Transcript of the beginning of the meeting:

Vladimir Putin: Mr Gayevsky, let's start with agriculture. I hear that you have taken in a record harvest.

Valery Gayevsky: Indeed.

Vladimir Putin: What could you say about your work?

Valery Gayevsky: Up until your arrival, we took in 7.6 million tons of grain on practically 97% of our harvesting area. There is some delay here in the Predgorny District , but this is understandable because it takes more time for the crops to ripen there. This seems to be our record harvest for the past 100 years of this territory's history. At any rate, it is 20% higher than in previous years. We are very pleased about this because the weather wasn't on our side. We had rains at the start of the season and it was very hot this last month (over 42 C). We were under a lot of stress because of higher fire risks, but we coped and prevented fires and today you've brought us some rain. We do need rain because after the wheat we'll start harvesting corn, sunflowers and beets and so on – somewhere in mid-September.

We don't have any serious problems in the fields. However, we have many problems in the long term, especially the living standards in the countryside. We are working to solve them.

Nikolai Fyodorov, whom you have entrusted with drafting the Popular Front programme, came to us last Friday. We gathered experts and our farmers and had a useful discussion on agricultural issues and regional development. We submitted our proposals to the programme. First of all, they concern land reclamation because this is very important for our dry lands. We must resolve this problem in order to survive and will probably need 1.5 billion roubles to upgrade our main assets. Nevertheless, even this Nevinnomyssky Channel that supplies water to the half of our territory is profitable. It contributes 700 million roubles of the water tax to the federal treasury.

One of our proposals is for vegetables. Honestly, we are sick and tired of rubber Turkish tomatoes. We’ve adopted our own programme and intend to double vegetable production in three years. The Agriculture Ministry is drafting its support programme for hothouse vegetables. We insist that it extends the programme to open ground vegetables, so that as many people as possible are involved.

Vladimir Putin: Yesterday, I had an informal meeting with our foreign partners. When a salad was served during dinner, they said: “We can feel the difference instantly. These are real vegetables, probably local.” I said that they were right. In Europe, people have forgotten the taste of good products.

Valery Gaevsky: Yes. Farmers asked me to thank you very much for discounts on fuels, lubricants and fertilisers. In a year and a half, they’ve saved 1.4 billion roubles on fuels. Igor Sechin visited us a couple of weeks ago and looked into all of this.Very helpful.

Vladimir Putin: As for the programme and your proposals, I’ll discuss this with Mr Fyodorov.

Valery Gaevsky: We had a good meeting. Our livestock breeding is doing well. We have about 20 major projects with a price tag of 22 billion roubles. And you supported us last year, remember? You backed Vaneyev (Vadim Vaneyev, Evrodon general director): the turkey farm with a price tag of 17 billion roubles. Investors developed interest in this project. This year we’ll launch half of the 20 projects and next year the remaining half. What will it give us? We’ll get an additional 120,000 tonnes of milk and 175,000 tonnes of meat plus about 90 million eggs. So, we don’t have any problems with developing agriculture. Its profitability grew by 15%, and 93% of all farms are doing well.

Vladimir Putin: Agricultural producers must be able to sell this produce at a profit.

Valery Gayevsky: Yes.

Vladimir Putin: There are always problems with selling produce after good harvests. It is important to keep farmers away from dishonest mediators and to help them store and sell their produce.

Valery Gayevsky: Absolutely. We especially need a grain transport network. We must have more freight wagons to transport grain and more terminals for unloading it in Novorosiiysk.

Vladimir Putin: Please, prepare your proposals so that we can send a signal to all those links in the chain that agricultural producers will have to deal with after bringing in the harvest.

Valery Gayevsky: All the more so since we export more than half of our grain – from four to five million tonnes.

We have seen good results in industry in first half of the year – 9.5%. Energy consumption is probably the best indicator of economic growth. Energy Minister Sergei Shmatko said at a recent meeting that last year electricity consumption in our territory grew by 5% despite our energy-saving programmes.

We are also trying to expand in a new direction – regional industrial parks. We have created six of them, providing them various tax breaks and preferences. It costs $100 to rent a hectare of land in such a park for a year. Serious investors from RusNano (the Russian Corporation of Nanotechnologies) have shown interest in them. We are working on a southern nanotechnology centre and will probably launch it next year. Mr Chubais (Anatoly Chubais, RosNano general director) is funding at least 15 innovation projects. Carlo Tamburi from Enel, a company you are well familiar with, put into operation a new electric power station in Nevinnomysk just two weeks ago. Igor Sechin attended the commissioning ceremony. They did a great job across the board despite the crisis – its performance coefficient is double that of other stations, it’s more eco-friendly and, most importantly, it consumes less gas. We hope tariffs will go down.   

Vladimir Putin: They also have new equipment there. Well done. And what about the number of tourists?

Valery Gayevsky: There has been small growth – probably 2%-3%. Nevertheless, we have set ourselves the task of doubling the tourist flow by 2015. We are building about 40 resort facilities (spa resorts and hotels) at the Caucasian Mineral Waters, mostly with the help of private investors. I’ll be straight with you – private investors are doing a better job. They provide better services, their incomes are higher and payments to the treasury are bigger.

Vladimir Putin: We must complete large national projects such as preparations for the APEC forum, the Olympic Games and the FIFA World Cup. But after we get ready for the Olympics we must focus on developing the Caucasian Mineral Waters resorts. But it is important to prepare for this in advance and so I’d like to ask you (we’ve already talked about this) to present plans for the region’s development, key areas of support and so on.

Valery Gayevsky: Our strategy is almost ready. I’m very grateful to you for the Mineral Waters airport. You held a meeting on this exactly a year ago, issued an instruction and they’ve done a great job.

Vladimir Putin: Yes, I know.

Valery Gayevsky: Mr Ivanov (Deputy Prime Minister Sergei Ivanov) attended the opening ceremony. He said the airport can even accommodate shuttles, but America has run out of them. In any event, the main air gates of the Caucasus are now wide open and we are now working on infrastructure at the Mineral Waters. Of course, it will be difficult for us without your help, so we are very grateful to you for your proposal.

One more detail. LUKoil is ready to start the project you support (its price tag is 120 billion). All design and estimate documentation is ready. It would be great if you could attend the groundbreaking ceremony, because this is going to be our biggest project in the south and you’ve always backed it.

Vladimir Putin: Yes, Mr Gryzlov (Duma Speaker Boris Gryzlov) told me about it.

And how do you implement the programme to modernise healthcare and education?

Valery Gayevsky: We are making a serious effort to modernise our healthcare system. I must admit there is a certain spike in prices on equipment and medicines. A typical retail situation developed after we put one billion roubles into the economy last year. The tomograph we bought for 41 million roubles last year, already costs from 41 to 51 million today. Some supplies have been disrupted by soaring prices…

Vladimir Putin: Perhaps you know how Moscow conducted such tenders? Let’s use their channels and do it properly and at the lowest prices.

Valery Gayevsky: This is exactly what we want. Regrettably, we cannot accept the prices that are offered today by the so-called new market. We’d like Moscow or the Healthcare Ministry to help us save money.

Vladimir Putin: Talk with Mr Sobyanin (Mayor of Moscow Sergei Sobyanin).

Valery Gaevsky: I will.

And one more issue. I’m referring to Law No. 313, under which we must relieve municipalities of the burden of funding healthcare starting January 1. I do not think this should apply to all municipalities, because the bulk of our urban and district authorities are coping with this job very well.

Vladimir Putin: Absolutely.

Valery Gayevsky: With your permission, we’d let them continue with it next year. I looked in it – our local municipalities will have spent half a billion roubles on support this year.

Vladimir Putin: Yes. The law is rather flexible. If it lacks something, it can be amended. We don’t want to take everything away from municipalities, all the more so since they are financially self-sufficient and want to do this. Let them go ahead and retain responsibility. But regional authorities must help those that are not strong enough.

Valery Gayevsky: This is exactly what we are doing. Thank you for this support.

Vladimir Putin: What about education and schools?

Valery Gayevsky: The programme for co-financing school repairs was very helpful. In two years we’ve repaired 51 schools and reduced the share of hazardous school buildings to 9%. Thank you very much for this. So, we are doing well here.

We have many more problems with higher educational institutions. We have 76 of them together with their affiliates. Pardon me for saying so, but they have turned into offices issuing paid diplomas. I am not saying that is true of all of them, but 20 years ago we had only six and now we have 76! I’d be glad if a third of them are honestly performing their duties. But as things are, the labour market is twisted and young people are hanging around instead of studying. The Ministry of Education must have its say on this. I’ll probably speak about this today at the meeting of the commission…

Vladimir Putin: Do this by all means. We are going to discuss these problems in more detail today. But still, what about schools? Have you coordinated the school management programme with the Ministry of Education, including higher salaries for teachers?

Valery Gayevsky: We’ve done this fully and have no complaints. Beginning September 1 we will raise salaries by about a quarter. Beginning October 1 we will bring teachers’ salaries up to the average in our territory – 14,500 roubles. It wasn’t easy, but we’ve done it.

Vladimir Putin: You’ve done well if you’ve matched the average salary for the regional economy.

Valery Gayevsky: Yes, this is the average salary so far. Teachers are grateful to us for this and they are primarily grateful to you.

Vladimir Putin: To you – you’ve raised their salaries.

Valery Gayevsky: No, to you. You’ve helped. As for unemployment, it is more or less under control. Today registered unemployment stands at 1.8%. As I reported to you, in summer last year it was 2.5%, or 5.9% in the ILO estimate.

Vladimir Putin: In this respect the Stavropol Territory is doing much better than the rest of the North Caucasus Federal District.

Valery Gayevsky: We remember your instruction regarding 400,000 jobs in the south. We will create 47,000 jobs under our three-year programme. We have investment projects to this effect and I think we’ll fulfill your instruction.

Vladimir Putin: Good.