Deprived Deciles in Negarestan; A Product of Managers' Erosive Outlook Instead of Wealth Creation

Gorgan – Despite Golestan's rich capacities, nearly half of the province's population falls into the lower-income deciles. Experts attribute this situation to weak development management and neglect of completing the value chain.

Ambassador of Arjan provinces, Fahime Ajaklou: Golestan province is a picture of abundance of blessings; From high-quality soils to the proximity to the markets of Central Asia. But behind this lush mask, a bitter statistical truth is hidden: nearly half of the province's population is in the 1st to 3rd income deciles. This deep gap, more than a random event, is the product of the regional poverty trap and an extractive economic model that has locked Golestan in the closed circle of raw material production and value-added export for decades.

Macroeconomic data narrates a shocking reality, Golestan's share of the country's gross domestic product (GDP), despite its significant population share, has always fluctuated between 1.1 and 1.3%, the question is why a province with such unique capacities has such a small share of the national economy cake? Experts believe that the answer to this question should be found in the unequal exchange system.

Majid Dehnavi, Ph.D. in management and an expert in economic issues, stated that Golestan's economy is a supplier of cheap raw materials for the central industries of the country in a conversation with Mehr reporter: While a large part of the province's labor force is based in the smallholder and traditional agriculture sector, the real added value is formed not in the farm, but in the back circles such as processing, branding and marketing industries; Circles located in other geographies.

He added: In fact, Golestan pays the production costs, including soil erosion and destruction of water resources, and other provinces reap the net profit.

Task-oriented versus development-oriented governance

Doctor of Management continued: Management pathology shows that in the past decades, the administration of the province has been involved in playing the role of a headquarters in national food security, rather than focusing on the production of sustainable wealth for the natives. This task-oriented view, although it has helped to ensure the food security of the country, but it has depreciated Golestan's biological infrastructure and thrown the rural community into the lower income deciles.

Dehnavi pointed out: When in the provincial planning council, instead of focusing on the megaprojects of propulsion and space exploration, credits are distributed among micro-projects in a trickle-down manner, the output will be nothing but management routines and wasted opportunities. Projects such as Inche Brun Free Zone or Petrochemical, instead of being the locomotive of development, were stuck in the corridors of bureaucracy for years.

Stating that one of the blind spots of the usual analysis is the banking network, he added: the ratio of expenses to resources in Golestan shows that the savings of the people of the province, instead of circulating in the local production cycles, leave the economic borders of the province and are invested in other industrial centers, and this lack of liquidity is a big obstacle for the growth of small and medium enterprises in the province, which could shoulder the main burden of employment and development.

The way out of the deadlock by changing the management paradigm

According to Dehnavi, to get out of this trap, housing prescriptions are not the way forward, and it is necessary to change the management paradigm in the three axes of the transition from subsistence agriculture to industry, change the geo-economic function, and review the evaluation indicators of managers.

He explained: The conditionality of any government support should end with the creation of a value chain, which means that the farmer should be a part of the industry, not just a supplier of raw materials.

Inche Barun should also be transformed from an administrative terminal into a logistics and reprocessing dock for regional markets, and finally, as long as managers are evaluated based on the amount of routine work, there will be no incentive to take risks in attracting investment or completing value chains.

The processing capacity of 70% of Golestan's products is pending the link between agriculture and industry

Agriculture has been considered as one of the main axes of development in Golestan for many years, however, the lack of transformation and complementary industries suitable for products has caused Golestan to receive a very small share of added value.

Experts believe that Golestan has a high potential to become a hub for agricultural and horticultural products transformation industries, but the lack of coordination between the agricultural sector and industry, along with structural challenges in providing capital and scientific management, has prevented this potential from being realized.

In this regard, the food industry expert of the Provincial Agricultural Jihad, emphasizing the need to transition from traditional agriculture to agriculture and industry, said in a conversation with Mehr reporter: Contrary to popular belief, Golestan's problem in the matter of conversion industries is not the lack of raw materials, but the problem of quality and time management.

Savor added: We have the capacity to process 70% of the products produced in the province, but the main problem here is that the produced product does not meet the standards required by the industry.

He continued: Without coordination, the farmer produces a product that is either suitable for the fresh food market or does not have the industrial quality required for the production line.

The food industry expert of Jihad Agriculture of Golestan said that one of the main bottlenecks in the development of transformation industries in the province is the incompatibility of the timing of facilities with the seasonal needs of agriculture and criticizing the bank's approach, he said: "In order to enter the market and close contracts with farmers, the investor urgently needs working capital during the harvest season." But when the bank facility reaches the hand of the industrialist in the months of the year when the harvest season is over, this funding is practically ineffective in the production cycle.

Pointing to the administrative obstacles, Sawer added: Strict bureaucracies in the discussion of land use and land affairs have prevented farmers from being able to direct their lands to high value-added production such as greenhouses or small processing units. We have to move from the point of view of prohibition to the point of view of expertise and development.

The necessity of activating the research and development unit

Golestan Agricultural Jihad Industries expert pointed out the vital role of knowledge in food industries and criticized the lack of research and development units in most industries of the province and said: Our transformation industries move without a mastermind, while we need a deep connection between universities and industry.

Savor added: University professors should not remain in theoretical environments; They should look for solutions in the heart of horticultural industry problems, such as product shelf life management or choosing suitable varieties for canning and drying.

He stated that in order to save transformation industries, the contract farming model must be implemented under the management of the research and development unit, and emphasized: We must promote economic agriculture; It means agriculture that can produce the equivalent of 10 hectares of traditional land from 2000 meters of land, due to the use of knowledge and technology. It is only with this approach that it is possible to produce products with export and industrial standards from garden products.

Golestan's transition from industrial poverty; From the revival of stagnant units to becoming the logistics hub of the north of the country

While livelihood statistics show that a significant part of the population of Golestan province is in low income deciles, the main question here is what is the contribution of the industry and mining sector in improving this situation and can the industrial capacities of Golestan be used to get out of deprivation?

The director general of Golestan industry, mining and trade, while explaining the challenges ahead, referring to the plans of this department to maintain stable employment and turn the province into a strategic business hub, said in a conversation with Mehr reporter: Golestan province has always struggled with structural challenges in the field of industry, environmental restrictions in the past years had put the brakes on industrial development in this province, but now that some of these obstacles have been removed, the eyes are on the development of towns Industry and investor attraction has changed.

Referring to the allocation of more than 1,200 hectares of land to towns and industrial areas of the province, Farhad Zare considered the current state of production as a result of the conflict between limitations and capacities, and while accepting the public concern about people's livelihood and its direct connection with the activity of production units, Farhad Zare emphasized: It should not be hidden that economic conditions, price increases, lack of raw materials, energy imbalances and restrictions caused by sanctions and financial exchanges, have all affected the reduction of production capacity and employment. However, our strategy is currently based on two main axes: maintaining the status quo to prevent the closure of active units and reviving stagnant units that return to the production cycle.

Changing the view of investors towards the north of the country

Stating that the geopolitical changes in the region have created a golden opportunity for Golestan, he added: In a situation where regional tensions in the south of the country have changed business equations, Golestan province has received special attention from businessmen and investors as the gateway to Central Asia and the connecting point of the North-South corridor.

The general manager of Golestan added: "Our geographical location, rail access to Turkmenistan and land routes have turned Golestan into a logistics hub for the southern provinces." This change of perspective is an opportunity to bring the province's industries out of recession by attracting new investors.

Trying to exploit the capacity of the free zone

Zare said about the process of attracting investment in Inchebrun Free Zone: Considering the special rules of free zones in this area, infrastructure development and legal management is the first priority. Currently, numerous requests from investors to enter this zone have been registered and we are holding continuous meetings to facilitate this process. Samet provincial administration also considers itself obliged to provide the conditions for the presence of domestic and foreign investors in addition to the free zone complex, so that Golestan can benefit from this competitive advantage.

Expressing hope for the economic future of the province, he said: "If we can use this opportunity properly by synergizing executive bodies and removing infrastructural obstacles at the borders and rail network, we can achieve industrial growth and prosperity and improve the livelihood of the people. In fact, Golestan has the capacity to turn from a non-industrial province into a major player in the country's trade chain."

According to this report, poverty in Golestan is not the result of geography, but the result of politics. If the top management of the province accepts land development as a decision-making compass and replaces the value chain with raw sales, it can be expected that in the future, Golestan's share of the national economy will be proportional to its natural capacities. Otherwise, Nagaristan will remain surrounded by deceptive greenery and realistic poverty.