Prime Minister Vladimir Putin held a meeting with Rostselmash managers in Rostov-on-Don


Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues,

We met last December, at a time when the situation was dramatic as the plant was on the verge of closing down, with its warehouses filled to capacity with equipment. As far as I remember, all sites around the plant were accumulated with unsold combine harvesters and other machines.

At that time, we took a number of decisions and agreed to implement a package of measures to support not only your plant, Rostselmash, but also all producers of agricultural equipment.

Today, I would like you to report on the implementation of these measures. If necessary, the Government may review its stand on some issues and make amendments and additions to the programme.

Here are the measures on which we agreed.

First, it was decided that budgetary allocations would be used to buy exclusively Russian-made equipment. The recommendation concerned leasing deals and acquisitions made with loaned funds the interest rate on which is subsidised by the state.

Second, the authorised capital of Rosagroleasing has been augmented by 25 billion roubles. As a result, we have bought agricultural equipment worth 21 billion roubles, including 1,272 machines at Rostselmash, or over 50% of your output in the first half of the year.

Third, we have adopted decisions to support export, which producers of agricultural equipment can use. As much as 6 billion roubles has been allocated for reimbursement of part of loans issued for the production of goods for export. I don't know if you are using this scheme, but you will tell me.

State guarantees for export support have been approved at $1 billion.

The fourth measure we outlined last December was a temporary nine-month duty on imported combine harvesters worth 15% of the cost but not less than 120 euros per KW of power, just as you had requested. In other words, we ensured our producers some breathing space.

Such measures of supporting the national engineering companies are justified at the acute phase of the crisis, but they cannot be used permanently. It would be wrong to close the market to imported goods and equipment.

Therefore, I hope that our producers of agricultural machines will use the time effectively to launch the production of new models and novel equipment. I have seen today - I will speak about it later - that you are acting on that premise and developing new equipment.

Next, the 2009 federal budget stipulates subsidising engineering companies' spending on loan servicing in the amount of two-thirds of the refinance rate. The total amount of subsidies is 1 billion roubles.

Moreover, 300 million roubles will be allocated from the federal budget for R&D in the interests of agricultural machine-building companies.

These measures helped us to prevent a plunge in production and shutdown of our enterprises, and to stabilise to a large degree the situation in the industry as a whole, including, I hope, at your plant.

In particular, in the first half of the year, as I have been told here, the volume of commercial goods decreased, but not as much as it could happen - and as we thought would happen last December. Production fell by 23-24%.

You have produced 2,331 combine harvesters, which is slightly fewer than last year, but still quite a lot.

You also prevented mass layoffs. This has been a vital move and I express my gratitude for this.

The average monthly wage at your plant is 19,800 roubles, which is even slightly more than last year, by 8.8%, as I have been told. And you have no wage arrears.

The plant is now producing two new types of combine harvesters, the Torum 740 combine harvester and an energy device we have just seen at the exhibition. You are also modernising production facilities according to plan and implementing an energy saving programme.

In general, the production of machines and equipment for agriculture and the timber industry from January to May 2009 amounted to some 80% of last year's level, according to the Federal State Statistics Service.

The production of grain harvesters has not dwindled, but has even increased by 1.8%.

You know better how well the anti-crisis package is working at your plant. As I have said, I expect to hear your proposals on other things we can accomplish. But the main intent of today's visit has been a desire to see that the measures we have taken, and which we discussed last December, are effective at this enterprise.

So, let us see what else we can do.

I have looked at the cars made at the Taganrog Plant. We can talk about that too if you wish. Incidentally, I will announce further measures to support the car industry at the Government Presidium meeting today. The relevant Government agencies have finalised such instructions. I will announce them publicly at the meeting with the Government in Moscow.

Let us get down to our discussion. You have the floor, Mr Babkin (President of Novoye Sodruzhestvo).

Konstantin Babkin: I would like to give my sincere thanks to you for the support measures you launched following the meeting at Rostselmash in December of last year. These measures enabled us to resolve the many issues you have mentioned and, as we have shown you today, to move forward. During this time, we have built a new assembly line in the newly repaired workshop. In addition to the new combine harvester model and the power unit, we have started assembling new tractors that our Canadian enterprise produces. We will increase the local content gradually, bringing it to more than half.

The measures taken have enabled Rostselmash to keep going throughout the winter and maintain its pace in spring and summer. But I have to tell you honestly that the prospects for the autumn and next winter at this point seem uncertain. We are preparing to switch to a three-day week because demand for agricultural machines is still slack.

Vladimir Putin: In principle, this happens every year. I understand that this year it is even more so.

Konstantin Babkin: Yes, we observe a seasonal drop every year; this year it may be worse than usual.
In this regard, we are asking you to prolong and expand the measures introduced. I would like to take you through the minutes of the December meeting and show how we see the implementation of its decisions. The customs duties work. They were introduced in January and will be in effect for nine months. They create a level playing field for Russian and foreign producers. We are asking you to introduce them permanently, at least for as long as the crisis lasts.

Also, you made the decision to allow the purchase only of domestically produced farm machinery with subsidies from the federal and regional budgets. We would also like to see that measure...

Vladimir Putin: You mean loans subsidised by the state?

Konstantin Babkin: Yes, we want this measure to be prolonged as it enables us to work. Please extend it until the crisis has been overcome. At the same time, it is vital to sharply determine the criteria of what is "Russian-made technology". A clear line must be drawn between what is Russian made and what is not. Investors and officials must have clear guidelines.

Vladimir Putin: Is there some complication here, in terms of a misunderstanding of what is Russian-made technology and what is not?

Konstantin Babkin: Yes, this has been a debated issue. Some say a certain level of local content should be established, although it is very hard to assess. We propose proceeding from certain limits, that is, welding, painting and assembly should be done in Russia and some other operations may be done jointly. Should we regard Belarusian machines as Russian-made or not? There is a debate, but it should be concluded quickly. We would like it to be finished within a month so that it does not drag on.

Vladimir Putin: Are Belarusian machines produced entirely here, or do we just assemble them?

Konstantin Babkin: Yes, there are some assembly facilities. Belarusian machines that come out of these facilities gain a "made in Russia" status and are eligible for government support.

Vladimir Putin: Do you think it is unfair and superfluous?

Konstantin Babkin: We want equal terms. We would like it more if the Belarusian market were open to us, with Russia's open for Belarusian tractors. In other words, we should sit down at the negotiating table. We are ready; we are even planning a trip to Belarus to come up with joint proposals.

Vladimir Putin: Very good.

Konstantin Babkin: About increasing the charter capital of Rosagroleasing. You have disbursed 25 billion out of the budget, of which 5 billion reached Rostselmash. That amount of our products should be bought from us. It has played a positive role, but we would like that organisation to do two things.
Its work should be more transparent. We asked them to provide us with information on how the money will be spent and who has received what. Many agricultural machine builders complain that they have not received support from Rosagroleasing.

And in future we would like to see long-term and more definite plans of the latter company so that we know how much will be bought from us and when, if at all.

We are aware that another 5 billion from the Finance Ministry budget is being allocated to that company in the shape of the value added tax rebate. But so far nobody has been negotiating or telling us whether or not our combine harvesters will be purchased. We want that firm to operate more efficiently and transparently.

Vladimir Putin: OK, I have made a note of it. What is the next question?

Konstantin Babkin: Export support is a very important issue. You have given instructions to prepare an agreed proposal on expanding the mechanisms of export support.

Let me cite two figures. A quarter of Rostselmash products is exported; in particular, export gave us a great boost last autumn and winter. We sold a total of 878 machines, of which 525, or about 60%, were exported. As we see it, there is no real support of export in Russia. There are no project-tied credits, at least not in agricultural machine building; there are no intergovernmental export guarantees.

From the experience of working in Canada and from meetings with colleagues we know that in international trade combine harvesters and tractors always have the support of state financial institutions.

Vladimir Putin: State guarantees are not functioning. Are you not using them?

Konstantin Babkin: Not yet.

Vladimir Putin: Why is this?

Konstantin Babkin: I don't know why.

Vladimir Putin: The budget has allocated $1 billion for state guarantees of export.

Konstantin Babkin: Mr Putin, there is a major problem in terms of obtaining these guarantees. It takes between 180 and 400 days to obtain the guarantees. During this time, any client would give up on the loan; he cannot wait that long. The procedure is very complicated; it requires validation from the Finance Ministry and the Ministry of Economic Development. It is so cumbersome that the number of contracts that have been financed in Russia can be counted on the fingers of one hand. Not a single agricultural machinery contract has been financed since the provision on state guarantees was introduced.

Vladimir Putin: In principle, with some modifications, do you believe it is a useful measure?

Konstantin Babkin: Absolutely.

Vladimir Putin: And it would be effective if properly administered?

Konstantin Babkin: Yes, absolutely.

Vladimir Putin: And you would then avail yourself of this measure?

Konstantin Babkin: Yes, of course. Because our competitors, foreign companies which supply similar machines to Russia or other countries, do so very quickly and effectively and they get these guarantees very cheaply.

Vladimir Putn: OK. I must request you to do something. Can you write up a procedure that would be acceptable for the enterprise?

Konstantin Babkin: Yes, we can.

Vladimir Putin: I am not suggesting that precisely that procedure will be introduced. But in any case I will be able to compare what the Finance Ministry proposes and what the producers and exporters need.

Konstantin Babkin: Yes, we can. The main proposal is that a guarantee should be issued - or withheld - within 30 days, "yes" or "no", but within 30 days.

Vladimir Putin: Thank you.

Konstantin Babkin: Let us continue with research and development. Let me reiterate once more, we have added 800 million of our own money to the 300 million previously allocated for the development of the rotor combine harvester. It gives us great pleasure to be able to present the results of our labour. Our country now possesses this new technology.

While I do not expect further competition, so far not all of the issues have been resolved. At present, we are not approaching this work systematically. We ask that you intensify and systematise this work.

In this time of crisis, this is not that urgent, because next year we will be preparing the latest model. We need to, of course, help...

Vladimir Putin: Mr Babkin, how is this not urgent? It is extremely urgent. If we keep tariffs on imports high, and you ask that we extend them, you are even briefly suggesting that they be made permanent, then if we are going to permanently maintain prohibitive tariffs on imports... The issue is not the WTO. We are actually considering the idea of joining the WTO. But the issue is that if there is no competition, then there will be no incentives to introduce new designs.

Therefore, this is important right now, while there are measures in place to limit the import of your competitors' machinery. I am warning you that you must take advantage of these. I hope that other Russian manufacturers and companies are hearing both you and us. You must now act as if we were not in the midst of a financial crisis.

Konstantin Babkin: Good. We will do this.

Vladimir Putin: And now let's talk about local production. I understand that you have purchased a company in Canada. Thankfully you have bought it, and let it develop as it should in the conditions of the Canadian market. But it is very simple to determine what machinery is Russian and what is not.

Of course, there are many criteria, but it is not difficult to calculate to what extent something is locally produced. Paint is locally produced, and another important thing is propulsion systems. I know that this sort of production is complex until you have assembled here. But you can still calculate the level of local production. One result of our agreement (not with you personally, but with the entire industry) will be what are the criteria for deciding that machinery is Russian-produced.

And our final goal is not to import the components from abroad and assemble them here. We must increase our competence, create new jobs, and develop new technology here in Russia.

Excuse me. Please, Mr Babkin.

Konstantin Babkin: Moving on, we must discuss subsidies. You made the decision to subsidise the interest rate on credit that companies in this industry use to upgrade equipment. The money has been allocated, and the system is beginning to work. Thank you.

Vladimir Putin: What is your sense of this? Have you taken advantage of this programme?

Konstantin Babkin: Not yet. As of yet, we have only made a resolution to do so.

Vladimir Putin: But you intend to make use of this programme?

Konstantin Babkin: Yes. We have prepared the paperwork for the actual requests.

I also want to say that our industry falls under the jurisdiction of various different ministries, which means that issues are not always resolved efficiently. We request that a new permanent agency be created: the Council for the Development of Agricultural Machine Building. We request that you appoint Igor Sechin to head this agency. As is the case with the councils that govern other industries, we ask for coordination and cooperation.

Of course, both Rostselmash and other companies in agricultural machine building support the measures you mentioned. But we would like to express a more common desire. If you are to talk about an end to this financial crisis, Mr Putin, then it seems the time has come to adjust the country's economic course. That is to say, instead of monetary goals and the fight against inflation or entrance into the WTO, the creation of favourable conditions for industry, non-oil and gas production and the real economy should serve as today's guidelines.

If I may speak a little more concretely, we propose that you single out the industries and goods that have been traditionally developed in Russia and that should continue to be developed. Give these industries a market; that is to say, protect the domestic market using tariff and non-tariff measures, systematically support exports, regulate the market so that raw materials are cheap for domestic consumption, and do not try to equalise domestic prices for these materials with world prices. These steps are such, so that energy prices and tariffs in Russia correspond with our capacity as a country that produces oil and natural gas.

If we are again to have a budget surplus, we request that taxes be lowered and not raised. We also request the support of science and R&D, and the resolution of other practical issues. I have set forth our proposals in the booklet that I had the honour of presenting to you, a copy of which I have signed and now present to you.

In conclusion we want to assure you that we at Rostselmash are working on the assumption that Russia possesses outstanding potential for development in agriculture, agricultural machine building, and industry overall. If you enact a real system of support, then this potential will become reality. Thank you for your attention.

Vladimir Putin: Thank you, Mr Babkin, and thank you for the information. I will also closely examine everything you have said, as well as the booklet.

As for adjusting our economic policy... You and I spoke in the car just now about the WTO. On the whole, how do you relate to the prospective decision to create a customs union between Russia, Belarus and Kazakhstan, and then later to consider entrance into the WTO?

Konstantin Babkin: Very positively.

Vladimir Putin: Why?

Konstantin Babkin: We must repair and revive the integration that existed in the Soviet Union. This is easier than integration on a global scale, and it will have a greater effect.

Vladimir Putin: That is already a kind of adjustment.

You also spoke about attention to the real sector of the economy, and stated that less attention should be given to the fight against inflation. But what do you imagine would happen to the competitiveness of your enterprise if high inflation or hyperinflation were to occur?

Konstantin Babkin: To tell the truth, inflation is not a determining factor for us when we make investment decisions. We generally don't consider inflation. We consider the tax rate and government support for exports, but inflation is not the most important thing. My partner also believes this.

Yury Ryazanov (vice-president of Novoye Sodruzhestvo): Concerning inflation: inflation occurred during January and February of this year; that is, the dollar's value rose, and we experienced a degree of relief.

Vladimir Putin: So an expensive rouble is not beneficial for you, but a cheaper rouble is?

Yury Ryazanov: Stable, weak inflation at 4% a month is good. Stable, predictable inflation is very beneficial.

Vladimir Putin: I think that Mr Ryazanov, Mr Babkin and everyone else understands that there are some industries that have an interest in the complete opposite effect. Therefore, we should find a happy medium here. We will strive to do just that.

This relates to the idea that commodities should be cheap and independent of the world market. All young and progressive people believe this. And you understand perfectly well that if we artificially preserve prices within the country, the Government will not be able to keep prices on any product artificially low. That particular product will simply disappear from the country, and a black market for it will emerge.

Remark: I don't understand.

Vladimir Putin: What do you not understand? If oil products cost three times as much as abroad, then they will all be stolen from the country.

Remark: What about tariffs?

Vladimir Putin: Our customs will be overloaded. You have mentioned Belarus, which keeps prices much lower and imposes tariffs on imported oil products.

There will be many problems that you and I will not be able to resolve. And we will have a "crooked" economy. It is not possible to directly control prices on an entire class of goods. And we would simply strangle any company on which we could impose such strict controls.

Konstantin Babkin: We are not suggesting direct price controls on petrol. But we have seen that 60% of the price of petrol is due to taxes. So it is possible to regulate the price of petrol, to literally cut it in half, using taxes.

Vladimir Putin: If we sharply cut all taxes on this product, then the state will lose the corresponding revenue. This year, government revenues have already shrunk enormously. And we are now forced to cut expenditures significantly. I believe I have never publicly said what I am about to tell you. A striking portion of next year's budget will be devoted to social expenditures. Almost 73% of our expenditures will be on social programmes. That 73% is a preliminary number. And how can we ensure development in the real sector of the economy?

Therefore, your proposal is not bad at first glance, but if you examine it from all angles, problems arise that demand additional attention.

Konstantin Babkin: May I add something? In principle, the conditions that have been set up for our factory are close to ideal, in terms of taxes and many other issues.

Right now we are refinancing our interest rate, and two thirds of the refinancing rate is being refunded, is that right? That's a good measure. When the refinancing rate was at 12% or 8%, the state paid some of it, and we paid 4%. Now the rate is at 24%, which if you deduct 8%, leaves 16%. The interest rate has increased by four times.

Vladimir Putin: Who offered you a rate of 24%?

Yury Ryazanov: Sberbank.

Vladimir Putin: Right now? At 24%?

Yury Ryazanov: Yes, now, at 24%.

Ilya Chelpanov, first deputy general director of Rostselmash: You started to say that in autumn we usually decrease the level of production. But for the past three years we have actually worked five days a week, all year round. We had developed an arrangement with the dealers. I would like to emphasise that it was beneficial to them, the dealers, to buy from us in autumn and winter, to stockpile goods to bring to market later in the season.

This sort of thing did not take place this year, because the dealers either cannot receive a loan, or can only get one at interest rates of 24%. So we cannot create the right conditions for a dealer to take out a loan at 24% and then hold onto it for half a year. Naturally a dealer will try to pass the higher price onto the farmer, but nobody will take the machine at such a high rate.

Therefore, now that there will be a lull for half a year, we will work three days a week, and dealers will not buy from us. Then before the season begins, farmers will come and want to buy everything immediately, and we won't be able to handle the volume of production.

Thus, the issue we are now facing is how to provide dealers with an effective rate. We have already drafted a proposal. The Ministry of Agriculture would undertake a grain intervention. The goal is a good one, but the main goal is supporting the price on grain. We have a proposal to strengthen the effect from these measures. Perhaps contracts with the larger agricultural machinery producers for the purchase of this grain could be concluded earlier, in autumn, or some sort of bonds could be offered (the essence of which would be that the Government would purchase the grain)? The market would respond to this.

In the current situation, this would allow these contracts or bonds to be offered to a bank as collateral for financing. And so, with the same money that was allocated for the intervention, it would be possible to extend the collateral in our market, in the grain market, and in the market for machinery.

Dmitry Udras (general director of Novoye Sodruzhestvo): Now the banks do not have faith in the farmers, saying, "And what if you don't sell the grain?" But farmers could show the contract stating that the government guarantees that it will buy ... - and that's all to do.

Vladimir Putin: And what if we were literally to start this intervention in July? What difference would there be? The only problem is that this intervention began too late in previous years, but I think it will be successful if we start earlier.

Dmitry Udras: But the farmers will begin to prepare for the coming year in the autumn. That is, this autumn they are buying machinery for next year.

Vladimir Putin: I understand, but what exactly is the issue? You said that we should either give papers for a purchase, or draw up an agreement for this intervention. So you think that these social agreements or these papers can be issued more quickly and or in larger numbers than if do this intervention until the end of the year. That is, in essence, this can be done at the nearest time possible. Is this what you mean? In that sense, this gives agricultural producers the opportunity to show that their goods are guaranteed to be sold, and so they will borrow money at a fixed rate. Good. We will think about it. Thank you.

Yury Ryazanov: May I ask another question? In 2000, we obtained a Tupolev TU-204 aircraft. And now we feel wronged: the government invested a lot of money into it, and this model operates poorly, to say the least. If possible, it would be good to halt the procurement of Western machinery...

Vladimir Putin: You know that the decision has already been made to limit the import of medium-haul aircraft that fly for short distances. For now, the only aircraft we have not limited the purchase of are wide-body aircraft...

Yury Ryazanov: Like the Ilyushin?

Vladimir Putin: Yes. For example, large Boeings, large Airbuses. The sort of planes that we don't manufacture.

Yury Ryazanov: Just today we have discussed combine harvesters. We produce the very largest combine harvesters with your help. Yes, earlier you gave us protection, and we found this role. If we don't protect this area of the aviation industry, we will not create the right conditions, and we will fail. We won't be able to make up for it later.

Vladimir Putin: I share this same opinion. But airlines have a different opinion, they do their business. They say, we need a good aircraft that works efficiently.

Konstantin Babkin: I have one more request, please. I have been longing to bring it up. The position of the company Rosagroleasing (RAL) is important to us. It must be brought to market as quickly as possible, because the situation last year worked out so that RAL said nothing and all the farmers were kept waiting. RAL is good and advantageous. But when RAL has no position, then the farmers don't go to the bank for loans, and we don't get prepayment.

And so what happens is that nobody knows what is happening in the market for half a year. Everybody is kept waiting. And then in June, RAL says, "there will be no funds." And it turns out that the money was given out neither on a commercial basis, nor to Rosagroleasing. The market is in approximately the same situation now as far as Rosagroleasing is concerned: there is absolutely no clarity.

It would be a great help to tell the entire market as soon as possible either that "yes, there will be money, and exactly this much," or "there will be no money." That way, everyone knows that there will be no money.

Vladimir Putin: Good.

Yevgeny Korchevoi, general director of Soyuzagromash: Mr Putin, I would like to return to the discussion on Rostselmash. Mr Babkin touched on the criteria used to determine whether a product has been produced in Russia or not. I would like to raise the question of Belarus, because this also affects us.

What we are seeing in Belarus is that for the last three years, more than 2,500 feed and grain combine harvesters from there have been installed in Russia. This year, one thousand have already been delivered. That is, in the same amount of time that we produced 1,200 combines, Belarus delivered 1,000. How are they selling these machines?

These combine harvesters are supported by a subsidised programme to compensate interest rates from the federal budget, but they very cleverly "russify" these combines, as I would put it.

Vladimir Putin: How so?

Valery Maltsev, general director of Rostselmash: There is a factory in Bryansk called Bryanskselmash. The factory cannot compare with Rostselmash, as it produces little itself. [Belarusian agricultural machinery producer] Gomselmash transports all thousand combines through Bryanskselmash. There are photographs, in which several combines are not even unloaded from the railroad platform. They replace the Gomselmash labels with ones from Bryanskselmash, and then obtain a registration certificate for their hardware at the State Industrial Supervision Agency, which reads "Place of Production - Bryanskselmash." And that's it. The combine is now "russified."

This year, one thousand Russian combine harvesters have passed through Rosselkhozbank with a Bryanskselmash label. If possible, I ask that you order an investigation into this. This is deceit. It is dishonest.

The second issue also has to do with Belarus. We are not opposed to cooperation; let them export the combines to us - that's not the issue. But open up the Belarusian market to our combines, for Russian combines, for combines from Rostov. Why does this issue concern us? Each year for the last three years, an auction for agricultural machinery is announced in Belarus. For the third year in a row, Gomselmash wins 90% of the bids, and Rostselmash wins about 10-20%. The total number of combines is 200. It was the same this year.

We take out loans, produce these combines specially for Belarus, which are now in our factory, but the Belarusians have not paid us for the third year in a row. We won the bids, the agreement was concluded, but unfortunately they have not been delivered.

In all, it turns out that they have sold 2,000 combines here, but we have sold them zero back.

Vladimir Putin: You know how our Belarusian friends and colleges respond to our arrangements. But, nevertheless, I believe your observations are true, in particular in that it touches upon various attitudes to the openness of the market. The openness of markets should be identical, and access to a market should be equal. We are trying to obtain this.

Yevgeny Korchevoi: That is all. Thank you very much, Mr Putin. May I have literally one more second? Rostselmash is the largest agricultural machinery producer in Russia. I represent the Soyuzagromash association. Rostselmash manufactures half of the country's machinery, and more than 500 other companies produce the other half. These companies are not that large, and not that many personnel work at each one of them, but nevertheless there are many of them. As a rule, these are middle-sized and small businesses.

These companies also face complications and difficulties. The people who work at these factories are trying to overcome them. One complication is that the support that reaches these companies is extremely limited. One example is Rosagroleasing. In December, we calculated the balance when you made the decision to redeem the outstanding debt, and at the 35 largest of these companies, including Rostselmash , had a total remaining debt of 12.5 billion roubles.

More was allocated. You spoke of 21 billion roubles, but that 21 billion went to the six largest companies. The other companies, about 50-60 of them, whose factories are struggling with outstanding debt, did not receive a penny from Rosagroleasing. Farmers need this machinery, these seeders, tillers, and mowing machines.

Farmers now cannot lease this machinery. Although the allocated money was a great deal and would have been enough for everyone, this machinery is not being leased.

And the second issue that affects these smaller companies has to do with tariffs. Thank you very much for your support in this regard. The 15% tariff on combine harvesters has generated money; but again at the same time, there are seeders, tillers, and mowing machines that are produced in Russia, and these machines are better than their foreign equivalents. They are cheaper and they operate better, because they adapt better to the land, and they are made for Russian land. And the rate on these machines is now either 5% or 0%.

Four months ago, we sent an application to the Commission on protection measures. Up until now, they have not examined it, but all of the substantiating material is there.

Vladimir Putin: What is the rate?

Yevgeny Korchevoi: From 0% to 5% - in some places 0%, in others 5%. But this has to do with the 200 companies that are not that large, but which employ about 30,000 to 50,000 people.

And third. The decision to only subsidise Russian machinery, in the form of subsidies for interest rates, has worked very well in the interests of Russian production.

Farmers, large agricultural producers and agricultural landholders have drawn their attention to Russian-made farm equipment for the first time. That is, they have begun to focus on what is being produced in Russia that deserves their attention. Because before they had so much money that they did not even notice whether something was Russian or not.

And now when farmers come and say, "There are no good Russian machines and nothing to buy," then we say, "Why of course there are! There is this factory, and this factory!" And when they see the machines for the first time they say with wide-eyed surprise: "This was made in Russia?"

For that reason, we have decided to hold a big exhibition of agricultural machinery in September, for those exact farmers, so that they can see Russian machines in all their beauty. This is a new project.

I ask for your support as well in this. In what way you can support it? Request that the Ministry of Agriculture invite farmers and agricultural producers to the exhibition. We will arrange everything ourselves, but the most important thing is that our clients are there.

Vladimir Putin: And where exactly will it be held?

Yevgeny Korchevoi: At the Crocus Expo exhibition centre, from the 16th to the 19th of September. Naturally, it would be a great honour if you could come and see how many fine machines Russian factories now produce. Thank you very much.

Vladimir Putin: Thank you for the invitation. I want to thank you for your work. As I see it, on the whole your efforts have been good and, in view of the economic downturn, rather effective. There have been results, despite the complications that you and I could not entirely overcome, of course. Nevertheless, much has been accomplished.

I have taken note of what you have suggested. Regarding customs tariffs, we must consider what measures we must undertake. The continuation of the subsidies for interest rates on loans has to do with transparency in Rosagroleasing's planning and implementation. Exports are connected with the need to streamline as well as expedite technical procedures.

The council on the development of the agricultural machinery industry, I believe that this suggestion is fair and correct. We need to create this consultative body in which it would be possible to raise the issues facing the industry, define them, and search for solutions.

On the interventions in the grain market to provide credit for businesses in the agriculture sector, this is not a bad suggestion, and we will also strive to implement it.

We will also pay special attention to the hidden exports from other countries that evade our resolutions.

Thank you very much. All the best.

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