OREANDA-NEWS. June 24, 2011.  "In Russia, the national agrarian policy has always been about more than economics. It has at all times carried social implications and in many ways determined the potential for the country’s development in general."
Vladimir Putin’s speech:

Good afternoon, ladies and gentlemen,

Thank you for your invitation to participate in the fifth annual conference of the Russian Agrarian Movement.

Today, as I am told, you have already made an important decision with regard to organisation and personnel. The organisation’s Central Council has been reshuffled, and Viktor Zubkov has been elected as its chairman. I’d like to congratulate him. And I would like to congratulate all of you on this decision because, indeed, Mr Zubkov is a person who has devoted virtually his entire life to agriculture, with the sole exception of the period in which he served as head of the Russian government.

(Addressing Viktor Zubkov) I understand you started working at a state-owned farm. Am I right? You started out as an ordinary worker and rose to the position of farm manager, then you worked as a Communist party and Soviet functionary. From then on, your career was always linked to the Communist party, and you were successful in it.

He thought it would be improper to speak of it, but I have known Viktor Zubkov for a long time. I know that he took charge of a state-owned farm that had one foot in the grave and he built it into a leader, then he was put in charge of another defunct farm and he helped it rise to its feet as well. I very much hope that Mr Zubkov will be as successful in his position within this non-governmental organisation.

I would also like to express my gratitude to the members of the Russian Agrarian Movement, AKKOR (the Russian Association of Farm Holdings and Agricultural Cooperatives), and other industry associations for supporting the creation of the Russian Popular Front. It is important to create new mechanisms for joint discussion and decision-making, the effective promotion of important and relevant ideas, and, of course, a basis for constructive feedback and public control over the way these decisions are implemented. I look forward to good teamwork, all the more so since there are many problems and questions being raised concerning the implementation of these ambitious joint plans. I expect to discuss such issues today.

Let me remind you that in the early 2000s, when we laid out the guidelines for our development strategy, we made the agro-industrial complex a key priority. Those present here know and have surely heard that this is a difficult sector to manage and that results are very hard to achieve. Many have even said, somewhat insultingly, that agriculture is a black hole in which the government would do better to avoid investing its resources. I have always considered and still consider this point of view to be profoundly mistaken. I am pleased that, together, we have managed to discredit these attitudes. We have proved that our decisions have been absolutely correct and that giving support and attention to those who till the land and are determined to achieve success invariably reaps rewards.

In 2006, we launched a national agricultural sector project. It was followed by the launch of a state agriculture development programme. We funded it out of the federal budget to the tune of 550 billion roubles. For their part, the Russian regions contributed a further 250 billion. Those were investments in new and promising developments in agriculture, jobs, social infrastructure, welfare, and opportunities for millions of our citizens to fulfil their potential and guarantee our food independence, providing the Russian people with high-quality, affordable food.

Today the call to “buy Russian” is no longer an attractive abstract slogan but a reality: domestic products are returning to stores after a period in which imports had wiped them off the shelves. There are still plenty of foreign imports, but the situation is changing. More and more, people prefer domestic products that have an edge in terms of quality and environmental purity and that are natural products rather than some cheap synthetic surrogate brought in from abroad.

We are becoming the masters of our own food and agrarian market step by step. All this is the result of the development of the Russian agro-industrial sector – the tangible result of the work of Russian farmers, livestock breeders, and the food processing industry. I can site one example: the share of domestic products in the meat market has increased from about 50% in 2005 to over 75% today, with poultry production more than doubling from 1,388,000 tonnes to 2,824,000 tonnes. Frankly, I do not know that any of our neighbours have achieved such success. These are record indicators.

The production of pork has increased 1.5 times. Fish production has grown by more than a quarter. We have more than enough grain in spite of two consecutive years of drought in 2009 and 2010.

Moreover, only recently, many people did not take the suggestion seriously that Russia could be a viable exporter. We were net importers. Nobody believed that we could sell grain abroad. And yet we have managed to do so by bringing in harvests approaching 100 million tonnes. In 2007, Russia became one of the top three grain exporters in the world. One of the top three.

I am sure that our producers will regain and consolidate their position in the grain market, and the state will render all the support necessary in terms of organisation, finance, and foreign trade. I hope that we will have the opportunity to discuss these plans today in more detail.

But the immediate challenge in this difficult period has been to render emergency assistance to farms stricken by drought and prevent anomalous weather patterns from reversing positive trends in the development of the agro-industrial complex. That includes not only large enterprises but also small and medium-sized private farms. This has been our principled stance, and it has proved a success.

Speaking of support for small farmers, I would like to return to the initiatives proposed at this year’s AKKOR conference in Tambov. I am referring to special projects in support of start-up farmers and assistance to private farms in registering their titles to land. We will follow this initiative through. This year, more than 120 million roubles have been allocated for obtaining land titles. Next year, the figure will be over 1 billion. As regards the project for start-up farms, it will be launched in 2012, as we agreed. The federal budget will allocate 2 billion roubles for this purpose next year. Of course, we expect the regional authorities to contribute their share.

With regard to what has been accomplished, let me say that about 320 billion roubles were allocated in 2010-2011 to subsidise interest rates, leasing, tax benefits, seed and fertiliser, as well as to support cattle producers and provide direct financial assistance to farms that have been affected by emergencies. I am aware that there are some problems with actually disbursing the 5 billion roubles that we allocated to farms that preserved their livestock numbers. We just visited such a farm, and I asked the manager, “Have you preserved your livestock?” “Yes.” “Did you get the money?” “No.” But the region has received the money. And I expect (the governor has promised) that it will reach these farmers shortly. I am referring not only to the Rostov Region but also to other regions. It is a real problem. These are problems connected with the bureaucracy, and these are clear abuses of the bureaucracy. I hope this issue will be settled in the very near future. I am sure it will be. I ask the Agriculture Ministry to monitor this situation and bring the matter to a close.

Next. We have extended the discount period on fuel and lubricants to December 31, and Rosselkhozbank (the Russian Agriculture Bank) and Sberbank have made more than 150 billion roubles available in credit to fund spring sowing this year. Moreover, in spring we used surplus federal budget revenue to support agriculture: we earmarked an additional 13 billion roubles, despite certain limitations and the need to reduce the budget deficit. It’s no secret that the government initially believed that we should first eliminate the deficit and then decide what to do with surplus revenue. But we made an exception for agriculture. In spite of the budget deficit, we allocated additional funding out of this year’s revenue. First, we allocated 3.7 billion roubles to Rosagroleasing in order to allow it to lease equipment to farms at a 50% discount, covering about 6,000 units of equipment in all. Second, an additional 9 billion roubles was allocated for the development of pig and poultry breeding.

Of course, state support could not solve all the problems caused by the drought. But, nonetheless, in a very difficult situation, we managed to build up agriculture’s financial stability, and, as a result, the domestic agro-industrial complex has garnered considerable potential for growth and a large margin of strength, which helped us make it through the natural disasters of the past two years and helped us overcome the negative consequences of the global financial crisis.

Obviously, the impact of weather on farming is always unpredictable. However, we anticipate that this year, agricultural and industrial production will be restored to its pre-crisis levels, and we have every reason to have such optimistic expectations.

You have successfully completed the sowing, which is the basis for a good harvest. You have probably heard the estimates. We expect to reap around 85 tonnes. Let’s hope that the weather remains the same, and I believe that we can reach this goal.

Estimates for the grain harvest are quite good. We should add our crop stocks here, including the intervention fund. As you know, we used part of the intervention fund reserves (mostly fodder grain) to support farming. However, there is still a significant reserve left. Therefore, I would like to confirm our decision to lift the grain export ban from July 1st onward. I think that everyone here understands the reasons for this decision. We could not leave our own country without grain, for fodder or for bread. From the very beginning, I emphasised that this was a temporary decision. By limiting grain exports in August 2010, the government prioritised the domestic supply and preserved the stability of the domestic food market. Despite additional costs and other problems, we succeeded. Now, the domestic grain price is lower than the price on the global market. We have enough stock to ensure smooth supplies until the next harvest. A balance of consumption has been reached, and we can now export our excess supply. Besides, the FOB export price on our crops is around 7,000 roubles in the Black Sea, whereas the global market price is 9,000 roubles.

We fully understand that grain export is a strong motivating factor in production, increased harvests, and extended cultivation. It also implies growing investment into logistical improvements and port infrastructure in southern Russia and the Far East. Finally, it is a real opportunity to diversify the structure of Russian foreign trade turnover. According to experts, next year, Russia will be able to export up to 15 million tonnes of grain and retake its place at the top of the world’s grain exporters. We hope you can make specific suggestions as to how this potential can be fully realised for the benefit of Russian producers. For our part, we promise to provide all the necessary support.

Colleagues, we have no doubt that our pursuit of comprehensive agricultural development should continue. And it is not only about production rates. It is about competitiveness and efficiency. It is about the growing accessibility of quality produce for our citizens and, as I just said, about stronger export potential. What we need is a massive flow of investment and advanced technology. The agricultural sector must become one of the driving forces behind the national economy. And it can do so, just as it can become an industry that is attractive to capital investments, an industry that creates modern and rewarding jobs and allows rural citizens to improve their incomes so that young and qualified specialists choose to work in agriculture. It is clear that the social infrastructure of the villages must be improved, which includes rural healthcare, education, culture, sports and housing utilities.

When it comes to rural healthcare and education, you are aware of the large-scale projects we have created for the next two years. According to the education modernisation programme, rural schools will receive twice as much funding [as their urban equivalents]. We must also focus on the development of rural healthcare, which is in itself a big issue. In the immediate future, we plan to discuss it thoroughly with the representatives of federal agencies, regional and local authorities, social organisations, and, certainly, agricultural businesses. We must specifically concentrate on bottlenecks (and there are still plenty of them) that hinder this process and reallocate our resources to the most pressing matters.

Recently, the government has been deeply involved in drafting the federal budget for the next three years, and this work is still in progress. We have just examined the parameters of financial support for the sector under the auspices of the state agricultural programme. I can report that we decided to increase funding to 130 billion roubles in 2012 and added 12 billion roubles to the initial proposal. This amount (130 billion) has been included under the state programme on agricultural development. We must now ensure its full spending and application to the most critical problems facing the sector. Therefore, I would like to invite the Russian Agrarian Movement and other agricultural unions to participate in a detailed discussion of budget priorities in the sector. I believe that such cooperation will help us take prudent action and better execute our mutual responsibilities. Mr Zubkov is directly involved in the process, and he eagerly defends the interests of the industry – sometimes perhaps too eagerly, if we consider the scale of the sector, although I admit that there is good reason for it. Today, he was elected chair of your organisation’s Central Council, therefore his ties with this activity are even more clear.

I am asking the Russian Agrarian Movement to send its proposals to Mr Zubkov so that he can enlist your help in this work. We will consider these proposals as we develop a new state programme on rural development for the period starting in 2015. We will also consider your suggestions on the budget for the next three years. Let me remind you that, according to the federal law, the programme I have just mentioned must be approved this summer.

In turn, we will suggest that several completely new and independent courses of action be taken under the state programme. The first regards support for the food and food processing industry, as well as small farming communities. The second concerns the infrastructural development of the food market. Third, there is a need to improve the economic regulation of food markets. And, finally, we must consider the maintenance of soil fertility.

By the way, I believe that we should consider returning to localisation in the field of agriculture. There are regions with high economic value and profits. There are also unstable farming regions. We are all fully aware of that. And we should differentiate between the crops that can be produced most cost-effectively in a given region. That means that we should also review Russia’s long history and experience in farming. There is no shame in learning from our ancestors. We can grow watermelons here but we cannot do it there. This knowledge comes with practice and experience…