8 february 2010

First Deputy Prime Minister Viktor Zubkov chairs a meeting in Tuapse on developing infrastructure for exporting grain

Participants:

The first deputy prime minister's opening remarks:

We are continuing our series of meetings on strategic issues affecting food markets.

Prime Minister Vladimir Putin chaired the first such meeting in the Leningrad Region, which was on developing poultry farming. On Saturday, we met in the Kursk Region, where we mostly discussed developing the domestic grain market. Our detailed discussion with members of regional governments focused on the need to structure acreage for grains and legumes. Besides increasing the share of high-protein cultures, this would update the existing mechanism for making purchases and carrying out commodity interventions, allow for the introduction of mortgage mechanisms and lead to programmes for modernising grain storage facilities and infrastructure necessary for the grain industry.

The subject of today's meeting is developing the infrastructure for exporting grain.

Despite unfavourable pricing in global markets, last year's grain exports exceeded 22.5 million tonnes. That's a good result. In this year's conditions - and you all will be the first to say this - we need to strive to exceed 20 million tonnes.

The first World Grain Forum, which was held last year, affirmed Russia's significant export potential, even in a "weak" global grain market.

Today we should discuss the government's strategy for exporting our significant grain surplus. We will discuss export companies' experiences in establishing their niche in the market. We will hear proposals for cooperating with our main national company in this industry - the United Grain Company [UGC].

Let me be clear. We are talking specifically about cooperation. UGC should not be an obstacle for exports. Here we need a state-owned company and exporters to work together harmoniously. We need to think together how we can increase the presence of Russian grain on the global market. And I'll say this right off the bat - the considerable funds allocated by the government must not decrease Russian companies' exports. We need to think how we can work harmoniously in order for our businesses to not lose ground.

In conditions of a Russian grain market's dynamic development, we need to reach a reasonable balance between the needs of domestic markets and the export capabilities of trading companies and UGC, the main national grain company.

At government meetings we issued directives to identify potential partner countries, including through humanitarian aid and intergovernmental agreements. The Foreign Ministry, the Economic Development and Trade Ministry and the Agriculture Ministry have each proposed a number of such countries. Today they will report on these plans.

The goals for developing grain exports for the near term are clear. The government has discussed them numerous times. Once more, the most important goals are modernising the grain industry, developing new export channels and securing investments.

During today's visit to Tuapse, we saw a new high-tech terminal that can handle more than 2.5 million tonnes of grain per year. It's a good terminal. I would once more like to thank everyone who made this happen. Construction was difficult in the limited area of the port. The investors found an opportunity to make such an excellent terminal. Shipping is already in progress.

And there are more vessels on the way. This significantly augments infrastructure facilities in Russia. Moreover, this project was implemented without government involvement, from which we can draw the conclusion that export infrastructure projects are promising and attractive for businesses.

Today we will also discuss proposals drafted by the Ministry of Agriculture and UGC for a programme that would modernise infrastructure used by the grain industry, as well as proposals outlining the mechanisms for implementing this programme.

It is also extremely important that we discuss mechanisms for stimulating development of infrastructure used by the grain industry and investment in this sector. The government has decided to subsidise the construction and modernisation of grain silos, grain port terminals and grain processing plants. This will encourage business to get more actively involved in such projects.

The effectiveness of this resolution depends on the Ministry of Agriculture's appropriation of funds to the regions in a timely manner. Today, we will look at which projects the Ministry of Agriculture has selected and prioritised.

The next important issue, which we have also discussed several times, is the impact of operating costs on the competitiveness of Russian grain.

First of all, this means the costs of shipping grain by rail, which includes both railway tariffs and service tariffs. Here there is little to boast about, unfortunately. The cost of grain transhipment and shipping services is not falling, but rising. This negatively impacts the economics of producing and exporting grain.

Today we will consider this and other issues. I propose that we first hear from business representatives and then from government agencies.

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During his working visit, Viktor Zubkov also visited the Tuapse commercial seaport, where he took part in the inauguration ceremony for the grain terminal.