development of small and medium-sized businesses. The region has 33 thousand small and medium-sized enterprises, including 9 thousand legal entities and over 23.5 thousand individual entrepreneurs. The entrepreneurial sector employs about 25% of the total workforce in the region's economy. A quarter are engaged in trade, a fifth in industry, the same amount in agriculture, 13% in construction, and 8% provide services in transport and communications. For us, investment proposals envisaging deep processing and the production of high value-added products are relevant. These are projects in the processing of meat, milk, rapeseed, flax, peat, and wood, and the production of a wide range of building materials. That is, we should produce what is based on local raw materials. The task is to use the raw material base as effectively as possible. And to achieve a more significant economic effect than our competitors. We have all the opportunities for this, primarily cost reduction. After all, the cost of labor and energy is cheaper here than in Europe. To compete, businesses must be high-tech.

- What are the results of the first months of 2016, how much investment resources have been received in the region, what are the forecasts?

- In January 2016 alone, Br973.9 billion of investment in fixed capital was attracted. The region continues to implement projects for the construction of the Vitebsk and Polotsk HPPs, a workshop for the production of large-format ceramic wall products of OJSC "Keramika", the construction and modernization of a workshop for the production of dry whey and dry milk products of OJSC "Gluboksky Dairy and Canning Plant", the modernization of production at OJSC "Polotsk KHP", OJSC "Naftan". LLC "Management company of the holding "Belarusian Leather and Footwear Company "Marko" is implementing the investment project "Creation of production capacities for the production of up to 5 million pairs of shoes per year and reconstruction of the fur factory, taking into account the creation of the holding "Belarusian Leather and Footwear Company "Marko" for 2013-2024". With the involvement of foreign investment, the implementation of large projects continues this year - the construction of a plant for the production of sheet metal and tinplate in the Miory district (investments from Austria, Germany); a dairy farm in the Gorodok district (Russian Federation); a plant for the production of commercial equipment by LLC "Modern-Expo" in Vitebsk (investments from Poland); modernization of the production base of OJSC "Orsha Aircraft Repair Plant" (Ukraine); development of production of thermistors and capacitors at OJSC "VZR D "Monolit" (Russian Federation) and a number of other projects.

- What are the most significant proposals for Chinese investment?

- In negotiations with Chinese investors, we put forward proposals for the development of milk production, feed, and deep processing of dairy products. Naturally, each investor has their own requirements, just as Belarusian partners do. The solution lies in finding compromise options, taking into account the experience of each party. We need to continue working on the construction of a cascade of power plants on the Western Dvina River, develop the petrochemical complex, create a raw material zone for the production of leather goods and footwear, implement waste-free technologies for wood processing, freezing and production of ready-made vegetable mixes, potatoes, mushrooms, berries, and medicinal preparations. Not as a raw semi-finished product, but as something ready for sale in retail chains, something that is in demand by the consumer. Moreover, there is no time to waste, business is getting more expensive every day. We must preserve the brand of an environmentally friendly Belarusian product and promote it skillfully.

- Some enterprises are experiencing problems. There are issues with city-forming enterprises, such as the Obolsky Ceramic Plant in the Shumilinsky district, and the Invest plastics plant of OJSC "Invet" in Bigosovo, Verkhnedvinsky district. How do you see a way out of the current situation?

The Obil ceramic plant finds it difficult to compete with other enterprises producing similar products due to the significant energy component in the cost of its output. It is necessary to reduce production costs. To this end, the plant is completing the implementation of an innovative project that will increase production volume and reduce the consumption of fuel and energy resources. The plant modernization is being carried out using funds from the innovation fund of the Vitebsk Regional Executive Committee. The installation and debugging of equipment are underway at the enterprise by representatives of the Greek company Sabo, whose main activity is the turnkey construction of brick and tile plants. The modernized workshop will produce bricks using a new plastic molding technology (previously, bricks were produced by semi-dry pressing). The modernization will reduce fuel and energy consumption by approximately 20%, increase labor productivity, and significantly improve the quality of bricks. This will increase production profitability and make the products more competitive. Production volumes will remain at the level of 30 million bricks per year. OJSC "Invet" is one of the largest industrial enterprises in the Verkhnedvinsk district and focuses on the production of technical products from polymer materials. Since 2004, the enterprise has undergone large-scale modernization using credit resources, with investments exceeding Br45 billion, and new equipment has been acquired for production using the rotational molding method. Plastic processing capacities have increased 7-fold. "Invet" is experiencing difficulties with capacity utilization due to a decrease in orders from domestic consumers. The enterprise

it is necessary to continue mastering new types of products, which have no analogues in Belarus, and to enter new markets. Last year, "Invets" already began supplying products to the Voronezh, Smolensk, and Kaluga regions, and increased supplies to Kazakhstan.

- In modern economic conditions, the role of a leader increases. What qualities should an enterprise director, a district executive committee chairman possess to meet the demands of the time?

- Only competent managers who think strategically are capable of uniting a team to accomplish set tasks. Much depends on their professionalism, ability to react promptly to a rapidly changing situation, and make adequate management decisions. It is precisely this crucial component in a leader's work that the head of our state constantly draws attention to. And there are many such truly talented, educated leaders in the Vitebsk region who know how to work with people, possess analytical thinking, and principledness in defending the interests of the entire nation. The leadership of the regions of the oblast represents a fusion of experience and youth. More than 40% of the chairmen of city and district executive committees, heads of local administrations are aged 41 to 50 years, and 28% are over 51 years old. Constantly

Work is underway to find new, energetic, and idea-driven young managerial staff. Of the regional leaders, 32% are under 40 years of age. The majority of them have higher agricultural and economic education. Leaders must possess knowledge of progressive management methods and skills in operating in modern market conditions.

- Another pressing issue that always concerns people is housing. What is the dynamics of housing construction in recent years, what is the target for the region for 2016 and for the next five-year period? What are the solutions to the problems of providing housing for large and low-income families?

- The volume of housing construction directly depends on its financing. Over the past five years, the region has commissioned over 2.5 million square meters of total housing area. In 2015, the target set by the government was met by the region. This year, the regional executive committee has set a target for cities and districts to build 330 thousand square meters of housing. It is planned to maintain housing construction volumes at the 2015 level, with preferential lending being reduced, provided that alternative forms of state support are introduced. In rural areas, the needs of large and low-income families wishing to build housing with state assistance are generally met. It is somewhat more difficult to achieve this in cities.

of regional subordination Orsha, Polotsk, Novopolotsk and Vitebsk due to a large queue. In the regional center, for example, families with four or more children are directed to housing construction with preferential loan processing.

- What significant social facilities will be built in the region this year? What is planned to be commissioned?

- In February, the №1 treatment building of the Vitebsk Regional Infectious Diseases Hospital was commissioned. The next is the housewarming in the therapeutic building of the children's regional hospital. The regional investment program prioritizes socially significant facilities. These include kindergartens in Orsha and Glubokoye, a supported living center for the elderly in the agro-town of Bychiha, Gorodok district, and other facilities.

- Throughout last year, you paid a lot of attention to the region's agriculture, and personally participated

in working meetings and seminars on the development of the agro-industrial complex. How do you assess the results of this work?

- Unfortunately, not everything worked out, but at the same time, progress is evident in many areas. We managed to increase the average milk yield per cow - the increase over the year was 315 kg. Gross milk production increased by 4.1 thousand tons and amounted to 745.6 thousand tons, the sale of milk to processing enterprises increased by 6.2 thousand tons. Milk commercialization has improved.

Farmers harvested 1 million 440 thousand tons of grain in all categories of farms. This is the best result in the last 40 years. For the first time, the average yield in the Vitebsk region reached 36.6 centners per hectare. We have the highest potato yield - 262 centners per hectare. The gross harvest of flax fiber is 10 thousand 324 tons, the largest in the republic.

Feeding schemes for young cattle have been revised in the farms, work has been carried out to ensure and improve housing conditions, as a result of which animal survival has improved, and more calves have been obtained. Their number compared to 2014 increased by 3.1 thousand and amounted to 199.6 thousand heads. Feeding rations are compiled based on the results of biochemical blood tests and feed analysis.

- One of your initiatives in agriculture is the creation of integrated structures (agroholdings). What stage is this work at?

- Agricultural producers, grain processing enterprises, dairy and meat processing plants with their own retail chains are united in cooperative and integration structures. Thus, we expect to reduce the cost at each stage of agricultural production and processing. There are already initial results. Thanks to the interaction of all participants, there has been an increase in agricultural production volumes, and their share in the total value of the region's gross output has also increased. In the future, these structures will produce more than 50% of the region's gross output. The main problem in forming cooperative and integration structures is the high amount of debt obligations. A draft regulatory legal document is being prepared to reduce the debt burden on parent companies. Several algorithms have been developed for chronically insolvent farms. There are options for joining investor enterprises, changing specialization, and initiating bankruptcy proceedings. We will work with each case individually.

- How are the plans for the development of beef cattle breeding being implemented in the region, and are there any plans to purchase beef cattle breeds in the near future?

- Beef cattle breeding is carried out by 49 agricultural organizations in the region, with separate farms established in 30 of them. Breeding herds have been created in four agricultural organizations: OJSC "Lipovtsy" of Vitebsk district, the "Golubichi" branch of OJSC "Gluboksky Meat Processor" of Gluboksky district, OJSC "Sharkovshchinsky Agrotechservice" of Sharkovshchinsky district, and the state enterprise "AgroBerenevka" of Dokshitsky district. The farms are certified as breeding farms and house 880 Hereford cows and their crossbreeds. Last summer, a list of agricultural organizations for breeding Hereford cattle was identified in the region, along with the volumes of young stock transfer for further rearing in specialized farms. The construction of open-air fattening grounds for beef cattle is planned. To improve the meat qualities of young stock and increase the number of purebred breeding stock, it is planned to purchase up to 5 thousand Aberdeen Angus heifers from Russia.

- The Vitebsk region was severely affected by African swine fever. What is the current situation with herd recovery?

- The losses were significant. However, serious recovery work has been carried out. As of February 1, 2016, the region has 300,640 pigs, and their number has increased by more than 97,000 over the year. 9 pig breeding complexes are fully staffed, and targeted work is underway to restore the herds at the remaining ones.

- The region has already started spring fieldwork. How has the structure of sown areas changed this season? How will it transform in the future?

- The Vitebsk region should significantly change the structure

of sown areas, aiming to maximize the yield of fodder protein. The main goal is high-quality feed for livestock. Farms should achieve maximum milk yield and weight gain while reducing costs. The field feeds the farm, and we earn money from the sale of meat and milk. The fodder base must be formed to maximize the improvement of production efficiency. The region is changing the structure of sown areas, increasing the cultivation of legumes, rapeseed, and clover. The grain group has been maintained at almost last year's level, with an increase of 25 thousand hectares for legumes. We are increasing the areas for rapeseed, including spring rapeseed. The region's rapeseed acreage will expand by 30 thousand hectares, covering an area of 106 thousand hectares. The issue of providing seeds and crop protection agents is being addressed by the Vitebsk Oil Extraction Plant. This enterprise, with the support of the concern "Belgospishcheprom," has also begun directly cultivating rapeseed in the fields of Orsha, Senno, and Tolochin districts, with a total area of 3.2 thousand hectares. The area of perennial grasses will be increased by 30 thousand hectares. Potato and vegetable fields are planned to be concentrated in farms that have storage facilities, equipment, and appropriate technologies. The specifics of the work of agrarians in the northern region of the country are determined by natural and climatic conditions, with shortened periods for spring and autumn work. Compared to other regions of Belarus, we have the most challenging conditions. It is important for us to organize work on our lands in such a way as to achieve the maximum possible level of productivity from each hectare of arable land and agricultural land.

Alena TIKHONOVA. BELTA.