Identifier
Created
Classification
Origin
05MINSK1305
2005-10-26 11:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Minsk
Cable title:  

Importing Barley A "Treasonous" Act

Tags:  EAGR PGOV ECON BO 
pdf how-to read a cable
VZCZCXRO9811
RR RUEHCD RUEHFL RUEHLA RUEHMRE
DE RUEHSK #1305/01 2991136
ZNR UUUUU ZZH
R 261136Z OCT 05
FM AMEMBASSY MINSK
TO RUEHC/SECSTATE WASHDC 3221
INFO RUCNOSC/ORGANIZATION FOR SECURITY COOPERATION IN EUROPE
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEHRC/DEPT OF AGRICULTURE WASHDC
UNCLAS SECTION 01 OF 03 MINSK 001305 

SIPDIS

SIPDIS

SENSITIVE

MOSCOW FOR FAS

E.O. 12958: N/A
TAGS: EAGR PGOV ECON BO
SUBJECT: Importing Barley A "Treasonous" Act

Refs: A) 04 Minsk 1280, B) Minsk 923

UNCLAS SECTION 01 OF 03 MINSK 001305

SIPDIS

SIPDIS

SENSITIVE

MOSCOW FOR FAS

E.O. 12958: N/A
TAGS: EAGR PGOV ECON BO
SUBJECT: Importing Barley A "Treasonous" Act

Refs: A) 04 Minsk 1280, B) Minsk 923


1. (SBU) Summary: The GOB has been trying to promote
domestic beer production since 2003. Though Belarusian
beer is cheap and sold in half-liter or larger bottles,
the low quality of the barley used in brewing has
resulted in even worse tasting beer and the industry's
loss in competitiveness on the market. Higher quality
barley is needed, but President Lukashenko insists that
only Belarusian barley be used and subsequently banned
any import of foreign barley, warning that importation
would be a treasonous act. Belarusian farmers, however,
failed to meet President Lukashenko's 150,000-ton quota
on barley production and specialists claim that the 2005
crop is of worse quality than that of 2004. Ignoring
the wet weather conditions and the cold climate,
Lukashenko blamed the insufficient barley production on
the Ministry of Agriculture's (MoA) bad management.
However, breweries expect the MoA to achieve the desired
quota by lowering standards and/or mixing barley with
other plant parts. End Summary.

The Leader's Love For Beer
--------------


2. (U) Since 2003, the GOB has aggressively increased
and promoted domestic beer production by giving
breweries preferential subsidies, directed loans, and
government support, as well as limiting imports, to cash
in on Belarusians' appetite for beer. The driving force
behind this trend, not surprisingly, has been President
Lukashenko (who reportedly does not drink). In a
gesture of gratitude, one brewery created a beer named
after the President's place of birth, Alexandria, after
the GOB directed a private bank to lend the brewery USD
36 million for modernization. Though relatively cheap
(most at around USD 70 cents per half liter),the
quality of Belarusian beer is affecting its already
shaky standing on the domestic markets.

The Cause For Concern
--------------


3. (U) Barley is a major ingredient in beer. The
quality and amount of protein in the barley affects the
taste and preservation of the beer produced. Brewers
and agronomists have noted that Belarusian barley does
not meet high enough standards to produce a quality
beer, but Lukashenko believes otherwise. In his 2004

and 2005 annual videoconference on the harvest campaign
(reftels),Lukashenko ignored his specialists'
suggestions to import higher-quality barley and accused
them of serving only foreign interests and not those of
their country. Instead, Lukashenko insisted that
Belarusian barley was of good enough quality and
demanded breweries use only the domestic crop.


4. (U) In September, a production engineer at a
Belarusian brewery reported to the independent press
that the quality of Belarus' 2005 yield of barley ranked
much lower than that of the already low 2004 yield. The
engineer predicted that if Belarus did not import
barley, the quality of Belarusian beer would be so poor
that it would lose its competitiveness on the domestic
market. However, as in the past, Lukashenko denied the
inferiority of Belarusian barley and publicly warned his
ministers in September that "not a single grain" of
barley would be imported into Belarus in 2005.

The Officials' Opinion
--------------


5. (U) On September 26, Poloff met with officials at the
Ministry of Agriculture who supported the President's
stance about Belarusian barley. According to the
officials, the GOB expected farmers to surpass 2004's
150,000-ton (metric) yield of barley, 60,000 tons of
which would be used for brewing and 15 percent of which
would be high quality. The officials stressed that no
barley would be imported because Belarus would meet its
domestic needs. The tone of the statement contradicted
what MoA officials had preached to Poloff throughout the
meeting, particularly that breweries and companies could
import commodities if they so chose without government
interference.


MINSK 00001305 002 OF 003



6. (U) Though the MoA officials praised the quality of
barley, they did grumble about the domestic barley's
high moisture content and the subsequent loss of its
color. Poloff mentioned the opinions of some
specialists that because of Belarusian barley, breweries
would produce poor-tasting beer. One official laughed
at the comment and cited how Belarusian beer received a
gold medal in 2004 for its quality and taste. He
failed, however, to specify what type of "gold medal",
from whom, and what brand of beer.

Real Experts Disagree
--------------


7. (SBU) In August, Econoff spoke with a German brew
master, who worked for Anheiser-Busch for 25 years,
currently managing the launch of a new brewery in
Belarus. This brewery is an American-Belarusian joint
venture and is being built to modern western standards.
He stated that Belarusian barley is of inferior quality
for beer production and he had serious doubts Belarus
would even be able to produce enough low-grade barley.
His brewery was talking with local collective farms to
try and find one willing to produce barley to their
specifications, but it would take five years to get the
first usable crop and so far they had not found a farm
they thought could grow barley of sufficient quality.
Another problem is that Belarus only has one company
that can turn barley into malt, Belsolod, and it is
state owned and produces an inferior product. Even if
the brewery could find decent barley, there is no
guarantee Belsolod would use that grain for its malt,
when only low-grade barley was available for state
breweries.

Who Is At Fault?
--------------


8. (U) On October 5, Lukashenko again warned that any
import of barley would be regarded as evidence of
corruption and "damage to the peasantry." In his
opinion, a ban on the importation of barley would save
Belarus USD 150-200 million in 2005. The president's
statements came after the GOB realized only two of the
country's six oblasts fulfilled their regional quota
and, as a result, Belarus' total barley production
dropped 40 percent on the year to 90,000 tons; far below
the expected 150,000 tons. Coming on the heels of the
President's statement, the first deputy head of the
Presidential Administration Aleksandr Popkov blamed the
MoA and the state-owned food processing plant
Belgospishcheprom for the "insufficient production of
quality malting barley." Popkov blamed the two
agencies' bad management, and not wet weather or poor
growing conditions, for the loss.

Which Way Out?
--------------


9. (U) In interviews with the independent press, some
brewery specialists believe that the MoA and
Belgospishcheprom, fearing the president's anger, will
fulfill the 150,000-ton barley quota in one of two ways.
First, the GOB would combine the barley kernels with
other pieces of the plant, such as the chaff and stalks,
to reach the desired weight. Though usually discarded
in most circumstances, these extra plant pieces,
according to some specialists, would give the barley a
darker color and higher protein content. The second
method would be to simply lower the minimum quality
standards of the barley, contributing even more to the
low quality of beer. Belarusian breweries note that
either method would be a giant blow to their industry.
Lukashenko claimed that a ban on barley imports would
save the GOB USD 150-200 million, but specialists agree
that the amount spQ on producing beer with such low-
quality raw materials while the beer's competiveness
drastically falls would cost more than USD 200 million.

Comment
--------------


10. (SBU) Lukashenko, the former collective farm boss
and "expert" in agriculture and micromanagement, has put
the Ministry of Agriculture in a Catch-22 scenario. The
MoA must meet the barley quota, even though the country

MINSK 00001305 003 OF 003


failed to produce the amount and the President made its
importation a criminal act. The only other solution is
to lower the minimum standards of quality, but
Lukashenko warned that poor quality barley would also be
"unacceptable."


11. (SBU) Lukashenko has made a decision that defies
common sense, much like Nikita Khrushev's failed corn
campaign in the 1960s. The President continues to
stubbornly ignore the expert opinion of specialists and
refuses to admit that Belarus cannot produce the desired
barley needed for beer production. Whereas other
nations estimate the possible yields, Lukashenko sets
the bar and expects no less. In past years, Lukashenko
has also criticized his government for importing hops.
So far he has not raised this issue, much to the relief
of Belarusian beer drinkers.

KROL