VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Transcript of the beginning of the meeting:
Vladimir Putin: I have a few questions for you, Mr Zubkov. Have our support measures succeeded in agriculture? I am referring to the measures we approved earlier this year regarding the provision of fuel and lubricants and efforts to restrain price hikes, including prices of fuel and lubricants. We also planned to restrain the prices of chemical products, fertilisers, along with the rates on loans. We continue to subsidise interest rates on short-term loans and carry on with our extensive package of customs and tariff measures. How are they working? This is my first question. And here's the second: What is your assessment of the spring planting campaign?
Viktor Zubkov: Mr Prime Minister, the support policies approved by the government, notably the measures you have mentioned, are working quite well. The state programme for 2008-2012 adopted to implement the law on agriculture has been effective.
The year 2008 was quite good; it was even indicative in terms of a large grain harvest and a commendable growth rate in livestock breeding. We recently analysed these figures for 2009 and it was also a very good year. Gross production in agriculture grew and livestock breeding produced nearly 700,000 metric tonnes of meat more than in 2008.
The first quarter of 2010 was not bad either, with a 3.6% growth in gross agricultural production and a large increment in meat production compared to the first quarter of 2009. The production of poultry products alone grew by 96,000 metric tonnes in the first quarter this year. In short, we have gathered momentum and must now maintain it through the end of the year at least as well as we did in 2008 and 2009.
The government measures have had their effect. We continue to subsidise 100% of the loan interest rate in dairy stock breeding and 80% in beef stock breeding. We are also subsidising all extended loans, including those issued to compensate for the harvest shortfall last autumn.
Our measures related to the customs and tariff policy are also yielding good results. The government resolutions - you signed one more resolution the other day - allow us to conduct monthly monitoring of livestock and plant breeding and also to implement prompt customs and tariff measures when necessary, in particular to cut quotas or approve imports from other countries in case of interrupted distribution from our established business partners. This policy is encouraging our businesses to increase production.
These measures, taken as a package, give us hope that 2010 will be a very good year. The law on trade, which became effective on February 1, will supplement government support [in agriculture]. Some people feared that it would hinder trade and spur prices, but this has not happened. We have established a permanent working group under the government, which I am chairing and which includes representatives of farming and processing companies and large retail chains. You know these people; you have met with them at local meetings and when we were working on the trade law. We have held several working group meetings, and I can tell you that we have not detected any negative influence [from the trade law] on the market.
Vladimir Putin: The main goal of this law is to balance the interests of agricultural producers with the interests of the processing and distribution companies.
Viktor Zubkov: Yes, this is so. In the first quarter of this year, prices of some types of bread and bakery products, cereals, legumes, sugar, butter and vegetable oil went down compared to the first quarter of 2009, and meat prices have been kept at the December 2009 level.
Vladimir Putin: That is, they are not rising?
Viktor Zubkov: No, they are not.
Vladimir Putin: One goal was to help agricultural producers receive payment for perishable goods from retail chains promptly, within ten days, and payment for other products within 30 days.
Viktor Zubkov: Within 30-45 days.
Vladimir Putin: Is this system working?
Viktor Zubkov: Yes, it is. The group has been working to ensure the adoption of many bylaws related to the trade law to allow the monitoring of these processes. We must prevent the reappearance of the bonus system and ensure the development of trading sites. The group is working very effectively. We believe that the Administrative Offences Code should be amended to exact penalties for those who violate the law and the rules we have agreed to. This concerns both the producers, who must supply a quality product on time, and the processing and distribution companies, which must not be allowed to impose additional mark-up.
Vladimir Putin: The law must also protect the interests of retail chains.
Viktor Zubkov: Of course, all sides must be held equally responsible, including the producers and the retail chains.
Vladimir Putin: I'd like to hear about the spring planting campaign. How is it progressing?
Viktor Zubkov: The spring planting campaign has been adjusted to the schedule and is proceeding well, in my opinion. The measures approved by the government, notably the prices of mineral fertilisers, fuel and lubricants, are being implemented.
Vladimir Putin: Have the chemical and energy companies fulfilled their promises?
Viktor Zubkov: Yes, they have, and we believe that this is one more effective support measure in the agriculture industry.
Vladimir Putin: I would like to discuss one more point. In the past we produced less grain than needed, and so had to buy it in large quantities from other countries. Now we have become one of the largest world exporters, third after the US and Canada. We've got a lot of stored grain, but it costs us a lot to store it. We spend almost one billion roubles a month on storage. We agreed we would sell some of the grain, but found ourselves in a difficult position as world market prices dropped below our purchase price. What shall we do with all this stored grain? What do you propose?
Viktor Zubkov: You are correct. We have a great surplus of grain. Just a year and a half ago, one metric tonne of grain was valued at $400 and now it is about $180-185, which is less than half as much.
A resolution on reselling 1 million tonnes of grain, bought by the government, to foreign countries was signed, and we are now looking for potential buyers, mainly in the Far East. We will try to sell 1 million tonnes of grain there. At the same time, we set an objective (and many regions achieved it during the planting season) to increase production of those crops that are usually imported to Russia. This will help the market to reach an equilibrium level.
Vladimir Putin: This will help in the future, but now we cannot sell the grain at a profit, only at a loss; storage is also expensive: we spend one billion roubles per month on storage; I would like to stress this. Maybe we can use it for cattle breading?
Viktor Zubkov: We had such proposals, which are closely connected with state programmes, at a meeting of the Government Commission on the Agri-Industrial Complex. We instructed the Ministry of Agriculture to develop new ways to use the grain bought by the state from growers. We will study these approaches soon and will find domestic uses. Over 30% of the grain (3.5 million metric tonnes of 10 million) bought by the state is feed grain. Of course, we should use it within Russia, and many regions support this idea. However, we have to develop an economic balance and ensure that the state does not suffer a great loss.
Vladimir Putin: We supported the industry by buying the grain, but we cannot do this regularly, as it leads to budget losses. We should respond appropriately to current economic conditions domestically and in the export market. Our proposals can be drastic and challenging, but they must be efficient.
Viktor Zubkov: I absolutely agree with you: we need to look for new ways to dispose of the excess grain without yielding a loss for either the growers or the state. I also agree that the state undertook all the risk in this large purchase - over 38 billion roubles worth. We did remove excess grain from the market, but we also spend about a billion roubles a month to store it. We are looking for ways out, and are cooperating with the regions. I am hopeful that we will find a solution to this problem soon.
Vladimir Putin: What about the export of animal products? What are the plans and price quotes?
Viktor Zubkov: Less animal products are being imported into Russia. Still, as I mentioned, you signed a resolution allowing the Government Commission on Foreign Trade Protection Measures in Customs and Tariff Policy that I head up to take a decision on the reduction and alteration of quotes and on replacing the exporters that cannot deliver their products to our country... This is what this resolution is about. Let us assume it is already working. I believe this is right and the timely support of agricultural producers is profitable for the state.
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