Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, Mr Nazarov. How did your company perform in 2009, what are your first impressions as CEO? How are preparations coming for the sowing season? To prepare properly, actions must be taken and assessments made in a timely manner. Surely, you must have heard some critical remarks.

Valery Nazarov: Yes, of course.

Vladimir Putin: I would like to hear about all this, including your reaction to public criticisms of the company. Please, go ahead.

Valery Nazarov: Thank you very much, Mr Putin. In 2008, the state programme for developing the agriculture sector in 2008-2012 was adopted. The programme met all its target for 2009, and even surpassed some. We are implementing the programme this year as planned. This primarily concerns livestock farming, namely, the supply of cattle. We have already supplied 5,500 heads of imported cattle.

Vladimir Putin: Over what time period?

Valery Nazarov: Since March, right after I became CEO. A ship carrying 1,500 heads of pedigree bighorn cattle from the United States is to arrive in Novorossiisk on June 22. We are supplying this cattle to a livestock farm called "For Labour and Peace" in the Krasnodar Territory. We want pedigree cattle to reach livestock farms. In the past, we supplied ordinary farms with this kind of cattle. Naturally, it was used much less efficiently. This cattle is 20%-30% more productive in terms of milk and meat yield. The same priorities have been set for this year.

Previously, imported cattle accounted for 60%, while the remaining 40% was raised domestically. We have now changed the ratio. Domestic, adapted cattle, which was imported in the past, will now account for 65%. We are planning to completely change the way we purchase cattle, because transport costs are a major financial burden on agricultural producers. We plan to work on cattle selection instead. We will choose 20 livestock farms, provide them with semen and embryos, and then breed the cattle here.

Vladimir Putin: And what about equipment?

Valery Nazarov: We met our equipment targets last year. This year, we have already supplied 1,200 pieces of equipment, and we plan to supply another 1,400 pieces to agricultural enterprises. But there were some problems, for instance, when equipment was supplied to large companies in 2008-2009. Based on your instruction, we should prioritise small and private farms. We have essentially reoriented our way of thinking.

Vladimir Putin: No, you were not instructed to redistribute assets, to take away equipment from some companies and give to others. As you know, this is not a linear process. We should see who really needs this equipment and what kind of leasing terms are possible.

Valery Nazarov: Certainly. Eleven major agricultural producers owe us more than eight billion roubles, or 44% of Rosagroleasing's receivables. This is a large sum.

As far as small agricultural producers are concerned, we are now evaluating the possibility of establishing territorial motor vehicle and tractor pools. We have selected five regions, and I have held talks with the governors of the Altai Territory, the Samara Region, the Leningrad Region and other territories where there are plans to set up these pools. The seasonal factor is the main problem due to the low profitability in winter. We have agreed that they will purchase agricultural machinery, as well as motor vehicles, equipment for the lumber industry, as well as utilities equipment, so that it will be possible to supply this equipment and services during the inactive winter season. We are making the relevant assessments.

Vladimir Putin: Mr Nazarov, we known how the economy is faring both nationally and globally. Thank God, our agriculture sector is feeling confident. Naturally, we should strive to promote financial discipline among your clients, namely, enterprises using agricultural leasing services. We should demand that they show greater financial discipline and meet their obligations. At the same time, we should do everything we can to provide agricultural producers with quality equipment, especially during the pre-harvest period. Please don't forget about this main objective.

Valery Nazarov: Yes, we are currently leasing 4,000 pieces of equipment worth 5.8 billion roubles.