30 september 2011

Prime Minister Vladimir Putin meets with First Deputy Prime Minister Viktor Zubkov

The topic of the meeting was how to help farmers sell this year’s grain harvest. Zubkov suggested extending the “exceptionally favourable rail tariff” that already existed in some sectors to grain exports from Siberia and the Kurgan Region as well as to soy and soy oil meal shipments from the Far East to central Russia. The prime minister endorsed this suggestion, while stressing that the domestic market should be the main point of reference.

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Zubkov, it looks like this year’s grain harvest will be a fairly good one, and the agricultural sector will not only increase from last year’s decline but will also have good results on its own. Russia is returning to world grain markets. I know – and you have reported as much – that there are some problems selling harvested product. What is the state of affairs right now and what proposals should be implemented to assist the farmers?

Viktor Zubkov: Mr Putin, this year’s grain harvest will amount to about 90 million metric tonnes. We will fully meet our domestic needs and have enough for storage inventory. We can also export a fairly large amount. Our current grain exports include 66 countries and it is going quite well. Russian grain bids are winning practically every market tender. World market prices are very good as well, ranging from 8,200 to 8,500 rubles per tonne.

As of today we have exported 9 million tonnes. The trading, as I said, is good. This year’s Siberian harvest is about 12 million tonnes, and this is a very good result. Usually the average annual yield is anywhere between 9.5 and 10 million tons. So I’m suggesting that grain surpluses can be exported after the Siberian regions meet their internal needs.

We have some exceptionally favorable rail tariffs for hauling grain from Siberia to the Central Federal District. The coefficient is 0.5 and it is applied after 1,100 kilometres. But these tariffs are strictly a domestic programme. To assist farmers in Siberia and the Kurgan Region to export their grain surplus to other countries, where, as I said, fairly high prices are offered, it is necessary to extend that exceptionally favourable rail tariff to grain exports from those regions. The shipments will be headed south, to our western borders and to the Far East.

We have made the calculations. The ministries and agencies concerned have coordinated their figures. A healthy amount of money – 1.3 trillion roubles – has been set aside in this and next year’s budget. I request that you order an extension of this exceptionally favourable rail tariff to grain exports from Siberia and the Kurgan Region. It is also necessary to enable the sale of the Far East’s bumper crop of one-million tonnes of soy to central Russia. Soybeans and soy meal will need the same kind of rate break as grain and grain products. In this strong agricultural year, these decisions will help export an unprecedented 23 million tons of grain or so. In terms of wheat exports, we are likely to emerge second in the world after the United States. Our experts are making the calculations; I think the decision I mentioned will help reach those important and necessary targets.

Vladimir Putin: Very well. Let’s do it. I’d ask you to closely follow the domestic situation. The most important reference point for us is the domestic market, including domestic consumption, domestic prices, and storage inventory for next year. Keeping our domestic needs in mind, we must, of course, help the farmers export their products. Please put the finishing touches on the drafts and I will sign them.

Viktor Zubkov: I will. Thank you.