Prime Minister Vladimir Putin chairs a meeting in Rostov-on-Don on harvesting results and the development of livestock farming


“The harvest fully satisfies the country’s demand in grain considering carryover stocks and intervention inventory reserves. We have enough food and fodder grain.”

Vladimir Putin's introductory remarks:

Good afternoon, ladies and gentlemen:

This year's autumn harvest is coming to an end: Russia's grain has been almost entirely collected - 97% of the crop by October 21, which means that now is the time to summarise this problem-laden year. It was a hard time for all of us, but mainly for farmers.

What matters even more, we should make long-term plans and determine practical steps to guarantee a sustainable agricultural industry and to make it competitive.

Despite the drought, approximately 60 million tonnes of grain have been laid in all over the country, which approaches the planned amount. Now we know our grain stock precisely.

Once again, the harvest fully satisfies the country's demand in grain considering carryover stocks and intervention inventory reserves. We have enough food and fodder grain. Still, we need to suspend grain exports for the time being because the stability of our domestic food market and livestock fodder should be our top priority.

I signed the government decision yesterday to prolong the grain export moratorium to July 1, 2011. Regional governors have also called to extend the subsidising of railway tariffs for grain transportation. I believe this is a reasonable and substantiated measure.

I think we will prolong the tariff reduction to July 1, 2011 and spread it from grain to soy and soybean meal from the [Russian] Far East. First, we will thus support the regions that must buy grain, including drought-hit areas. Second, reduced transport costs will, I hope, have a positive impact on food prices or at least help curb an increase. This is certainly essential.

The drought could not but affect farmers. Agricultural production fell in this year's first nine months. The overall decline will be about 10%.

As you know, agriculture helped support the entire national economy last year, during the global economic and financial crisis. It had a surplus, however small, while industrial production fell.

This year, to the contrary, the drought has caused a decline in agricultural production. This is evident today. According to information we have received from the regions, the winter crop area is almost four million hectares smaller than last year. It amounted to 13.2 million hectares on October 20 against last year's 16.8 million.

Support of agriculture is critical in this situation. We must assist farmers with all autumn and spring work. Relevant decisions must be made now for next year's harvest.

You know that we have already implemented serious measures: we have allocated about 40 billion roubles from the federal budget to agro-industrial companies, rescheduled loans and leases and extended the terms of interest subsidies to three years, as you know.

I think that, proceeding from this situation, we should take a number of additional measures, for which we have the necessary resources.

First, I would like to remind you that we subsidise agro-industrial businesses from the federal budget to purchase fertilisers. I propose to earmark no less than a billion roubles for that purpose next year to make total subsidies for fertiliser purchases approach 5.5 billion roubles. This is affordable, and we have determined the sources of money together with the leaders of this sector. I hope there will be no problems. We also expect mineral fertiliser manufacturers to not raise prices next year.

Second, as I mentioned, the winter crop planting area is smaller this year, mainly due to bad weather - which means that we should compensate for the decline with spring crops. In this situation, it is important to reduce the financial burden on farmers. This would prompt them to extend the sown area in spring. That is why I propose allocating another billion roubles to subsidise spring sowing - particularly to purchase seed.

Mr Zubkov, Ms Skrynnik, please submit proposals on the means to transfer the money to the farms. I also ask the regional governors to provide to the government exhaustive information about the demand for seed, fertiliser, machinery, fuel and lubricants.

Third, we have determined a need to increase the registered capital of Rosselkhozbank and Rosagroleasing. Each will receive a billion roubles to become more proactive in implementing development programmes, granting loans to agrarian projects and assisting with the purchases of new equipment and machinery.

I want to stress, it is essential now that we consolidate the positive trends that have emerged in our agriculture and related industries in the last few years. Weather anomalies must not eradicate these trends and throw our agriculture progress back. This point mainly concerns such key sectors as livestock farming. I am convinced that we can make a breakthrough in increasing milk yields and in the cattle population similar to the progress in poultry and pork production. I want to remind you that poultry meat production increased 77-78% and pork 39% during the previous years. Any industry would take pride in such achievements, just as any country's agricultural sector would.

Importantly, regions and businesses are not scaling down their development programmes despite the current complicated situation. We have seen this once again during our visit to Eurodon. This is really an efficient cutting-edge business. It is no exaggeration to call it an innovative company. Similar ambitious poultry farm projects have been earmarked for implementation in the Stavropol Territory, the Saratov Region and in some other parts of Russia. I hope we will hear about them today.

Ever more interesting projects are appearing for cattle farming. The Supervisory Board of the Bank for Development (VEB) decided a few days ago to loan close on 25 billion roubles to the Bryansk Region for the establishment of a cutting-edge beef farm. Seven billion has been loaned to another farm, which was established on this money. Credit will grow as production increases.

The Bryansk Region project, which I have just mentioned, is unique in many respects. I remember being told about its innovations at a recent exhibition. Some of these managers are among us now. The farm will have elite stock and the latest technology. In a word, it will be on a par with the best farms in the world.

I ask the Ministry of Agriculture to make urgent subsidies to the development of the new farm in the Bryansk Region. We will certainly support such farms.

Last but not least, we will release targeted aid to livestock farming in the first quarter of 2011, allocating five billion roubles to the farms that retain their cattle.

I would also like to mention that milk purchase prices were high enough this year, so dairy farms can pay their way. This is a good incentive for prospective investors in livestock farming. The government will also support the promotion of such projects in every way.

To round off my introductory remarks, I would like to thank the farmers and all employed in the agro-industrial complex once again for everything they have done during this hard year. I want to thank all rural workers for their toil, which ensures Russia's food security, stability and independence despite adverse weather.

Thank you!

Mr Zubkov has the floor.

Viktor Zubkov: Mr Putin, meeting participants, in his speech, the Prime Minister outlined in some detail the situation in Russia's agricultural industry and he proposed new additional measures to support farmers. These measures, along with those previously adopted, will undoubtedly contribute not only to stabilising the situation in agriculture, but will also give new impetus to its development. I will try to touch briefly on some points.

Grain is still a strategic commodity. Measures taken in a timely manner and related to the ban on grain exports have revived the market. Grain has moved rapidly from the regions where it is abundant to regions where there is the lack of it. In August, the railway transported 671,000 tonnes of grain. In September and October, the total supply from Siberia and southern Russia is already estimated at 2 million tonnes; in other words, a 35% increase.

In November-December, a significant increase in grain transportation is projected. According to information from the governors - I often talk with the governors, who buy grain in large quantities - prices today are reasonable. It is clear that significant amounts of grain are also transported by lorry. However, I would ask that the management of Russian Railways - of which there are representatives here - to closely monitor grain transport and ensure timely delivery of rolling stock.

However, there are signals from a number of regions that in some areas, the ban on grain exports was imposed under the pretext of phytosanitary requirements. In fact, it was just a matter of "hold it back just in case." There should not be this confusion. Regional leaders need to restore order in this matter, and the government should deal with any specific case.

Growth rates of livestock and poultry for the first nine months of this year were 107% of what they were in the same period last year. In only nine months, the increase in poultry production was 303,000 tonnes, with 150,000 tonnes more pork. These are good results.

For cattle, we still have a small lag in milk production - about 2%. However, we know that the situation today with milk prices is not as it has been in recent years: 13.40 roubles is the price today to purchase a litre of milk. Last year, it was 10 roubles. So, of course, dairy farmers currently have the ability to provide cost-effective milk production.

The government adopted customs tariff regulation measures to balance the domestic market this year. Note that these were increased import duties on milk and milk products, cheese, rice, raw sugar; reduced quotas on imports of poultry in view of the intensive development of domestic production, as well as zero customs duties on buckwheat, potatoes and cabbage. If necessary, we can consider new business offers on a number of commodities such as soybeans, soybean meal - we are now receiving such offers.

I would ask the Agriculture Ministry and the Economic Development Ministry to make the appropriate proposals within a week.

As you have noted, Mr Putin, this year, due to weather conditions, the sowing of winter crops lagged behind the usual planting period. The area sown was just over 13 million hectares, which is 23% less than last year and almost 30% less than the targets - this is, of course, very much reduced. We planned somewhere around 18 million hectares.

Despite the fact that crop sowing in some regions is still ongoing, we will not be able to eliminate the backlog - winter planting this year will be down by 4 million hectares, as you said, and brought up to 15 million hectares. It's not very healthy - winter crops always had higher yields than spring crops.

Obviously, the sowing of many fields will have to be carried over to the spring.

Calculations show that for next year, the necessary volumes of grain, taking into account the dynamics of livestock breeding, the spring crop of grain should be increased by 25% to bring it up to 35 million hectares. Additional financial and logistical resources will be required. The Agriculture Ministry must now begin to develop these reserves. There should be a clear action plan to provide farms with seed, fertiliser, fuels and disaster preparedness equipment.

Given the complexity of the situation facing farmers because of the drought, we need to extend the government decree on discounted fuel and lubricants. This decree was valid this year, but for 2011 we have further proposals and we will soon present them to you, Mr Putin.

The pace of development of livestock production is directly dependent on next year's harvest. Livestock production is one of our top priorities.

Today, we learned a lot about large, modern complexes. We will develop a sizable number of such enterprises in the coming years. It is a way to modernise agriculture and, of course, ensure import substitution.

In November of this year, an additional 15 billion roubles will be allocated from the aid package for drought-stricken regions. It is important that this money be rapidly passed on to real manufacturers. This important business incentive should be used to curb rising prices and to ensure the profitability of milk and meat production.

I would also note that to prevent further adverse results, especially from large weather anomalies, we need to establish a range of possible systematic responses. First of all, we need to establish a system of agriculture insurance.

The government sent the State Duma a law on agricultural insurance. I believe that the Agriculture Ministry, together with the State Duma deputies, should ensure that this law is passed as early as the autumn session, so that common standards for insurance and damage assessment and insurance for total loss are met as a prerequisite for the provision of state support in other areas.

We need to reconstitute the reclamation and irrigation system. Practice shows that those farmers who applied irrigation this year avoided losses at the very least, and in fact, have increased their crop production many times over.

Irrigation equipment manufactured in Russia is not very expensive. So I think that the regions should be serious in pursuing this.
Improvement of support mechanisms for subsidizing fertilisers is also the order of the day. The regions are talking to us about this, and I think that the Agriculture Ministry must deal expeditiously with such proposals.

The system must be flexible in order to encourage the use of those fertilisers that are required in each case in terms of agricultural techniques. These measures should be taken into account when adjusting the state program for 2011-2012 and in developing the next phase to 2017.

Given the enormity of the tasks and the timeliness of the decisions made, the Government intends to continue regular contact with regional leaders, as we did during the summer drought. As of November 1, weekly conference calls will be held on cattle wintering issues. We will help those who have real problems, and will be very demanding of those who allow a decrease in the planned pace of livestock production without objective reasons.

Next year, this practice will be carried out as part of preparations for spring field work, despite the abnormal conditions of the past and present, especially the current year. We need to preserve and expand upon the positive achievements in agriculture.

Thank you for your attention.

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