Nezavisimaya Gazeta: “Budget Being Prepared For ‘Operation Soak Up’”
Igor Naumov
Russian taxpayers will pay farms for grain overproduction and exports
The global crisis and grain overproduction have made grain exports unprofitable. Despite this, Russia's agro-industrial sector plans to export 10 million tonnes of grain in 2008. At its meeting yesterday, the Government decided to compensate farms for their losses from the state budget at the expense of the taxpayers.
Yesterday the Government considered the budget fulfilment results for the first nine months of 2008. The previous day White House officials said that with the global financial crisis and the economic situation drastically changed, it did not look logical to discuss them. Trouble was first sensed in October, while earlier everything was quiet.
First Deputy Prime Minister Viktor Zubkov and Agriculture Minister Alexei Gordeyev were particularly proud of this year's record harvest. Prime Minister Vladimir Putin was also glad that more than 100 million tonnes of grain had been thrashed.
But Russia appears to suffer not only from a shortage but also from an abundance of grain. "We have not only a record harvest but a problem in how to sell it," Mr Putin shared his concerns before giving the floor to Mr Zubkov. The First Deputy Prime Minister did not look triumphant yesterday. More than 20 million tonnes of newly harvested grain remain uncalled for. Mr Zubkov said he held two meetings on the subject in the last two weeks and the ultimate decision was made.
"The state must soak up this surplus," the First Deputy Prime Minister said firmly, and proposed to Mr Putin a plan for such an operation. The state would buy over 10 million tonnes for the intervention fund, at the same time driving purchase prices up. By yesterday, 2 million tonnes had been bought, costing the budget 8.5 billion roubles.
Taxpayers will also have to fork out money to support grain exporters. World grain prices are down by one-third, and exporters are forced to sell grain at a loss, Mr Zubkov complained. Despite unprofitable exports, the official said farmers planned to sell 10 million tonnes abroad. With grain to be sold below cost and the firms to lose 1,900 roubles on every tonne, Zubkov suggested that exporters be compensated for their costs. The budget will allocate 10 billion roubles for this purpose.
Lobbyists are not concerned that Russian taxpayers will pay for consumers of Russian grain in other countries. Not only that, but farmers are ready to step up production. As Mr Zubkov said, areas to be sown to grain have been increased by a further 300,000 hectares this year.
Grain was not the only topic discussed. Mr Putin also raised the issue of milk and new technical standards due to take effect December 17. Regions that have large stockpiles of powdered milk are pleading with the Government for a postponement of the new rules, according to which only a product made from fresh milk can be called milk. Anything else produced from powdered milk must be called a milk drink.
Zubkov proposed that powdered milk surpluses be bought for the intervention fund. Mr Putin took a more guarded attitude. "You must feed us with a good and high-quality product," the Prime Minister said. For the ministers and deputy ministers not to misinterpret his remark, Mr Putin explained that he recommended a quality milk diet for all people, not just Cabinet members.
