Sales of Belarusian products much worse than official statistics suggest

On September 17^th the head of the Russian Association for Agricultural Machinery (‘Rosagromash’) and Rostselmash co-owner Konstantin Babkin complained about the dominance of Belarusian equipment on the Russian market.

Despite free access for some products to the Russian market, sales of Belarusian industry products in Russia, and other countries, are shrinking. So far, the government has managed to manipulate the numbers to hide the real situation. But the reality is much worse than the official statistics suggest. Belarus’ participation in the Customs Union and the Common Economic Space is unable to stop Belarusian goods from being pushed off the Russian market.

The 2020 Industrial Development Programme envisages that by 2020 Belarus will increase the sales of combine harvesters on the world markets from 10% to 15%. However, this task might be unattainable, given today’s problems with selling Belarusian equipment in Russia, which is Belarus’ major export market.

‘Gomselmash’ sells about 90% of its equipment through joint ventures and manufacturing facilities in Russia. At the same time, in 2013, supplies of agricultural machinery to the Russian market had reduced, despite the favorable conditions created by Russia. In February 2013 the Eurasian Economic Commission decided to introduce protective duty on combine harvesters, and on June 25^th this measure was extended until March 14^th, 2016.

The Rosagromash Head, Konstantin Babkin, said “The Russian market is open for Belarusian agricultural equipment, about 70% of Belarusian agricultural equipment is sold through Russian government structures using state banks loans and through ‘Rosagroleasing’”.

The production volume of combine harvesters in Belarus has been consistently declining since 2010 (2,035 units in 2010, 1,900 in 2011 and 864 in 2012). In H1 2013, Belarus produced 892 combine harvesters. As of July 1^st, 2013 stocks of grain harvesters in Belarus were 408 units or 274% of the average monthly production volume. According to Babkin, there are 3,500 unsold Belarusian harvesters in Russia.

The discrepancy in the figures shows the real scale of the sales problem. Unsold Belarusian harvesters are transferred to the balance of dealers, distribution companies and trading houses, and reflected in the official statistics as exports. As of August 1^st, 2013 the outstanding foreign receivables at Belarusian enterprises were BYR 2.8867 trillion, a 41.1% increase since January 2013.

A trend in ‘shrinking’ Belarusian exports to the Russian market persists. Neither the Customs Union, nor the Common Economic Space have stimulated the development of export-oriented economy in Belarus. In addition, after Russia’s WTO accession, the conflict of interests between Belarusian and Russian producers has grown in the face of stiffer competition from global brands.