Capital approach

[b]Belarus’ dynamically developing agriculture and world demand for food products is raising the importance of the agrarian branch in the eyes of foreign investors. Negotiations are regularly held at the Belarusian Ministry for Agriculture and Food, with German, Lithuanian, Polish, Belgian, Czech and Danish investors keen to help process grain, milk, meat and rape seed [/b]Last year, $20m of foreign investments were attracted into Belarus’ agro-industrial complex while at least $50m will have been attracted by the end of this year. Around 20 percent of this sum will be direct injections, i.e. investments into major capital.
Belarus’ dynamically developing agriculture and world demand for food products is raising the importance of the agrarian branch in the eyes of foreign investors. Negotiations are regularly held at the Belarusian Ministry for Agriculture and Food, with German, Lithuanian, Polish, Belgian, Czech and Danish investors keen to help process grain, milk, meat and rape seed

Last year, $20m of foreign investments were attracted into Belarus’ agro-industrial complex while at least $50m will have been attracted by the end of this year. Around 20 percent of this sum will be direct injections, i.e. investments into major capital.

German accent on Belarusian field
The most famous investment project using foreign capital may be that connected with the name of German businessman Lorenz-Peter Stotz. His firm began operations on the Belarusian market back in 1992, selling agricultural machinery from western manufacturers: harvesters and seeding and fodder harvesting machines. However, Mr. Stotz’s business became especially popular a decade ago, when he bought a loss-making collective farm in Zabolotie village in Smolevichi district. He was keen to have a testing ground for his machinery, to show potential customers the capabilities of the equipment. Over a short period of time, the agricultural enterprise was completely transformed, with harvest volumes raised, a horse stud farm built and housing for employees constructed. Now, Stotz-Agro-Service is involved in agricultural manufacture at several loss-making farms in Belarus.
According to Mr. Stotz, over his years of work, investments have totalled dozens of millions of euros, including loans to agricultural organisations. Mr. Stotz is confident that these funds will be recouped. “I haven’t come to Belarus simply to sell something and leave; I want to leave a legacy here. Our company sells highly-efficient agricultural equipment, using the latest technologies. It should considerably raise crop yields.”
Germany is one of the major investors in the Belarusian agro-industrial complex, accounting for $12.7m out of $20m of foreign injections attracted to this branch last year.

From loans to promising projects
Belagro-2010 — a traditional forum of Belarusian farmers — took place in June. Belarus’ Minister for Agriculture and Food, Mikhail Rusy, noted that the country is keen to attract direct foreign investments for high-tech agro-industrial projects. It is to be one of the major tasks for the coming five years.
Agriculture has received serious state support in recent years and is demonstrating annual production growth. Over Br120 trillion has been allocated for the state rural revival and development programme, with impressive results. Compared to 2005, when the programme was launched, production of grain and meat per capita has increased by more than a third. That of vegetables has risen by over 50 percent and that of milk has grown by 17 percent. Belarus occupies first place worldwide for milk production per capita: 600kg. The export of agrarian produce is estimated at $2.3bn or 7 percent of the country’s total exports. Foreign investors are now studying the Belarusian agrarian sector closely, looking at it against the background of rising demand for food on the world market.
Foreign capital directed towards agricultural manufacture has been largely given in the form of tied loans from foreign banks, provided specifically to pay for imported agricultural machinery or equipment. The money has been used to modernise meat, dairy and grain processing, as well as the bakery and poultry industries. Last year, Poland, Denmark and the Czech Republic were the largest creditors of the agrarian sector, after Germany.
According to Belarus’ Deputy Minister for Agriculture and Food, Leonid Marinich, this year, Israel, Canada and Belgium have opened credit lines. Minsk’s First Poultry Factory is using Israeli funds to construct a poultry farm for 600,000 laying hens and an egg processing facility. Meanwhile, Dzerzhinsky Agro-Combine is expanding its manufacturing facilities. Six enterprises of the Bakery Products Department are using foreign bank loans to purchase production lines processing oilseed rape. Such credit is also being used to buy technological equipment for poultry farms, flax harvesters and containers for grain storage.
“We’re currently most interested in setting up joint enterprises with foreign partners and in implementing beneficial projects,” notes Mr. Marinich. “For example, we’re currently realising a project to construct three bio-gas units, completely financed by foreign capital. The aim is to receive electrical and heat energy from production waste. The first such facility is to appear at Snov Agricultural Production Complex in the Minsk region. The construction of three more facilities is planned for next year, with partners from an Austrian company currently monitoring Belarusian agricultural enterprises.”
The Agriculture and Food Ministry is keen to co-operate with foreign partners in implementing another major project: constructing a factory to process whey and produce whole milk substitute, in Nesvizh. The enterprise’s final product is already popular worldwide. The project is estimated to cost $250m and a tender has been announced among investors, with the first results to be summed up soon.

Money finds money
Money always finds the path whereby it will generate more money, as business people will attest. Investors won’t risk their capital without being given detailed, objective information, of course. The Belarusian Agriculture and Food Ministry’s website indicates several projects which are open for implementation with potential investors. These include the construction of a pig farm housing 24,000 pigs, at Bereza’s Compound Animal Feeding Stuff Plant, the construction of a poultry farm to produce 12,000 tonnes of turkey meat per year, and a mini heat power station at Borisov Bakery Products Plant.
According to Mr. Marinich, partners are found most successfully at investments forums, which are regularly organised throughout Belarus, and which we attend abroad. In September, five projects — worth $130m — were proposed at an investment forum in Riga. In November, of Belarusian agrarians will be presenting promising proposals in Germany, at Frankfurt-am-Mein’s Investment Forum. The Belarusian Economy Ministry will be overseeing our projects. The city has long been known as a major financial centre in Germany and Europe. Taking into account that Belarus has recently joined the Customs Union of three states, enhanced interest is likely. By investing into Belarus’ agro-industrial complex, foreign partners can create favourable conditions for their business across a huge territory, reaching from the Russian Far East to the South-Eastern region.

By Lilia Khlystun
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