The stabilization fund system in Belarus, designed to provide affordable vegetables during the off-season, has become a source of tension among farmers, retailers, and government officials. Efforts to maintain low prices have led to challenges at every level of the supply chain.
Under Decree No. 713, introduced by the president in October 2022, trade markups on socially significant goods were capped. This policy has made supplying Belarusian retail chains less profitable for farmers, who now prioritize exports to Russia, where prices are higher. However, since October, vegetable exports have been restricted through single-use licences issued only after internal stock reviews.
Faced with limited economic freedom, agricultural producers are finding ways to bypass restrictions. For instance, goods are formally exported to Russia but later resold back to Belarus with added markups. Meanwhile, actual stocks of potatoes and other vegetables in Belarusian stores have dwindled. According to retailers, signed supply agreements from stabilization funds cover only 12% of their declared needs.
The situation is further complicated by the quality of produce. To meet volume requirements, farmers often deposit low-grade vegetables into stabilization funds. State authorities are tasked with overseeing quality, but proving deliberate violations is challenging.
Responsibility for addressing the issue has been spread across all levels of the supply chain. Officials must locate available stock promptly, farmers are required to supply retailers, and stores must ensure the presence of domestically produced goods. However, all parties remain dissatisfied: farmers face financial losses, retailers deal with shortages, and consumers encounter declining product quality.
The situation highlights the limitations of top-down market management. Efforts to control prices through administrative measures are creating shortages and eroding trust in the system. Experts suggest that resolving the issue requires a reevaluation of price regulations and the creation of conditions that enable producers to operate profitably while ensuring consumers have access to quality goods.
Despite the government's efforts to ensure "affordable" vegetables, no one appears to be winning: all participants in the process face economic and administrative pressure.
Source: nashaniva.com