OREANDA-NEWS. September 16, 2010. During his working trip to Murmansk, Dmitry Medvedev held a meeting on agricultural and fishing products processing. Supplies by farmers and food pricing were also discussed.

In his opening remarks, Dmitry Medvedev noted that major funds have been invested in the development and modernisation of agriculture in recent years. At the same time, the revival rate in the processing industry was considerably lower. The resulting imbalance has provoked a monopoly in some segments of the food market and a disparity in pricing policies in certain areas. The President outlined a series of priority measures to improve the situation in agribusiness.

Earlier, President Medvedev visited the Rostov, Orenburg and Saratov Regions, where he also held a number of meetings on the situation in agriculture and the food market.

* * *

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Good afternoon, colleagues,

If you have noticed – and you probably have – I have held quite a few meetings recently on the development of agriculture, including meetings of the State Council Presidium, meetings in Saratov and Voronezh, and some other events in Moscow.

This is largely due to the current situation on the food market, the need to monitor it, to adjust it when necessary, and in general due to the fact that recently we have been focusing a great deal on agricultural development and the food market. In some areas we have been successful, in others less so, but in any case, as they say, there is a lot to lose and our task is to make sure that we do not lose anything.

Today, here in Murmansk, considering the region’s special needs, I would like to focus on two interrelated issues: the pricing policy for the food market, which has always been more complicated here than in central or southern Russia, and agricultural products processing, which we haven’t addressed yet and now, I hope, we can do that.

Experts say that 30 to 50 percent of the final price of any product is processing and logistics cost. What does this mean in reality? This means that the availability of food is largely determined by the efficiency of processing enterprises and the level of infrastructure development. And this affects the food market as a whole.

Today the Governor and I went into a supermarket to have a look at the prices. I must admit that they are certainly higher than in central or southern Russia. This has always been the case. People’s opinions on the subject differ: some say the prices have grown disproportionately recently, and others believe they have remained practically at the same level.

In any case, a separate issue relates to monitoring the market. In order to ensure price stability it is necessary not only to grow the product but also to ensure quality processing and then deliver it to consumers at the lowest possible cost – and only in that case will our industry be competitive.

A large number of people are employed in the processing industry: almost 1.5 million people at nearly 45,000 companies. That is a serious workforce. In this context, the organisation of processing at the local level becomes crucial, as well as financial potential, and technological and production capacity.

In recent years a great deal of money – you are aware of the precise figures – has been invested in the development and modernisation of rural areas within the framework of the [Agriculture] Priority National Project. Of course, not everything has been done yet but our efforts of the recent years have ultimately contributed to [balancing] the situation this year, because if it were not for those past investments the state of agriculture and the food market would have been much worse than it is now, and that is recognised by practically everyone. However, I note that we focused primarily on developing agricultural production. The revival rate of the processing industry was much lower because of the priorities we had set.

At present, the amortisation in the processing industry is up to 70 percent. Here is one number that I think is quite curious: 30 percent of factories that produce cereals in Russia have been in operation since before the 1917 October Revolution, and a significant part, the majority, was launched during the Soviet period. The resulting imbalance has given rise to monopolies in some segments of the food market and caused certain disparities in various areas, and profiteers, of course, took advantage of that, so the situation must be rectified at both the federal and regional levels.

What is to be done? First, we must boost the modernisation of the food processing industry. Of course, this is easier said than done. Nevertheless, it is time to replace obsolete technologies, changing along the way our approach to how these technologies should be developed. Renovation, re-equipment and construction of new plants with equipment that is energy efficient and resource-saving, and using modern and innovative technologies - here, the situation is not ideal but without these changes there can be no movement forward.

Increased attention should be paid to the development of meat and dairy production. This completely fits in with the priorities that we have set some time ago for the [Agriculture] Priority National Project and as part of Agricultural Development Programme. And it is very important to create not only agricultural corporations (they will appear by themselves if this becomes a viable business), but it is vital to encourage the establishment of small processing plants. This is a more complex issue because it usually involves small investments made by people independently, often even without the involvement of banks. However, this production processing cluster is crucial.

The second area is the development of modern storage infrastructure, transportation and delivery logistics, which should become a priority for the national project on the development of the agroindustrial complex and the corresponding state programme for the period until 2017. This is extremely important for the entire agricultural sector and for the situation on the food market. Ultimately, it is very important for the consumer. I hope that this subject will be outlined in the report which my colleagues from the Government will make. I very much hope that the heads of farms and agribusinesses present here will also speak on this subject and tell us about their experience.

Thirdly, the development of the processing industry plays a significant role in addressing social issues. These evidently include creating jobs, securing qualified personnel and, ultimately, improving the quality of life. The implementation of new projects and modernisation of existing plants must go hand in hand with the creation of a modern social infrastructure.

As you know perfectly well, it is impossible to retain a qualified professional in a rural area, in a small town or in a city if there is no good social environment. In fact, big companies are addressing this issue. It is more difficult, of course, for medium and small businesses, but they must do it anyway.

Finally, here in Murmansk, we cannot avoid the subject of fish processing. In general, meetings on this subject are held regularly. We have not seen much success in this respect, but there have been some achievements nonetheless. In any case, we must try to make our fishing and fish processing industry competitive.

Here, of course, different approaches can be used. I hope the managers of companies present here will tell me which approaches they think are best and I would also like to hear about it in the reports by the colleagues from the Government. Then we can discuss our impressions.