Transcript of the beginning of the meeting:

Vladimir Putin: Mr Bochkaryov, I have seen the latest figures for the region. They look good, on the whole.

Vasily Bochkaryov: There are also some problems.

Vladimir Putin: Yes, there are problems. Wages have increased by almost 10% (9.7%) while wage arrears have decreased by 10%, which is good.

Vasily Bochkaryov: We still have a minor wage arrear of 10 million roubles.

Vladimir Putin: Registered unemployment in the region is nearly 50% lower than the average for the country. It is a positive indicator that shows that you are working to resolve the problem, with good results. However, investment in fixed assets has fallen unexpectedly in the first half of the year, for no apparent reason. Moreover, you have commissioned 22% less housing this year. What is the reason for that?

Vasily Bochkaryov: The housing stock we commissioned by November 1, 2010, amounted to 92% of last year's figure. By the end of the year, we plan to commission the same amount of housing as last year, and possibly even slightly more.

Vladimir Putin: So, the figures I saw are outdated?

Vasily Bochkaryov: Yes. We usually commission housing at the end of autumn. In other words, the situation in the housing sector will improve.

As for investment, it was a very hard year for us. We lost a large part of the grain harvest, bringing in less than 30% of the planned amount. We thought the beetroot harvest will be even worse, but the end figure is 50% compared to last year. Rains began in September, helping us improve the beetroot harvest, although initially the forecast was worse.

The decline in investment is my biggest concern. My second problem has to do with dairy cows. The drought scorched pastures and older villagers started slaughtering cows.

What have we done to improve the situation? We plan to build five large livestock breeding farms, each for 1,200 cows, next year. We have also started building a second large livestock farm for 3,600 milk cows. I will show some photos of the first farm. We are importing cows for it from Germany, the Netherlands and Hungary. I think these investments will help us improve the situation regarding milk cows.

We are also considering ways to improve the beef sector.

Vladimir Putin: Unfortunately, the cattle and pig population has been decreasing in the region.

Vasily Bochkaryov: This is true, but we are also increasing meat production, even though we are slaughtering more cattle than planned.

Vladimir Putin: The increase is also due to poultry farms.

Vasily Bochkaryov: Yes, we are developing poultry breeding; we have a good programme for that sector. We plan to produce 100,000 metric tonnes of poultry meat next year, or five times more than during the Soviet period. The target figure for 2012 is 140,000 tonnes of poultry meat, or seven times more than in the Soviet period.

Vladimir Putin: How much have the farms lost because of the drought?

Vasily Bochkaryov: More than 2 billion roubles worth of products. Last year we harvested 1.5 million tonnes of grain, but this year the figure was only 426,000 tonnes. The losses are huge.

Vladimir Putin: This means that you haven't harvested grain from 450,000 hectares.

Vasily Bochkaryov: That's right. Obviously, the drought has damaged the spring crops. We are now helping farms buy seeds for spring planting, because we have lost all the crops sown in spring. We produced enough food grain only thanks to winter sowing.

A few more words about investment: on November 9, we held a presentation of the Penza Region at the Russian Trade Mission in Germany. It took us three and a half months to prepare it. The event attracted 120 companies. We also held roundtable discussions on our industrial sectors, transport, agriculture, the processing industry and high technology.

We plan to hold a similar presentation in Italy on November 22-24 and one in Bonn, Germany, on February 1-2, 2011, to develop relations with more businesses in Germany. Germany and Italy are our top destinations because they have highly developed small and medium-sized business and agriculture.

But we are also establishing ties with large industrial companies producing car components and agricultural machinery. We have pledged to create a good environment for them, in particular to connect future construction sites to gas, electricity and water networks and to build roads, just like we do for agricultural projects.

Vladimir Putin: This is good. How are your large investment projects proceeding? As far as I know, you have several of them, in particular in housing construction.

Vasily Bochkaryov: Do you remember the cement plant we had discussed? You helped us with regard to gas supply limits. They have not yet reported on their progress this year, but we expect them to spend approximately 3.5 billion roubles of allocations this year. This is good statistics. Maybe we will even boost investment in the cement project.

Investment in a railway and a locomotive depot has been estimated at 1.2 billion roubles. The project is being implemented by an Ulyanovsk-based rail construction and assembly company. The locomotive depot has been completed and the site prepared. The Chinese will assemble the equipment. We have purchased portable heated cabins, and about 400 engineers and assembly personnel have arrived at the project site. Chinese specialists will arrive soon to assemble the plant.

Vladimir Putin: Why not use a Russian assembly firm?

Vasily Bochkaryov: This is a tied loan; the Chinese agreed to manufacture the equipment under a German licence on the condition that their personnel assemble it.

Vladimir Putin: And what will Russian personnel do?

Vasily Bochkaryov: We have built, first, a 93-km high-voltage transmission line, and second, a 2-km access road. We will also lay the ground for the project, build a railway and gas pipeline to it, and drill water wells.

Vladimir Putin: How much residential housing do you plan to build?

Vasily Bochkaryov: We are implementing two big projects, each worth between 11 billion and 12 billion roubles.

Vladimir Putin: This is enough to build a residential district.

Vasily Bochkaryov: Yes, that is what we are building. I showed you the plans. The project has the support of the Regional Development Ministry, and we have both guarantees and subsidies. We have built roads and the engineering infrastructure and have started building the neighbourhood.

A second housing development is being built near Penza on the route from Moscow. This project is also underway. We have already built several residential blocks. It is financed by Sberbank. A construction company has signed a 50/50 agreement with the lender. These are major projects.

Vladimir Putin: Good.