OREANDA-NEWS. Transcript of the beginning of the meeting:

Dmitry Medvedev: Good afternoon. Colleagues, let’s discuss several high-priority issues and start with the agro-industrial sector. Under the law On the Development of Agriculture, we have to examine a draft national report on implementing the state programme for the development of agriculture. This document sums up the results of our work last year, and in general, over the past five years. Moreover, the document shows how specific goals have been achieved and objectives accomplished. An expert commission, which included representatives of the scientific community, departmental associations and, of course, the national parliament, has prepared its findings.

The Government continues to focus on state support for the countryside. We had been implementing numerous projects over the past few years. Some projects proved to be very effective, and some were not as effective as we wanted them to be. But in any case, a positive trend has emerged. The countryside has started receiving private investment. Therefore jobs are being created, and equipment and technologies are also being received. Of course, we faced difficult seasons in 2010 and 2012, and this made it more difficult to achieve key parameters. Nevertheless, the average annual grain harvests, I repeat, the average harvests, stood at about 86 million tonnes. And average annual exports totaled about 18 million tonnes. Of course, this differs considerably from the situation in the 1990s and in the 2000s because national harvest volumes have changed.

Other crop harvests, including production of beetroots, rice, sunflower, corn and soy beans, also expanded rapidly. We started establishing large agricultural holding companies, which include fodder facilities and high-tech livestock-breeding farms, as well as processing and sales units. This is probably correct.

Under the federal targeted programme Social Development of the Countryside, about 100,000 families have received better housing in the past five years. I am particularly happy to mention the more than 50,000 young specialists who are very important for the future of the countryside.

Gas-pipeline construction also expanded in the countryside during the implementation of the relevant rural gas-delivery programme being implemented by Gazprom together with the regions.

Of course, we are moving ahead, and we are also facing our fair share of unresolved problems, including the financial stability of agricultural producers. The Ministry of Agriculture estimates total 2012 profitability rates at about 15%. At the same time, these profitability rates total 4.5% or about 5%, to be more exact, minus subsidies. The specific share of loss-making companies is almost 20%. Wages in the agro-industrial sector remain rather low, as compared to nationwide wages, and total about 15,000 roubles. We will have to accomplish all this and many other objectives under the new state programme in 2013-2020.

And, of course, Russia’s accession to the World Trade Organisation is another challenge. This is a reason why we are closely watching rural processes. This is why decisions to allocate additional funding are being made, even despite the rather complicated situation around forming the budget and slower economic growth.

Nonetheless, our accession to WTO will compel us not only to make managerial decisions but also to spend money. Today we’ve invited one of the governors from the agrarian areas to our meeting – Rostov Region Governor Vasily Golubev. He’ll say a few words. One more issue we’ll discuss today is how the development rates and the living standards depend on the effective performance of the authorities. Last year the Government endorsed criteria for assessing the performance of the regional authorities. They answered the main question: what have the regional authorities done independently to develop their economies and improve the social wellbeing of their people and what is the result of federal investments?

Analysts have rated the regions using the following key criteria –average life span, prevention of child abandonment, income growth, the unemployment rate, available housing, the commodity and services turnover of small companies, and private investment in basic assets. There are many yardsticks to judge the performance of the regions. Some of them are doing better than others. The average life span has approached 70 years and 36 regions have exceeded that. I’m referring not just to the North Caucasus where people traditionally live longer despite the modest conditions, but also the Stavropol Territory, the Rostov Region, Moscow and St Petersburg, to name a few.

The average national income was about 245,000 roubles a year per capita, which is a 4.2% increase over the previous year. At the same time, in the leading regions this figure is more than double that of the lower regions – 300,000 roubles versus less than 150,000 roubles, respectively.

There are also criteria on providing new housing. That varies in different regions as well and we’ll talk about that now. In any event, when the ratings are compiled, the key criterion is the opinion of the people. What matters most is whether they are satisfied with the performance of the regional authorities and the quality of the social services. We’ve invited Mr Fyodorov, the Governor of the Nenets Autonomous Area, to the meeting. This is a fairly small territory. He’ll also say a few words about this.

The third item on our agenda is very important, but we won’t discuss it in public. I’m referring to the amendments to the law on the federal budget for 2013 and the planning period of 2014 and 2015. As always, this is a complicated issue. That said we have saved some money by reducing allocations on internal debt maintenance. We must make the most of these funds. We must use them to support agriculture, in part, to reimburse livestock breeders for fodder purchases and some expenses on short-term loans (we’ve made a decision on this).

Our equity payments to Russian Railways amounts to 10 billion roubles and is aimed at developing railway traffic and infrastructure in the Moscow Region. There are many allocations on national defence and law enforcement and some projects on science, culture and sports. The Minister of Finance will report on this subject.

These are the key issues. Let’s start with the report on the state programme for the development of agriculture in 2008-2012. Let me recall that this is the first time we have carried out a state programme in rural areas. By and large, it has produced good results. Mr Fyodorov, go ahead please.

Nikolai Fyodorov (Minister of Agriculture): As you pointed out Mr Medvedev, the requirement for a national report is prescribed by the law on the development of agriculture. In this particular case, the report covers not only the previous year, but the entire period between 2008 and 2012, as the programme ended last year.

The report that has been prepared for the government members consists of two volumes and 281 pages. It is symbolic that the first indicative planning document in the agricultural sector went into effect in the difficult year of 2008, and played quite literally a historic role. Thanks in large part to the state programme, the agricultural sector, along with (I am sure that not every Government member will be able to say along which sector) the energy sector demonstrated growth during the financial crisis.

For the agricultural sector, the importance of the first state programme also lies in the fact that it provided a transition to a targeted planning method that ensures a correlation between the allocation of budget resources and the expected results based on the priorities set by the Government. During the five years of the programme's implementation, the agricultural sector received a total of 487 billion roubles from the federal budget, and an additional 243 billion roubles from regional budgets.

Technically, the funding of the state programme has been exceeded (I will address this later) by 18.5%. Government support to the sector has resulted in the influx of private investment, which by the end of 2012 totaled 1.8 trillion roubles. Each rouble of financial support provided by the Government has attracted over 5 roubles in private investment.

Loans and leasing instruments also proved to be quite effective during this period. As a result, the agricultural production rate has increased by about 17% over the five-year period, including 14.6% growth in crop production and 14.9% growth in livestock production.