The Prime Minister asked the farm's general director Stanislav Moiseyev about the crop yield. Mr Moiseyev said that the direct losses caused by drought accounted for 7 million roubles. "Losses from not selling our crops in full will be about 19 million roubles," he said.

Mr Putin also asked if Eksperimentalnoye took loans for agricultural needs. Mr Moiseyev noted that it would be very difficult to cope without loans. The farm works in cooperation with Rosselkhozbank, and took a 5-year loan to buy machinery and a 1-year loan on crops. "We will have to repay the loan on crops in April," he said.

The general director also told Mr Putin about problems related to the sale of the 2008 grain yield. "We encountered some problems, and managed to sale the last year's crop only this year."

First Deputy Prime Minister Viktor Zubkov, who accompanied Mr Putin on his trip, said that grain prices in 2008 were quite low.

"This will not happen this year. We plan to harvest 85 million tonnes of grain, and the price will be reasonable," he said.

After inspecting the drought-stricken field, Mr Putin spoke with farm workers.

***

Transcript of the beginning of the meeting:

Vladimir Putin: Basically, we have already started the discussion with your colleague. On average you have the same losses as he, don't you?

Voice: Yes, about one third.

Vladimir Putin: Are there any farms that grow nothing but grain?

А.Khizhnyak: Yes, there are. Most farms mainly grow grain crops, but livestock breeding is also developing. It is not as strong though.

As for grain production, the situation is as follows: a thousand effective farms have 1 million hectares of agricultural land and 770,000 hectares of plough land.

Last year we produced 6.6 billion tons and sold about 4 billion tons of produce.

Vladimir Putin: The reason I asked you about livestock is this: If it is developing along with grain crops it is easier to go through the difficult period and it is easier to talk with the lending institutions. I understand you mainly take out short-term loans?

Voice: Yes, short-term loans.

Vladimir Putin: When did you take them out?

Voice: In April.

Vladimir Putin: And you are to pay them back in April.

Voice: Mr Putin, it would be better if Alexander Aman told you about livestock farming. He has both the experience and some proposals regarding it.

Alexander Aman: I've been in agriculture for 15 years. My core competence is livestock. We raise more than 1,000 heads, 1,200 pigs, 320 cattle and about 350 sheep.

Our pig-breeding complex has 7,000 heads. But then the complex is only the building.

Vladimir Putin: I understand.

Alexander Aman: But the turnover assets that we have are not enough. We would like to bring it to your attention. I think it concerns many people. If they want to launch a livestock complex they have to face the problem of getting loans.

I have seen it myself. There are not enough turnover assets to expand or build new livestock breeding capacity. In our opinion, the way out could be long-term loans, targeted loans for expanding livestock breeding for a period of up to 15 years. Long-term.

Vladimir Putin: You've been talking about 8 years, and now you are saying 15 years.

Alexander Aman: I mean for the construction and for modernisation. This is just a wish. Up to 8 years is, well, realistic.

Vladimir Putin: What is the term of investment loans that you get? Is it 5 years?

Alexander Aman: Five years.

Vladimir Putin: And everybody takes out loans?

Alexander Aman: Yes, of course. About a million roubles at present.

Vladimir Putin: At what rate?

Alexander Aman: 16%.

Vladimir Putin: 16 percent? Let us go back to grain. If you have to pay back in April, problems will of course arise because the harvest is not in yet. We talked about it on the way here. We assume that the region will help actively. You know that the Government has issued a decree extending long-term loans by six months. Six months will see you through only until September. But you won' be able to repay it by September.

There are several proposals on the table. One is that the bank and the Ministry of Agriculture should consider every case and extend the loans.

As for the farms that do only crop growing, it has been decided to issue loans for up to three years.

Alexander Aman: Great.

Vladimir Putin: But for the others, those that have diversified farms and produce not only grain but other products as well things should be easier.

The first proposal was to examine every specific case. But I personally think the term should just be extended from six to nine months, for example, until the end of next year so that every farm could use these resources until the end of the year without any expert examinations (of course, the bank will be checking on you anyway, but still). Say, until November at the earliest. So that you bring in the harvest in August and in September, October and November you will be able to...

Viktor Zubkov: It is nine months until January. You've been speaking about extending the loans by 9 months...

Vladimir Putin: Yes, 9 months instead of 6.

Vikor Zubkov: Those who took out the loan on April 1 will have to pay back by January 1.

Vladimir Putin: So you will have a chance to bring in the harvest, sell it, make a profit and repay the banks. But that means you have to think in advance about how to sell the produce. You should have a contract, and have it in advance. Because if you sell it in 2011 that would be somewhat more complicated.

Last year, I know, many were not selling, and rightly so because the prices were too low. There will be no such situation in 2010. I mean, we are not going to have a harvest like last year. Last year it was 108 million tons, this year the tentative forecast is 85 million tons. That is enough to feed the country, but there will be no surplus as big as last year. That means the prices will stay high. That's the first point.

Secondly, if it becomes necessary we will intervene, like last year. But I repeat, you should think about selling in advance. Would this solution suit you?

Voices: Of course it will help...

Vladimir Putin: I just thought that such a general solution would be better than having experts come with inspections, even if they are highly qualified experts from the Ministry of Agriculture. Of course one can bargain with them, but it is better not to have to negotiate with anyone, it is better to have the same decision that applies to everyone.

Vikor Zubkov: It is better to have one solution for everyone.

Vladimir Putin: Yes. Do you agree?

Voices: Yes, it is much better this way.

Vladimir Putin: It is better. So let's do it like that.

A. Khizhnyak: Will Rosagroleasing loans be also extended?

Vladimir Putin: That's a different story.

A.Khizhnyak: A different story?

Vladimir Putin: Rosagroleasing contracts are not for a term of one year.

A. Khizhnyak: They have granted a one-year deferment.

Viktor Zubkov: They now envisage an 18-month term, I think the first payment...

Yelena Skrynnik: Deferment for the contracts that are already in force is one year.

Vladimir Putin: The Government has made a decision on this issue.

Yelena Skrynnik: The Board of Directors decides.

Vladimir Putin: In any case, a decision has been made.

A. Khizhnyak: I would like to ask you about something else. If we want to preserve soil fertility we would like permanent compensation for the cost of mineral fertiliser. At least 35-40% of the active substance so that we can always plan sowing. It will make grain production more sustainable and at the same time the soil will not be depleted. We want this programme to be implemented every year, so that they don't keep us on tenterhooks each time.

Vladimir Putin: All right, we'll see what we can do. Were fertiliser prices normal this year?

A. Grintsov: Yes, this year they were fine. We have already got fertiliser subsidies, about 70% of the cost. This is proof that the national programme for the development of agriculture is being fulfilled in reality, and not only on paper.

Vladimir Putin: We had an understanding.

A. Grintsov: But we would also like to have subsidies for pesticides, along with fertiliser. It is an important issue for us too. As you see, the fields are very clean. That's because of pesticides. But we still have locusts. We don't want to learn the same lesson as the Astrakhan Region.

Vladimir Putin: Yes, that is sad. All right, we'll look into that too. We made an agreement with fertiliser producers at the end of last year when we were helping them out of a difficult economic situation. They have kept their promise.

Viktor Zubkov: With helped with the duties...

Vladimir Putin: Export duties, you mean?

A. Grintsov: This year's fertiliser prices...

Vladimir Putin: Fuel and lubricant, too. As far as I know, regional prices are 11-15% below December's now that winter crop sowing starts.

A. Grintsov: Almost 2 roubles per kilogram less. Oil industry is good on its word-we have enough diesel fuel.

Vladimir Putin: All right, we will have a more detailed talk at the regional administration office.

A. Khizhnyak: Mr Putin, the Government is actively promoting Russian manufacturers this year, and it's high time, too. We think the Government should keep an eye on industry. Aid and promotion are good but price formation needs to be supervised.

Vladimir Putin: You mean price formation by Russian farm machine manufacturers?

A. Khizhnyak: Yes. The Government should curb their prices and, what matters most, prices should rise only with product quality.

Vladimir Putin: The majority of new machines go through Rosagroleasing, so it should check the prices.

E. Sirotkin: A combine harvester costs approximately 4.5 million roubles but their quality leaves much to be desired.

Vladimir Putin: It demands great improvement-more than to a thousand roubles, right?

Laughter

E. Sirotkin: There were better machines, someday. And we need longer-term loans. A farm like mine cannot pay off the cost of a harvester in five years unless we cede all our profits.

Vladimir Putin: How much land do you have?

E. Sirotkin: 500 hectares. It's a family farm. Apart from the crops for which we need a harvester we have a small vegetable plantation.

Vladimir Putin: We'll need to think about it, to make calculations. What if we extend short-term loans from six months to nine? The federal budget will have to pay every month for all to see that yours is a loan and not an allocation, and you will pay it back later to the federal purse.

E. Sirotkin: We understand, total loans amount to 140 million roubles for the region.

Vladimir Putin: It is a fifty-fifty regional-federal arrangement.

E. Sirotkin: Seventy-seventy in this case. The federal part comes from the consolidated budget.

A. Khizhnyak: We hope lease terms will be prolonged. It would be great help with technical modernisation of farms.

Mr Putin, can I ask another question? The role of insurance is growing.

Vladimir Putin: I was just going to mention it. A very small amount of property has been insured.

A. Khizhnyak: That's right.

Vladimir Putin: When I talked to a farmer the other day, I asked him "Have you insured your property?" He said no. "Don't want to part with your money?" I asked. "No," he said, "We have insured something." It turned out he had insured only the wheat.

Laughter

Vladimir Putin: Insurance is a must.

A. Khizhnyak: You are right but there is a gap of mutual prejudice between insurers and farmers to bridge first.

Vladimir Putin: You see, the larger the insurance sum the lower the premiums are.

A. Khizhnyak: Right.

Vladimir Putin: See, insurance companies work like banks. They are commercial organisations.

A. Khizhnyak: Now, we cannot mortgage our future harvest unless it is insured, so we will necessarily have to deal with insurers.

Vladimir Putin: My colleagues think, as you might know, that only insured owners should receive help-but we will give budget allocations to all who are in dire straits, now and possibly next year. That is the right thing to do, and it makes your future more reliable.

We have an opportunity to help everyone, crisis or no crisis. We might have a budget deficit but we will help you within our opportunities thanks to previous savings. But then, savings will run out, sooner or later.

That is why we need stability and reliability in every economic sector, and agriculture is no exception. The entire system must be reliable.

A. Khizhnyak: We will do all we can to make it so. We thank Mr Zubkov for insisting on keeping stable the prices for 3rd grade wheat in our region.

Mt Putin, we need a chance to make a profit. Will we always have to beg? This request is not to you personally but to the Government.

Ms Skrynnik, please evaluate costs for regions, set us a level of profitability and say: "Work on, and it will pay."

Vladimir Putin: Let us analyse the matter. We should take regional specifics into account. That is evident.

A. Khizhnyak: Yes.

Vladimir Putin: We will see what should be done. But then, I think you all know that we are subsidising 80% of interest rates in agriculture-something that has never been done in any other economic sector.

A. Khizhnyak: We see political changes. Your visit today makes us all hopeful because your concern spreads to other crisis-stricken regions.

Vladimir Putin: We will meet with the Governors of all the six problem regions but the matter does not concern them alone-all farmers should know that we will help them, too, when they have problems. We will think together how to make our aid effective. We will go on with this year's measures, too.

Voices: Thank you.

E. Sirotkin: There's still hope. Who wants to bother with agriculture? Especially as it's such a risky business. We can make a good profit today but will hardly make the ends meet tomorrow.

A. Khizhnyak: Mr Putin, I think the countryside will satisfy all domestic needs.

Vladimir Putin: That is evident already now.

A. Khizhnyak: And we will export about 50 million tonnes of grain.

Vladimir Putin: This year's exports will amount to 20 million, approximately.

Elena Skrynnik: We have export contracts for 23 million tonnes already.

Vladimir Putin: 23! Just recently we were buying grain from Canada but we are exporters now.

Voice: Can we hope for new loans if their terms are extended?

Vladimir Putin: We discussed this on our way here. I do not think banks will refuse to grant new loans to clients who have not yet paid back previous rescheduled loans because you will not keep afloat unless you get another loan.

A. Khizhnyak: The present aid concerns old loans.

Vladimir Putin: Right, so we will try to influence Rosselkhozbank and other banks. I think it must be done.

A. Khizhnyak: Mr Putin, the collateral value to loan amount ratio should be cut from 2 to 1.

Vladimir Putin: This is a commercial issue. It is up to bankers to set the collateral value though we will suggest the idea to them.

But then, bankers do not want to ruin anyone. They want their debtors to stay afloat and pay their debts. When a bank ruins everyone who comes its way, it gets ruined itself, and very soon. No one wants you to go broke. You must see that. Everyone wants good productive teamwork. But when bankers see a bad, neglected farm, why should they help it?

What I especially like about you is that you hold your heads high.

Voices: Of course, we do.

A. Khizhnyak: Ours is an area of risk farming, so we are used to ups and downs.

Vladimir Putin: We will get out of the predicament all together. I wish you every success.