28 february 2013

Government meeting

Transcript of the beginning of the meeting:

Dmitry Medvedev: Colleagues, today we have two state programmes on the agenda, both related to our natural resource potential. The task is to make rational use of this potential with an understanding that it doesn’t belong only to us but also to the future generations.

The Regeneration and Use of Natural Resources draft programme for the period from 2013 through 2020 has been posted on the website of the Ministry of Natural Resources and Environment. The Ministry’s public council has submitted a number of proposals and remarks with regard to the draft. The Government’s Expert Council also took part in the discussion. The programme should address a number of crucial issues related to the use and preservation of Russia’s mineral, water and game resources. Integrating these three targeted subprogrammes is a justified measure, given the ongoing conversion to targeted programming in budget planning. The aim is to increase the efficiency of federal budget allocations. The state programme is intended for an eight-year period, as I have said. The total allocations are considerable, amounting to 3.5 trillion roubles, including about 700 billion roubles from the federal budget and over 100 billion from the consolidated budgets of the constituent entities of the Russian Federation, while most of the sum – 2.8 trillion roubles – is to be drawn from the extra-budgetary sources, namely the developers of mineral resources.

The programme sets several key tasks. First, the work to create up-to-date geological maps of Russia should continue. We need reliable information on our mineral resources, including the resources of the continental shelf and other areas which have not yet been properly researched. The Arctic shelf is a natural extension of our northern territories. It needs to be explored and used, especially considering that many countries are interested in this, including those that have nothing to do with the Arctic region. Exploring the country’s mineral resources base, developing the fuel and energy, and agro-chemical complexes, as well as the construction industry, atomic industry, and metallurgy – these things will only be possible when we have complete information on our natural resources.

Special attention must be paid to the use of water resources, the introduction of modern water-saving technology, lowering the level of water loss along the its transportation route, fixing metering systems at water supply intakes and in flats. This is vital for supplying our cities, towns, and villages with good water, for our citizens’ health and also for the development of industry and energy. The safety and the security of the current hydraulic structures must be ensured under the relevant state programme. New dams must be built.

Work on protecting and reproducing fauna and forest ecosystems must be carried out on a systematic basis. The Federal State Hunting Oversight must be made more effective. Natural resource regeneration and use is a matter of state importance which concerns the entire country, regional authorities, municipalities, non-governmental organisations, and business. Information on the programme’s execution must be transparent for our citizens. As usual, we’ve invited our colleagues to take part in this discussion. Today we have Governor of Chukotka Autonomous Area Roman Kopin, and Nikolai Kasimov, one of the leading experts in this area and Chairman of the Ministry of Natural Resources and Environment’s Public Council.

We will also discuss another state programme today, which concerns the development of the fisheries industry until 2020. The industry has seen minor but stable growth as of late. In 2011, the industry performed better than it has done in ten years. Today we procure four million tonnes of bio resources a year, which means we hold the seventh place. This is not bad, but although it could have been better.

The process of import substitution has been launched. Russian goods are gradually returning to the counters and replacing foreign products. The volume of imports has been reduced by nearly 17% over the past five years. Competition for the use of bio resources and for sea food marketing has increased, which sometimes leads to major geopolitical conflicts. As a result, we must resolve the sector’s numerous problems as soon as possible. The biggest problem is, as we all know, the deterioration of the fishing fleet. In two decades the number of vessels has been reduced by one third, and those that are still afloat are in a very bad and sometimes dilapidated condition. Naturally, as a result of this we have lost some of our positions – our processing and refrigeration capacities leave much to be desired and a lack of funding leads to inadequate research of bioresources in the commercial areas of the world’s oceans and in domestic water basins.

The state programme that we are discussing today is aimed at resolving these problems. Its implementation will also require huge funds – more than 90 billion roubles. The programme sets the targets of bringing the catch of bioresources to 4.5 million tonnes and the output of processed and canned fish and fish products to four million tonnes – a 10% increase over 2011. We must ensure that everyone is able to buy fresh fish regardless of where he or she lives -- near the sea or in the middle of the country. This programme is important both for today and tomorrow.

Let’s start the discussion. Naturally, Minister of Natural Resources and Environment Sergei Donsky will be the first to speak. Go ahead please.

Sergei Donskoi (Minister of Natural Resources and Environment): Mr Medvedev, ladies and gentlemen.

I’m presenting for your attention a state programme of the Russian Federation that determines the condition and prospects of economic development by using mineral, raw material, water and hunting resources. Measures on their replacement, exploration and preservation are presented in three sub-programmes and depicted on these slides. A separate sub programme contains measures aimed at ensuring the implementation of the state programme as a whole.

I’d like to say a few words about each sub-programme. The first is called “Reserve replacement, use and exploration of minerals and raw materials." Aimed at providing the national economy with steady supplies of minerals and biological information on their resources, the sub-programme sets the following targets: to expand geological exploration of the territory of the Russian Federation, its continental shelf and the Arctic and Antarctic, and to replace minerals and other raw materials and ensure their rational use.

Minerals and raw materials are a powerful element of our national industrial advancement, and provide a foundation for innovative economic development. They also serve our defence, security and geopolitical interests. Experts predict that the growing domestic consumption of raw materials will be accompanied by a rapid increase in the demand for oil and gas, as well as ferrous, non-ferrous and rare earth metals by the developing countries of Asia and Latin America. This will allow the Russian mineral and raw material complex to be in the lead in the markets of the main consumers of natural resources.

However, we are facing a number of problems in the geological exploration and development of mineral resources. Our internal geological research is lacking – we are significantly behind other countries based on a number of indicators. Our prospecting area has been reduced; the average known resources in new fields are decreasing. On average, we are identifying fields with about 3 million tonnes. The exploration development centre is relocating to regions with difficult access and with undeveloped infrastructure. The rate of technological exploration equipment upgrades is insufficient; state regulation measures for subsoil use are often deficient. 

To resolve the aforementioned problems the subprogramme provides for measures that will improve the geological study of Russia by 2020 by publishing modern millionth-scale and 2,000th-scale state maps covering up to 100% of the entire country; it will create an exploration foundation for promising areas of intensively developed mineral resources; it will increase the investment attractiveness of geological exploration including the use of public-private partnership alternatives; it will ensure replacement sources of basic minerals (for example, gold – some 500 tonnes per year, iron ore – 200 million tonnes per year, uranium – 3,000 tonnes per year); it will assess the potential and prospects of using such non-traditional sources of hydrocarbons as shale gas, coal bed methane, gas hydrates, and it will tighten the control over the implementation of licensing agreements. Total subprogramme funding will exceed 3 trillion roubles including 359 billion roubles in federal budget funds. The implementation of the programme will ensure a sustainable supply of mineral resources to various economic sectors and will support our national export commitments. It will support employment efforts by creating over 300,000 new jobs, taking into account associated production facilities, and will create economic development centres in depressed, remote regions and zones of special geopolitical interest to Russia.

Now I want to highlight the subprogramme for using water resources jointly with the federal targeted programme Development of Water Resources Complex in 2012-2020. Here the goal includes the following tasks: to support socioeconomic demand for water resources; to preserve and regenerate water facilities to ensure environmentally favourable conditions for the public; ensure the protection of public facilities against floods and other water related risk; improve the reliability of waterways and other facilities, by maintaining safe operating conditions. 

Generally, our water resources effectively meet the national demand for water. Irrational water use remains the main problem.. Basically, every 1000 roubles of Russia’s GDP requires 2.3 cubic metres of water, which is much more than the indicator in Germany, France, the United States and Canada. A high level of pollutant discharge to surface water bodies persists due to worn facilities and the use of obsolete production and water purification technology; some regions are short of water resources due to irregular distribution and limited ability to use existing reservoirs to meet economic and public demand; a significant level of wear and tear of water facilities; a significant area with a population of over 4.5 million people affected by the negative impact of water.   

To resolve the aforementioned problems, the subprogramme includes measures with total funding of 541 billion roubles including 317 billion roubles in federal funds. The subprogramme will improve the indicators of the water resource complex by 2020. Some socially important subprogramme measures are already being implemented – the rebuilding of the water resource complex on the lower Volga, the stabilisation of the river flow in the Amur watershed and flood protection projects in Krymsk.  

The Ministry of Finance proposes reducing the federal targeted programme funding by 19 billion roubles in 2016, by 17 billion roubles in 2017, and by 15 billion roubles in 2018; these measures will strongly reduce the potential to improve the efficiency of these efforts. To maintain the current parameters of programme funding, perhaps it is possible to seek funds within the water resources sector. Since 2004, water distribution rates and water tax rates have not been indexed. We would propose such major changes in the rates for water consumption including indexing water taxes, indexing water body use rates, expanding the list of those liable for water use costs, as well as introducing changes to incentivise the installation of water meters. Some of this was carried out in 2010, but further steps to make these proposals into law have not been taken because of external circumstances.   

According to our calculations, extra budget receipts from indexed rates could amount to about 13-15 billion roubles per year. Since the share of such payments, up to 1%, in the total payer expenses is insignificant, it will not become an extra burden for water users; meanwhile the growth of budget receipts can become an additional source making it possible to maintain the current level of programme funding. Mr Medvedev, I ask you to instruct the Ministry of Natural Resources and Environment and the Ministry of Finance to work on this issue in terms of the programme.

The next subprogramme – Preserving and Replenishing Hunting Resources. This subprogramme is aimed at preserving, replenishing and stabilising the animal population. Currently there is a significant gap between the existing numbers and the potential biological productivity of wild animals. This is due to a high level of poaching, the high number of predators (primarily the wolf), the low quality of state monitoring of hunting resources and their environment. Given a decentralised management system in the sphere of preserving and replenishing hunting resources through delegating the authority to the regions, there arise a number of problems that should be tackled by regions. The primary problem is due to low federal subventions, especially in the subsidised regions which cannot afford a sufficient number of gamekeepers in municipal districts.

Currently the subprogramme funding is 8.5 billion roubles in federal funds. Additional measures to preserve and replenish hunting resources will need higher funding. In particular, federal budget subsidies for regional budgets for executing the delegated federal authority for federal state hunting supervision will need an additional 1.6 billion roubles. 

The success of this state programme depends on the higher quality of using state functions and government services under the so called supporting subprogramme. This slide shows the goals and the objectives – I will not voice them. The implementation of this subprogramme will improve the quality and accessibility of government services in the sphere of preserving and replenishing hunting resources and will improve the efficiency of the funding in general.  

Again, the programme funding exceeds 3.6 trillion roubles including 698 billion roubles in federal funds. The planned budget funding generally corresponds to maximum limits of federal budget expenses for the programme as projected by the Ministry of Finance. However the financial schemes proposed by the Ministry of Finance to fund programmes year by year create a significant disproportion in supporting programme measures – in particular, regarding the federal targeted programme Development of the Water Resources Complex in 2012-2020, approved only in April 2012; the Ministry of Finance proposes reducing funding in 2016-2018 by 55 billion roubles and redoubling the limit of financing in 2019-2020. If we accept the scheme proposed by the Ministry of Finance as a basic method to fund the programme, we will create risks for the implementation of the goals set by the Government in this important document of strategic planning.

Now let me mention how we took into consideration remarks and proposals submitted during the discussion of the state programme. There was a detailed discussion of its main provisions at a number of major events, including a geological congress in 2012 and a meeting of the ministerial public councils in October 2012. The majority of proposals put forward during the discussions have been taken into consideration. Support was not given to proposals on increasing the budget funding for a sub-programme and modifying its structure, which is explained by the existing strict budget caps and the approved methodological directives on the drafting of state programmes. That’s all. Thank you.

Dmitry Medvedev: Thank you. Do Government members have any comments?

Anton Siluanov (Minister of Finance): May I, Mr Medvedev?

Dmitry Medvedev: Yes, go ahead.

Anton Siluanov: Mr Donskoy was speaking about our differences over the amount of funding. Yes, we did have differences. What is that all about? In 2016, outside of the three-year period, a 20 billion rouble increase in funding for the programme is planned. More specifically, allocations for the programme amount to 73.4 billion roubles in 2015 and 92.4 billion in 2016. We proceeded from the assumption that this considerable increase should be deferred. In keeping with the funding caps for state programmes we have drawn on the basis of the long-term budget strategy, we suggested to the ministry that the increase in spending should be staggered. We are ready to thrash out this issue, taking into account the proposals on rate indexing for water consumers and so on, and within a week to find a solution with regard to the amount of funding. If you instruct us to do so, I think we can resolve this issue.

Dmitry Medvedev: Well, what do you think?

Sergei Donskoy: Mr Medvedev, this increase for 2016 until 2018 is in reality what we were stripped of in previous years and which was put off until later. Today it’s just a continuation. As I see it, it is not entirely reasonable to dump all these resources on 2019 and 2020. Besides, we are not sure that we will receive them after all. It will be hard to achieve the target set out in last year’s federal targeted programme on water resources, to mention just this indicator, if we keep delaying the actual allocation of the resources.

Dmitry Medvedev: It is a convenient device, of course, no doubt about that. But it is often overused.

All right, please clear it with the Ministry of Finance and report your final proposals. Mr Dvorkovich (Arkady Dvorkovich, Deputy Prime Minister), please keep an eye on this process.

Do Government members have any questions to ask or opinions to offer? If not, I will ask our invited colleagues to take the floor. I see Mr Kopin.

Roman Kopin (Governor of the Chukotka Autonomous Area): Mr Medvedev, colleagues, it is very important that we have been discussing a draft programme on the restoration and use of natural resources. It has the status of a state programme and the amount of budget allocations is considerable.

I would like to suggest several considerations on the subject under discussion, taking the Chukotka Autonomous Area as an example. For example, its gross regional product (GRP) has more than doubled since 2008. In 2013 and thereafter we expect additional growth. What has helped us to achieve this result? The region’s economy is based on the production of natural mineral resources. We have a development strategy which you, Mr Medvedev, approved in September 2008. It refers to two priority development zones: a polymetal cluster with gold, silver, copper, tin, etc., and production facilities; and a coal cluster with coal and natural gas production facilities. Geological exploration and restoration of mineral resources are of special importance for the local economy. I must say that the surveying of Chukotka has been inadequate, with only 5% of its territory prospected and only between 10% and 15% (minus the Arctic shelf) covered by remote probing. But even this inadequate exploration has revealed that our tin and tungsten resources are the biggest in this country. The Bayim zone is one of the largest copper ore deposits in the world, while the recorded coal reserves add up to 4.5 billion metric tons. We consider geological exploration to be one of the most important tasks on the national scale. If we do this consistently, we will find numerous deposits of this kind, which will lay the foundation of economic prosperity for decades to come.

Let me say a few words about the existing problems that are slowing down our development. The capacities of local transport and energy infrastructure are quite limited, which is characteristic of all remote territories. We believe that these problems should be addressed as part of the currently coordinated Far East and Trans-Baikal development programme.

I would like to support the programme under discussion today. I think that we should continue developing major institutional solutions that would make it possible to spur on geological exploration, provide tax preferences to subsoil users, and, of course, remove infrastructural constraints. They may involve both direct federal funding and greater financial participation of subsoil users. Many other northern countries and territories have similar track records on this.

Mr Medvedev, please instruct the Ministry of Natural Resources and Environment and other agencies to further refine the regions’ proposals to the programme under discussion. Thank you for your time.

Dmitry Medvedev: We will meet with you after the Government meeting to discuss your concrete proposals. You may submit the documents to me in person. Do you have any remarks with regard to the programme?

Roman Kopin: No. We have considered the programme, some of our proposals have been taken into account. We hope it will be launched soon. Thank you.

Dmitry Medvedev: Very well. Mr Kasimov please.

Nikolai Kasimov (Chairman of the Public Council under the Ministry of Natural Resources and Environment): Mr Medvedev, members of the Government, colleagues, the draft programme for the restoration and use of natural resources has been discussed on a broad scale by experts, the public, the Public Council and others and approved by the professional community. The important thing is that the ministry has taken into account the majority of comments and proposals in connection with the programme. At the final stage of debates during the joint meeting of the public and expert councils, held as part of the Open Government activities and attended by the Minister for Open Government, Mikhail Abyzov, and the Minister of Natural Resources, Sergei Donskoi, experts put forth a number of proposals which have been supported by the Ministry of Natural Resources. They are as follows.

First, the current legislation must be amended to mitigate environmental risks during survey and exploration projects on the shelf. We all know that these activities are not properly regulated in legislation. We must take into account economic risks associated with changing markets of mineral raw materials and also monitor, including by independent experts, the efficiency of oil recovery, which is very low. We should therefore approve close monitoring within the framework of this programme. And, of course, we need to conduct survey and exploration work on a larger scale. I’d like to draw the attention of large companies to this issue.

As for government funding, the majority of experts have pointed to the need for systemic funding of research in this sphere, because many geological achievements in the mining sphere have been traditionally linked to substantial funding of this field. In general, we must accelerate the drafting of the necessary legislation for the programme’s implementation and, of course, ensure information transparency and expert and public monitoring of its implementation at all stages.

I have taken part in many programmes, starting 25 years ago, and I’d like to say that this is a good programme. It is a detailed roadmap for operation in this sphere in the next eight years, and both public and the expert councils have recommended adopting it. Also, I’d like to say that the use of a broad range of public and expert organisations at all stages of this programme’s development was one of the main conditions for ensuring its high quality, and I hope that this will also help us to implement it.

I understand that a programme is not a dogma but a living organism, and hence all proposals that have been made should be taken into account during its implementation as part of annual, three- and five-year plans. In short, Mr Medvedev, we recommend including our proposals in the Government’s decision. Thank you.

Dmitry Medvedev: Thank you very much.

I have a question, perhaps for the Minister and the Deputy Prime Minister who are responsible for this. The programme provides for the allocation of huge extra-budgetary funds, which are not envisioned for any other programmes. I will certainly be very glad if we manage to attract these funds. How realistic is this? If I am not mistaken, 80% of allocations for the programme should come from extra-budgetary sources, which will definitely make the Ministry of Finance happy. How accurate are these calculations?

Arkady Dvorkovich: The bulk of extra-budgetary funds will be provided by mineral producers, who routinely invest in exploration and other components of the use of subsoil resources. Our calculations are based on concrete plans of companies and have been coordinated with them. We are reasonably confident that the targets are quite realistic, provided the planned decisions are taken on tax and other incentives, especially in such mining regions as eastern Siberia, the Far East and, of course, the shelf. If we ensure these conditions, the targets are quite realistic.

Water resources are a separate issue; we are only drafting plans in this sphere. RusHydro has proposed investing extra-budgetary funds in the development of our water management complex, and other companies also have relevant ideas. The funding on this part of the programme will depend on the decisions we take in the next few months. As for mining, I repeat that we are reasonably confident about funding.

Dmitry Medvedev: All right. Do you agree (addressing Sergei Donskoi)?

Sergei Donskoi: Mr Medvedev, I would like to add that all our investment commitments are also stipulated in the licences, and are therefore licence commitments. This is also true for shelf projects, when we insisted that investment in them must be increased, above all in the exploration stage, which means that companies will have to invest [in exploration], because otherwise they will lose their development licences. So this in fact represents a commitment. However, we must also create investment conditions that are favourable for developing these projects.

Dmitry Medvedev: These questions concern people in this room.

Sergei Donskoi: These are our targets anyway, and all the measures stipulated in the programme are aimed at increasing investment attractiveness by lifting administrative obstacles and the like. All of these elements increase interest in mining projects.

Dmitry Medvedev: Yes, fine. Are there any more questions? No? In that case I propose adopting the programme on the condition that the finding issue is given some more attention with due regard for the discussion we had today. Moreover, this should be done quickly. I give you a week to complete the process. Don’t procrastinate, because if we put it off until closer to 2020, we might as well not adopt it at all.



* * *

Minister of Agriculture Nikolai Fyodorov and Minister of Healthcare Veronika Skvortsova give a post Government meeting press briefing


Nikolai Fyodorov: I would like to greet all of you. Since you are also interested in the national fishing sector, then you are my colleagues. First, I would like to say a few words about the current situation as regards the discussion of this issue at the Government meeting. Unlike such issues as the development of agriculture and the agro-industrial sector, the national fishing sector still lacks a state programme for long-term development. There used to be a federal targeted programme during the post-perestroika or reform period to develop the fishing sector in 2009-2012. That federal targeted programme has therefore run its course and was basically completed. As of 2013, we have no programme. Consequently, this programme was being drafted… Frankly speaking, this programme was drafted even earlier. On May 21, 2012, we, and the Federal Agency for Fishery, as well as our colleagues from the Government, started concentrating on this document. So, we have drafted what is called the state programme to develop the national fishing sector in 2013-2020. This programme has been approved in its entirety. 

It was based on our work on the 2009-2012 federal targeted programme and on a practice that was not always good. True, there were interesting cases sometimes. I will cite a strange figure that I have already mentioned today at the Government meeting: just three billion roubles were spent on this targeted programme in 2009-2012 out of 14.3 billion roubles allocated to it by the federal budget. This is difficult to comment on because in a short time after it began to be carried out, those who were implementing it realised that they would be unable to spend this sum and gave it up of their own free will. Many projects were not carried out. These were fairly large projects on building research vessels, mooring berths and coastal infrastructure, running into the billions of roubles. The federal budget allocations were made to support these projects but they remained on paper.

At the same time there are major indicators of the fisheries industry’s development that are not bad: the growth of the yield of water bioresources (you know who is interested in this) is fairly high. It reached its peak in 2011 and practically remained at this level in 2012. Some years are fishing years and others are not; there are even and odd years – specialists know what I’m talking about. In 2012 we managed to preserve the 2011 level in the yield of bioresources and manufactured fish products. In general, fishing organisations’ turnover increased by 8% in 2012 even despite problems with this programme. The balanced financial result of the fisheries industry also grew by 1.8% as compared with 2011. In growth rates, the turnover of retail trade in fish and seafood exceeded the corresponding figure for 2011 by 10%.

Today we have presented a programme, the basic scenario of which costs about 90 billion roubles. If you like precise figures, and I’m sure some of you do, I can say that based on the budget restrictions of the already approved three-year budget, our limit on the state programme to 2020 is 88.91 billion roubles. That said, we have received the approval of the Ministry of Finance for the additional requirement for 44.7 billion roubles. This year we must present an additional list of projects all over the country under the federal targeted programme that is part of the approved state programme. In general, 62 regions are enthusiastic about new projects that will be co-financed by the federal budget, which was not the case before.

A list of projects under this state programme has been compiled and will cost another 50.6 billion roubles, but this is still a draft. The federal targeted programme with a list of projects all over the country still has to be coordinated and approved by the Government, so in a sense this issue has been delayed. In general, we need such a mechanism as a federal targeted programme, but for the time being this issue is postponed and we must accommodate it with our colleagues in two or three months.

So, what’s new? I’ve mentioned this in brief – based on the experience in implementing the state programme on agriculture, we have come to an agreement with the regions on co-financing of the state programme on fisheries. It would be wrong to carry out the state programme without this. We must have mutual commitment and discipline. First, the regions should take part in the development of this state programme by law. The development of the fisheries industry and its infrastructure, including processing, trade and logistics, is the responsibility of the regions under the current legislation, notably, the Federal Law on Trade. Secondly, if there is no agreement, it will be difficult for us to control how effectively state programmes are being implemented. Therefore, we have obtained endorsed documents from 62 regions on their intention to co-finance particular projects. They have guaranteed to us allocations of 14.24 billion roubles from their budgets and committed to attract another 27.56 billion from extra-budgetary sources of the fisheries industry. Of these 62 regions, 12 are nearshore. So, here are some examples related to this state programme. Now I think it would be best to take your questions.

Question: A question regarding fisheries. Is the Ministry of Agriculture going to submit an application on the resignation of Mr Krainy (Andrei Krainy, Head of the Federal Agency for Fishery) because of the start of criminal proceedings?

Nikolai Fyodorov: This has nothing to do with the state programme.

Question: But it has something to do with the state.

Nikolai Fyodorov: Of course, we will do something about this. As a minister who is now responsible for the fisheries, I’m also dissatisfied with such a performance… I have cited the figures showing that the targeted programme has produced results, but a mere three billion roubles were spent instead of 13 billion. I have cited some examples. I want to remove all these shortcomings and one of the mechanisms is joint responsibility of the federal centre and the regions. We will do this. I’m realistic about my ambitions and I know what we can do based on my experience and meetings with governors. I will therefore continue to improve every aspect of the situation, including its human resources aspects.

Question: Could you say a few words about the programme targets you hope to achieve by 2020?

Nikolai Fyodorov: If you don’t mind, I will quote some figures. In 2011-2012, Russia caught just over four million tonnes of water biological resources. Currently we are planning on getting this figure up to 6,156,000 tonnes. In 2011-2012, aquaculture output stood at 140,000 tonnes. Our current plans call for 410,000 tonnes of aquaculture products. Russia turned out 3,455,000 tonnes of processed and canned fish products. We plan to increase this output to 5,255,000 tonnes by 2020. Currently, we process about 30% of water biological resources using waste-free and resource-recycling technologies. There are plans to process 80% of these resources by 2020. Domestic fish food products currently account for 77-78% of the Russian market, and we plan to reach 85%. Current per-capita fish and fish-food consumption is 21.5 kilograms, and there are plans to get this to 28 kg.

Question: How many vessels do you plan to build?

Nikolai Fyodorov: This is set out in the federal targeted programme. As a state agency, our primary responsibility is for research vessels. Seven vessels were to have been built in 2009-2012 under the federal targeted programme. But, as you know, we have built only one and a half vessels, and even a bit less. On the whole, we are facing problems, and serious criminal trials are being conducted. Just like for any minister, this comes as a bit of a disappointment to me… 

Over the next two to three months we will discuss this issue with our colleagues, including the Ministry of Industry and Trade, which is responsible for the shipbuilding issue. This discussion is also currently underway here. You have heard that the fishermen themselves do not have much faith in the capabilities and potential of the national shipbuilding industry. Understandably, as lobbyists, we … First of all, my colleague, Denis Manturov, is convinced, and he is trying to prove that we can achieve this objective. This is why discussions are currently underway … We still have to decide how many vessels can be built at national shipyards. This issue has become the subject of heated discussions and debates involving shipbuilders and fishermen, as well as us, lobbyists and intermediaries from different sides. 

Question: Mr Fyodorov, could you say a few words about fishing quotas in the context of shipbuilding projects? Fishermen are currently concerned about this issue and they want to know whether these fishing quotas will be available. How will these quotas be calculated? Will this depend on your decisions about shipbuilding?

Nikolai Fyodorov: To be honest this issue is complicated and highly controversial, due to the reasons which I have outlined. There are some other reasons which are linked to the fact that, even me as a Federal Minister, I have not yet made a completely objective assessment of the situation, including the situation in the context of the potential of the Russian shipbuilding industry, the requirements of Russian fishermen, fishing sector specialists, as well as the real upgrade of the fleet. In addition, we have to meticulously examine various data that indicate that our vessels and our fishing fleet are not as rundown as some people claim, people who insist that the fleet must be overhauled and that we need new vessels. Some experts cite some quite convincing arguments that we need to modernise and upgrade the available vessels because Russia's fishing fleet is somewhat newer than that of the United States and some other fairly strong marine powers, but we are seriously lagging behind in terms of equipment standards. This is perfectly understandable because Japan, Korea and the United States used to develop up-to-date navigation systems, and they have implemented modernisation projects over the past 20 years. But Russia has not paid sufficient attention to this, that's putting it mildly, so your question is quite complicated and controversial. We are currently conducting an additional examination, and we are assessing all the pros and cons of the fishing quotas. Although I am now a Federal Minister, I cannot make unequivocal statements, as some State Duma deputies like to say. . That’s why I promise that we will draft an objective and effective model, as well as an effective approach towards this issue, in the next few months.

Question: May I take this opportunity and ask you a question on the issue of grain?

Nikolai Fyodorov: Yes, it appears that we see each other every day. 

Question: Yes, it's great. The Federal Service for Hydrometeorology and Environmental Monitoring (Roshydromet) has updated its assessments of the state of the winter crops. Its experts believe that 8-9.5% of harvests might be lost. What harvest volumes does the Ministry predict? They say that 95 million tonnes can be harvested. Is this a target or an assessment? Are you increasing estimated export volumes? Your Deputy, Ilya Shestakov, said today that 20-23 million tonnes could be exported.

And my second question is how do you plan to organise grain purchases if the harvest is not very successful? And could you say a few more words about Mr Shestakov’s comment made by him in Belokurikha today that the Government will probably buy grain down south in order to slightly reduce grain exports if the harvest is not very substantial. Can you comment on this? What is your opinion of this?

Nikolai Fyodorov: I don’t know anything about the comments of my Deputy, Ilya Shestakov, so I find it hard to comment on this while talking to a representative of a respected publication. Lawyers say that they must see the source of information themselves, and they must hear something themselves. Otherwise it would be better not to make any comments. But I will try and make some more or less correct comments. First, a long-term summer and autumn agro-meteorological forecast until the end of the harvesting season will be compiled. The most important forecast will be published after March 23, that is, in the week of March 23-30. We are working closely with Roshydromet, and we are just as interested in the information which is based on their data. All Russian grain consumers are also very interested in this information, which will make it possible to clarify weather forecasts and harvest volumes.

Our current policy objective, which has been set by the Ministry, is to harvest 95 million tonnes of grain. We must do everything at all levels in order to achieve this volume. This is important in the context of national security … We also want to preserve Russia’s reputation and role as an important participant in the global food market as much as we can. This must be primarily accomplished through grain and processed grain products. I am telling all vertical and horizontal levels of all agricultural staff that they must harvest 95 million tonnes in order to accomplish these important state objectives for the country and domestic consumers. And regional forecasts give us reason to believe that this is feasible. But we cannot cope with force majeure circumstances … Colleagues, this may sound banal, but this, nonetheless, amounts to a forecast. We can start harvesting crops, and it will start raining, or heavy hail or something else may fall. As you understand, I have high hopes. I understand you because you want to obtain accurate harvest statistics from the Minister or the Prime Minister or the President. But we can only speak within this framework for now.

I can confirm your export estimates. The export potential and our export potential forecasts for the 2012-2013 agricultural year, that is, until July 1, will remain at the level … Until recently, we predicted 14.8 million tonnes, 15 million tonnes if the figures are rounded up, up to the end of the agricultural year. As I see it, it would be premature to cite any other statistics because grain exports have virtually come to a standstill for a very simple reason. We can no longer compete with our own price on the global market because domestic market purchasing prices are now higher than global market prices. As you know, the current global market price is $300. And the Russian grain market price is over $300. I am talking about wheat, for the most part. Therefore we have no objective reasons for modifying our current export potential forecasts. 

Question: What about next year?

Nikolai Fyodorov: The situation for the next agricultural year, 2013-2014, depends on the yields. I reiterate, we support civilised regulation of the markets, including the export market.  Exports will depend on the harvest, and we will forecast them based on the harvest. To frighten the public with words like “embargo” is the last thing we want. It is our firm professional conviction that any limits we impose will be as unpopular as they will be uncivilised. “Unpopular” is an understatement, considering the stance the WTO would take if we took such steps. Regulation is necessary and quite feasible within the limits of the market economy, and we are determined to act accordingly.

Question: Do you think it possible to do so if we have a poor harvest?

Nikolai Fyodorov: It’s hard to tell now. But, whatever turn things may take, we will stick to our principles – they really matter to my colleagues, to Mr Dvorkovich, and myself. We are more than just like-minded people – we share the same ideology. I can’t say we are all alike. On the contrary, we are very different but we are all very particular about principles of administrative regulation and violations of market regulation laws. Don’t think I’m boasting… But then, some people think our principles almost boil down to treason.

I can assure you, we don’t intend to give up our liberal and civilised market principles in grain market regulation and the use of our export potential.

Question: What can you say about purchasing interventions?

Nikolai Fyodorov: We are ready for them, and we’ll start them in July or August as I said yesterday. The concept is understood, and we are earmarking the relevant resources.

Question: Mr Fyodorov, let us return to the fish issue. Here are two examples. The McDonald’s chain sells more than one million Filet-O-Fish a year in Russia. They are made of pollock – not of Russian catch but re-exported from Denmark, which has no such fish. It’s from America. It’s my first point.

My other point concerns Russian domestic fish prices. Arctic cod is very popular with fishermen. Its wholesale price in the Russian Far East is 11 roubles a kilo. Our retailers are very reluctant to buy it because their mark-up has a 30% legal ceiling, so a kilogram of cod brings them a miserly 3 rouble profit. Naturally, they prefer to purchase salmon from Norway at 150 roubles a kilo and get a sizeable 30% profit.

What do you think of the ultimate goal of the federal programme you mentioned in the context of fish prices and the promotion of domestic producers?

Nikolai Fyodorov: I am optimistic about meeting the challenges you mentioned, leaving McDonald’s aside – that’s a separate topic. I have good grounds for optimism because we have a sufficient minimum guaranteed by the programme, which earmarks 90 billion roubles from the federal budget for its implementation until 2020 – a sizeable addition to funds from the purses of regions and fishermen. We spent 3 billion roubles in 2009-2012, as I said – that is less than a billion roubles of budget allocations a year to revive the fishing fleet. We are now increasing funding from a billion a year to 10 billion or more. Looking ahead, the implementation of the programme will depend on the performance of the Ministry of Agriculture, the Federal Agency for Fisheries and the regional administrations.

Among other measures, the programme envisages the co-funding of mariculture, fish processing and the coastal infrastructure, each of which will requires a separate sub-programme. There is another area – pilot projects for fish technology parks. We will conclude agreements envisaging the full cycle from primary and final processing to sale via packing, storage and shipping. It is our duty to spend the funds as best we can together with the regional authorities.

The federal funding of transport, logistics and trade centres will see a tenfold increase but only on the basis of co-funding with businesses and regional administrations. The programme involves big money. Maybe even this money is not enough but, anyway, the programme includes sizeable funding. Possibly it impresses me so much because I come from a proud but poor republic. Anyway, this money inspires me. If others are inspired too, they will work with great efficiency and save money at the same time. Do you agree, Moscow journalists, and do you know what creative work is about?

As for food products and the quality and provenance of ingredients, Russia’s accession to the WTO completely changed the situation, and we have to be quick as we introduce civilised ways of protecting and monitoring all the food products and ingredients we import, and ensure complete transparency of the relevant businesses. So it is our duty to streamline the work of the Federal Service for Veterinary and Phytosanitary Supervision (Rosselkhoznadzor) and the Federal Service for Supervision of Consumer Protection and Welfare (Rospotrebnadzor). That is the way to adapt Russia to WTO standards and requirements – I think you have received sufficient signals to grasp the situation.

You might know that our conscientious work in this field allowed us to outrun the European veterinary agencies in detecting counterfeit food ingredients – particularly mixtures of horse, poultry and other meats in sausages from an EU country – which I don’t want to name. We will step up our efforts, especially since the International Epizootic Bureau will shortly be opening its Russian office, so we will have a partner. The bureau will supervise 53 European and Central Asian countries, including the former Soviet republics, Central Asia making up the majority.

Question: What about the technology parks you mentioned – where and when will they open?

Nikolai Fyodorov: It’s too early to say for sure: we are only negotiating about them at this stage. The first-ever programme for fish technology parks was approved today. Our desire to establish them is not enough. We need also firm guarantees for co-funding of them by regional budgets. We will assess all the prospects. We have sufficient experience of assessing the reputation of regional administrations, and we will proceed from their reputation to appoint pilot regions. These will be the most active ones, which promise the best results. It’s too early to announce them now. Thank you.

* * *

Veronika Skvortsova: Good afternoon, ladies and gentlemen.

Moderator: Good afternoon. The Government discussed high-tech healthcare services today. Healthcare Minister Veronika Skvortsova delivered a report.

Veronika Skvortsova: Colleagues, I would like to remind you that the regional modernisation programmes resulted in a broad base for high-tech healthcare services in regional hospitals and clinics.

Such services were mainly concentrated in federal medical establishments prior to 2011. We have now changed the funding for high-tech services which a year ago allowed us to introduce subsidies to regions that possess licensed high-tech medical facilities alongside subsidies to federal state-financed ones. Five billion roubles were paid as subsidies to 59 regions last year, while the regions themselves contributed another 13 billion. As a result, the number of patients receiving high-tech services in the regions increased four-fold from 34,000 to 127,000. In particular, the regions accounted for 40% of kidney transplants.

We extended this programme into this year, and are again subsidising the regions according to standards based on their economic situation, and meeting last year’s targets for high-tech healthcare. This year, there are 62 regions benefiting, and they are willing to increase funding from their own budgets by 4.5 billion roubles compared to last year. Their plans envisage 150,000 patients receiving high-tech treatment instead of 127,000.

All this is a step towards our goal – to include more high-tech services in the mandatory medical insurance programme by 2015. This will not be possible unless these services are broadly accessible all over the country, and not only in big cities.

Question: If we have understood correctly, you were referring to this year’s subsidies. And what will be done next year? If I am not mistaken, either you or the Minister of Finance said that the state healthcare programme did not include high-tech services when this programme was introduced at the Government meeting. Will such services be funded from the budget in the future?

Veronika Skvortsova: High-tech services will be entirely funded by the federal budget up to 2015, when it will be divided into affordable services and the most expensive ones – those too expensive for mandatory insurance programmes.

Though these programmes will envisage a greater part of high-tech services, however expensive, because mandatory insurance funding will substantially increase over the next two years, exclusive services provided by central medical facilities will still need federal funding. Together with the experts we are dotting all the i’s and crossing all the t’s in the list of these services in all the basic fields of medicine, so that we have an approximate idea of their costs, and we hope they will still be entitled to federal grants in 2015.

Question: You say you and your colleagues have made the relevant estimates. What will these grants amount to?

Veronika Skvortsova: We are specifying the list now: we enter every particular technology on it only when we are sure it cannot become widespread in the regions in the next year and a half to two years. Regional health services have been significantly  upgraded, and many central regional hospitals and health centres can offer sophisticated services, so we will transfer everything we can to mandatory insurance programmes, and the list of federally funded services will be quite small.

Question: Will pilot projects be launched to include high-tech services in the mandatory insurance programmes, and in what regions, if any?

Veronika Skvortsova: Every year will be a pilot year. We intended to shift some high-tech services to mandatory insurance as early as this year, with priority for angioplasty, stenting and other endovascular surgery, which is part of heart and vascular surgery. However, mandatory health insurance is still underfunded, so if we make the shift, the quality of regional health services might deteriorate.

That was why our calculations made us put off the shift to next year. We will make thorough estimates also before we decide about high-tech therapeutic services, including the treatment of rheumatism and rheumatoid disorders – we must rule out even the slightest risk of reducing the access to or the quality of health services. We will not grant mandatory status to any service unless we are sure that the shift will improve it or at least will not make it any worse. Thank you.

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