Leu Marholin: Belarusians Should Be Ready For Price Growth

The system is absolutely unsustainable.

Before avoiding public meetings provoked fresh speculations about possible insult, Lukashenka managed to hold other meeting on problems in the agricultural sphere.

It resulted in draft decree on prolongation of terms to repay debts to banks by agrobusiness. However, the loan book of this sector is already labeled as "high maintenance". Prices for food products are higher than in neighboring countries.

What are consequences of other state's intererence in agricultrural issues? Economist Leu Marholin answers questions of Charter97.org:

- If we enumerate all cases of 25 years when agricultural enterprises had their debts either prolonged or forgiven, it would be a great novel.

It's high time to officially recognize that the current state of agricultural enterprises is completely unsustainable. There is no owner on the Belarusian land, as it was like during the Soviet times.

It will become other unfavorable event for banks to prolong debts. However, debts of collective farms do not take the first place in the loan book. In addition, Agroprombank is not the bank subject to repayment of debts. The bank has a directed budget support to prolong and write off these loans.

- That is, the money will be taken from the budget and taxes of citizens.

- Yes. We got used to the fact that collective farms turned from economic agents into organizations for "social protection" of rural population. They ensure subsistence level for rural population in return of complete control over them.

Now collective farms control everything in life of rurals, not only salaries. If a rural loses the credit of the state, he loses everything. Шт fact, rurals are serfs of the 21st century. It can be observed during the "elections": the number of voters there often exceeds 100%, and there are lots of people in the list who left the area or just died.

- What should consumers do, if, as you say, banks comply with the new agrarian decree of the authorities? Belarusians pay for products more than our neighbors...

- These are two interrelated processes: ineffective industry is not able to produce competitive products. The cost of our food products is several time more than of our neighbors. After all, sums invested in loss-making enterprises during the season exceed the total revenue.

The only way to reduce prices for food products is to fill in collective farms with more money. But the state has no opportunity to do it, and it will cause the price growth for food products.

The state can only watch our neighbors to overcome us in cheap food products and use non-economic methods to refrain Belarusians from buying foreign goods.

We remember the situation with the Russian sugar and milk, when they become cheaper than Belarusian. Belarus will simply not allow cheap goods from Ukraine, Poland and Lithuania to the Belarusian market.

- That is, citizens lose their money to invest it in a loss-making agricultural sphere, and then prices for uncompetitive products grow.

- I would say that the price growth for products will be stipulated by economic methods. After all, it's somehow needed to compensate budget funds invested. The market will use non-economic methods to defend agricultural enterprises from collapse. And it will also contribute to price growth for products.

- Will an especially hot summer cause the seasonal price growth?

- I don't think that hot weather can be a crucial factor. It's not a divisive factor for cereals. Factor of May were more important. And though they were partially damaged by dry period, I guess six million tons will be harvested for domestic consumption. Though it may not be enough for exports.

The weather is not the thing jeopardising our agriculture. The very organization of work is the key bane. The authorities themselves cause even greater damage than hot weather or the "dangerous beetle" Rosselkhoznadzor refers to.