12 february 2010

First Deputy Prime Minister Viktor Zubkov attends the 21st Congress of Farms and Agricultural Cooperatives

Viktor Zubkov

On the 21st Congress of Farms and Agricultural Cooperatives

“Last year was quite challenging. Many economies suffered significant downturns, but Russian agriculture managed to buck the trend. Its success was made possible by the daily work of 300,000 Russian farmers. <...> Last year the government prioritised land issues, the development of family cattle farms and consumer cooperation, and we have remained focused on these issues throughout the year.”

In his address to the delegates and guests at the event, Mr Zubkov said, in part:

"It's been almost a year since the 20th anniversary congress, where we reviewed the achievements of the farm movement in the preceding year.

We discussed problems and considered solutions and priorities for moving forward.

Last year was quite challenging. Many economies suffered significant downturns, but Russian agriculture managed to buck the trend. Its success was made possible by the daily work of 300,000 Russian farmers. I'd like to use this occasion to thank you and your colleagues on behalf of the Russian government for all your hard work.

Let me remind you that last year the government prioritised land issues, the development of family cattle farms and consumer cooperation, and we have remained focused on these issues throughout the year.

We met in St Petersburg in August and in Moscow in December to discuss the preliminary results with you.
Now I would like to say a few words on what has been accomplished.

Regarding land, efforts are being made to simplify land surveying, cadastral estimates and the registration of agricultural land. It is a complex and time-consuming process. However, a law on agricultural land circulation has been passed in the first reading.

A total of 300 family farms are scheduled to be built by 2011, of which 52 farms holding 4,800 head of livestock have already been completed. This is a good rate of progress, given that this programme was launched in May. There are also several serious problems in this area. The government is aware of these problems, and the Ministry of Agriculture is busy finding solutions.

Now, moving on to consumer cooperation. We understand that getting your products to the customer is as important as production. This is why the government has issued several directives on the development of an integrated cooperation system for the procurement, processing and sale of agricultural products as well as on the creation of farmers' markets. We recently visited one such market in Kursk. We aim to set up these markets in every region and district. The Central Union of Consumer Societies has already submitted a draft programme. It is important that you urge your regional governments to provide the necessary assistance.

As for other results from last year, obviously the economic downturn affected the industry greatly, and we had to respond rapidly to the challenges faced by the agricultural sector.

The first issue we had to address was credit and financing. Over 147,000 loans worth some 42 billion roubles were issued to small farms last year, with some 6 billion roubles allotted in the form of subsidies.
The agricultural sector demonstrated its resilience. Indeed it was one of the few - almost the only - sectors of the Russian economy that rallied last year.

Beef production alone rose by 515,000 metric tons. However, to meet the targets put forth in the government programme for 2010-2012, beef and milk production must increase by 650,000 metric tons and 1 million metric tons per year respectively.

This is quite a challenge, but I think we'll be able to meet it. Toward this end, we will expand the production of traditional meats, such as pork and poultry, and also turkeys.

I have already sent the relevant directives to VEB, which will issue long-term loans with favourable terms to turkey producers in the Rostov, Saratov and Voronezh regions with the aim of producing 90,000 metric tons per region.

One important achievement from last year was passing a law on trade, which will facilitate the sale of agricultural products. The law limits bonuses to 10%, prohibits markups on basic goods, sets payment deadlines for food products depending on expiration dates, and introduces a ban on the return of unsold items.

Now to turn our attention to the key forms of government support that will be provided for farming this year. Let me start with lending. Yesterday we agreed with banks that a total of 800 billion roubles must be lent to the agricultural sector this year, which is actually a small increase from last year. Loans must become more accessible for producers, primarily farmers. A farmer should focus on production, rather than waste time endlessly gathering documents.

This is why I have issued a directive to develop a system for subsidising loan payments through banks. This measure was designed specifically to support family farms and other small farms.

In addition, we will work on a way to optimise interest rates and expedite the loan application process. This applies to all loans, including for machinery and equipment.

Next, the practice of setting price ceilings for mineral fertilizer and lubricants proved very effective and will be continued. On Saturday the centre for field work coordination will hold its first meeting of the year, which will be followed by the Minister's report on the current situation with lubricants and mineral fertilizer prices and future market trends.

Moving on to milk production. The government has developed regulatory mechanisms for the milk market, including the withdrawal of surplus milk from the market when supply is too high. These mechanisms raise the possibility of purchasing interventions in the milk powder market. Unfortunately, this tool was not used last year. I believe the Ministry of Agriculture must do so this year.

An agreement on milk prices made by the alliances of producers and processing companies will also play an important role. This agreement is being finalised now. It would be great if it could be signed at the congress of milk producers on March 3.

One of the most critical issues facing the agricultural sector is grain market regulation. Our primary task is to ensure that grain production remains profitable. In other words, farmers must be offered a fair price for their grain. Toward this end, we will improve intervention mechanisms and adjust them to suit current conditions.
In addition, the government has repeatedly brought up the need to introduce pledge intervention mechanisms and to switch over to stock exchange trading. We will need to increase the share of high-protein forage cultures in the crops to be sowed, which will allow us to reduce our dependence on volatile grain prices and spur the growth of livestock production, especially at farms. We discussed these issues at the meeting in Kursk on Saturday.

Next, we will use funds from the State Agro-Industrial Leasing Company to upgrade the processing facilities at small farms. I have issued the relevant directives to the company's new director general.

I'd like to touch briefly on the expansion of social services in rural areas. The economic crisis forced us to redistribute part of the funds allocated for social services in order to support the agricultural sector. But we need sustained growth and employment to ensure future stability. We will set more ambitious goals under the targeted programme to improve social services in rural areas in upcoming years.

I would like to emphasise that the government believes farmers are the backbone of the middle class in rural areas. These small and medium-sized businesses ensure social stability in rural Russia. This is why the government will continue its efforts to bolster farming.
In closing, allow me to thank you for inviting me to this congress. I wish you every success.

Thank you for your attention.