Visits within Russia

28 february, 2012 19:48

During his visit to Bashkortostan Prime Minister Vladimir Putin takes part in the national agrarian forum in Ufa

“Agriculture has proven to be one of the most lucrative industries in the national economy. Measures that have been taken to support it have proven very effective.”
Vladimir Putin
At a national agrarian forum in Ufa

Vladimir Putin’s speech:

Good afternoon. I’m pleased to welcome all participants to the national agrarian forum. This is a period of great responsibility: preparations for spring fieldwork are in full swing. You are laying the groundwork for a future harvest, and above all, I’d like to wish you success in the current season.

Talking about strategic industries, we primarily refer to the defence industry, machine building and space. This is certainly true but it is also true that the agrarian sector of our economy is also strategic – it deals with food security, allows for the extensive use of high-tech achievements and creates new jobs. And, finally, we should not forget that all experts say that food and water will become the most important resources in the near future. Obviously, we have many opportunities for developing these resources. This is why it is so important that today, agriculture is becoming one of the locomotives of Russia’s development and our national growth, refuting all stereotypes to the effect that no amount of money or effort can pull our agro-industrial sector out of its problems.

I’d like to note that agriculture has proven to be one of the most lucrative industries in the national economy. Measures that have been taken to support it have proven very effective. Since 2006 investment in our agro-industrial complex – some of you may be aware of this figure but probably not all of you, and it’s a huge figure – has exceeded 1.5 trillion roubles. These solid funds have produced tangible results and not just by upgrading production. The development of our agro-industrial sector has become an objective factor in ensuring the sustainable development of our economy as a whole, and improving the living standards of millions of people. I’d like to mention the record low inflation that was achieved in 2011 – the lowest this country has seen in the last 20 years. No doubt, rural workers have contributed significantly to the resolution of this macroeconomic task. It is thanks to your efforts that we have managed not only to receive a good harvest but also to keep prices at an acceptable level. All these factors helped to curb inflation. After the extremely difficult seasons of 2009 and 2010, when droughts and natural fires destroyed more than one third of all harvests, our farmers did not become desperate, but rather preserved and consolidated the development potential. I’d like to mention just a few figures – last year the growth of agricultural production exceeded 22%; production of pork grew by 10% and of poultry by 12%. I’m sure that other directions of livestock farming, especially of cattle, will also gain momentum.

Last year grain harvest amounted to almost 94 million tonnes, which allowed us to replenish our reserves and not only to fully meet our domestic demand but also to export about 27-28 million tonnes. This is a good figure and we once again rank third place among the world’s top grain exporters. You’ve done an excellent job and we will continue supporting all those who work on land – there is no doubt about that.

We have allocated 170 billion roubles in the federal budget for support of the agro-industrial sector. In addition, our biggest banks with state participation (both Rosselkhozbank and Sberbank) will additionally provide no less than 150 billion roubles worth of loans. We will keep an eye on the accessibility of loans at all times. I’d like our bankers to remember that crediting of small and medium-sized companies must be at the top of their list of priorities.

As in the past few years, agricultural producers will enjoy a discount on fuel and lubricants – 30% off the price that was fixed on December 31 of last year in each specific region. Importantly, this discount will apply to wholesale rather than retail prices, which will lower the costs of fuel and lubricants even further. Supplies of discounted fuel will be increased by 10% as compared with last year’s level. This will allow agricultural producers to save 11 billion roubles in the first half of this year.

Last year producers saved 18 billion roubles and this time they will have saved 11 billion roubles in the first half of the year. We will continue replacing obsolete agricultural equipment with new models. Last year Rosagroleasing received 3.7 billion roubles for this purpose. As a result, agricultural producers purchased more than 5,000 units of equipment at a 50% discount. This year Rosagroleasing will also supply domestic equipment on easy terms. They will not have to make a down payment and will be able to postpone the first contribution for half a year.

I hope many producers will find this helpful. All in all, 8.5 billion roubles are earmarked for this programme. Starting this year we are also going to use federal budgetary funds to make up for about half of all expenses on the construction and modernisation of intra-farm land reclamation networks. This will be done under regional programmes.

I’d like to emphasise that we have supported and will support all forms of work in the countryside. At last year’s convention of the Association of Farm Holdings and Agricultural Cooperatives (AKKOR), we spoke about support for budding farmers and self-employed entrepreneurs in the countryside. We said how important it is to help them get on their feet and build their farms and houses. Many colleagues spoke about this. We are going to launch a relevant programme sometime in the next few months. We will allocate two billion roubles from the federal budget toward this programme and hope that the regions will contribute as well. In addition, we will expand the programme on family dairy farms.

Last year we helped farmers with land registration -- the federal and regional budgets earmarked 120 million roubles for this purpose. This year we have allocated much larger funds – 1.4 billion roubles – to this end.

I’d like to touch on another issue that is often raised by farmers, agrarian businesses and unions. I’m referring to extension of the zero revenue tax rate for agricultural producers. This issue is being worked on by the government as well. To be honest, there’s no answer to this question yet. We need to re-assess our capabilities, but we will operate in accordance with the interests of agricultural producers no matter what. The tariff decisions made this year have been of great help to all farm businesses. Natural gas and electricity rates have remained unchanged, which will also help agrarian businesses cut their costs and save resources. This is particularly important during the spring. Our decisions in the area of power supply  are also designed to help the agro-industrial sector: from now on, energy companies will not fine consumers for under- or over-consumption of electricity. I hope this will amount to a tangible contribution to our joint work.

I’d like to add that it’s important that we protect the agrarian business against abuses by monopoly operators, including infrastructure monopolies. As you may be aware, we are introducing serious measures of anti-corruption oversight with respect to major companies, including income disclosure requirements for senior executives. I believe that we need to apply the same approach to regional suppliers of electricity and other resources. Obscure state and municipal unitary enterprises and various other entities should be brought out of the shadows. Retail and wholesale agricultural markets will continue to be overseen by the state. Our goal is to facilitate the sale of produce by farmers without the involvement of any middleman. Occasionally, this is impossible to avoid, but their numbers should be kept to a minimum. We should focus on building a modern and civil infrastructure for selling farm products, such as farmers’ markets, fairs and specialised co-ops. However, we should do so in a measured and balanced way so as to not impinge upon the interests of producers and consumers.

This is exactly why the government decided to put off the phased-in transition of farmers’ markets to specially outfitted capital buildings. At the request of the Russian regions, the deadline for transitioning farmers’ markets was put off until 2015. But time passes quickly. Governors should begin preparing the infrastructure now, and they should do it in such a way that farmers don’t become ultimately responsible for covering these costs when they lease their trading spaces, and so they won’t have to increase prices for their produce. At the same time, we need to make wider use of popular weekend markets, and provide free and unfettered access to such markets for farmers and owners of private farm holdings. Any and all access charges should be made illegal. I’d like to emphasise that this should fall under the direct responsibility of local authorities. We will certainly develop the agricultural cooperative business, as well as the procurement, processing and sales businesses, and we will think of the best ways to use the capabilities offered by Rosselkhozbank and Rosagrolizing.

Speaking about the prospects of the Russian agricultural business, we can’t avoid talking about Russia’s accession to the WTO. I’m aware that this concerns many of our agricultural producers; therefore, I will elaborate on it. As we know from the experience of most of the WTO member states, joining the organisation provides major additional opportunities, the most important of which includes free access to the international market. We have already said that our export potential will increase (it’s up at 25-28 million tonnes of grain). However, in order to be able to protect the interests of producers, and later, of exporters, Russia needs to be a full-fledged member of the WTO, because otherwise we will always end up in a situation where our interests are infringed upon. Greater transparency and attractiveness of national economies to domestic and foreign investors is also a major factor during accession to the WTO and an effective tool against unfair competition both domestically and internationally.

In order for us to be able to use these opportunities to the fullest, we should adopt the best practices used by the WTO old-timers, learn to use all forms of support, both direct and indirect, provided to agrarian producers. There are many such tools, and all WTO member countries are using them with great success. Our goal is to use them wisely in our development strategy and make them work toward the further promotion of our agro-industrial sector.

Allow me to repeat: we will not permit anyone else use our agrarian resources, or any other part of the Russian economy for that matter. We will not put the industry at a disadvantage against stronger competitors. Obviously, the point of reviving Russian industry and the agriculture industry in particular and investing 1.5 trillion roubles in the process is not to get everything ready to be gobbled up by some unfair competition. Allow me to emphasise this: we have many tools that we can use to protect domestic producers. We only need the concerned departments to give these tools some consideration in advance. We still have time, since the final accession will only take place after we are done with our internal procedures sometime this summer. Now is the time to think about market protection tools.

I’d like to point out that, first, many WTO standards have already become part of our routine work. In addition, 90% of what we are doing now is in line with WTO international rules and requirements even without us being a member. As far as the Customs Union and the single economic space go, they were built on WTO principles. Our union with Belarus and Kazakhstan, including the Customs Union and the single economic space, are completely based on WTO precepts.

Second, adaptation procedures will be applied in a number of sensitive industries, primarily the automobile industry and agricultural equipment manufacturing, and in poultry and hog farming. In order to be able to protect these industries and help them ease into a new competitive environment, we will certainly use any available tool and work together with you on pinpointing solutions which are really needed in a given agro-industrial sector.

Finally, WTO rules primarily involve direct support for agricultural producers, but they are in no way related to programmes for the comprehensive development of rural areas. I just want to point this out. As far as direct support goes, we agreed on something that we haven’t even had before. This year we are allocating $5.5 billion, in equivalent dollars for agricultural support. We have agreed with the WTO that we would be entitled to provide this kind of support in an amount up to $9 billion. We will be entitled to provide the same amount next year as well, and then this amount will start gradually decreasing. Again, indirect forms of support are available, and they include primarily the development of infrastructure, such as roads, co-ops and so forth. There are many components in this that can be used to support and help agricultural producers be more effective and competitive. We are in no way limited in our investments in rural infrastructure.

I’d like to remind you about our decision to use regional road fund resources. They should be primarily used for building rural roads and improving the infrastructure at all urban and rural centres in Russia, including the maintenance of municipal and rural roads. In all, this project should receive financing in the amount of at least 130 billion roubles over the next two years. I’m here to tell you that this much money has never before been invested in rural roads or for the upgrade of urban and rural centres.

We will also expand staff training and research programmes for the needs of agriculture, and we will certainly keep expanding the social infrastructure. We have built over 15 million square metres of housing under the federal targeted programme Social Development of Rural Areas, and installed water and gas supply lines to more than half of all rural buildings. In addition, we have improved power and telephone service in rural areas. All of that improves the quality of rural life, opens new opportunities for economic growth, strengthens Russian producers’ positions, creates new jobs and attracts young people to rural areas. We have also decided to extend the federal targeted programme Social Development of Rural Areas until 2013.

However, I believe that we should pursue a more ambitious goal. We need to build a truly modern rural social policy that would meet in full the interests of the people, especially in education and health care. I can tell you that a programme for the sustainable development of rural areas is being developed now, which will include key social needs: utility systems and building infrastructure.

We will need to adopt one more strategic document this year -- a state programme for the development of the agriculture industry until 2020, which will determine the industry’s key priorities and support mechanisms. By the way, this programme will be fully adapted to the WTO environment. We will provide a powerful and lasting impetus for agriculture, including small- and medium-sized rural businesses and create proper conditions for improving domestic producers’ competitiveness. Of course, we need to accelerate the process of replacing imported food with domestically produced food and strengthen our positions in the Russian food market, which is particularly important given our upcoming WTO membership, something I have covered extensively.

I am confident that we have all it takes in order to be able to focus not only on quantity, but on quality as well. The quality and affordability of domestically produced food should be the focus of our national agrarian policy. No doubt, the prosperity and new opportunities for millions of people in our country greatly depend on progress in rural areas.

Thank you for your time. Thank you very much.

* * *

Vladimir Putin’s comments on statements by forum participants

Vladimir Putin: I would like to inform you that I have signed a series of acts aimed at supporting agricultural businesses, which were drafted by my colleagues. I will begin with the important social concerns such as support for young professionals who move to rural areas and accept jobs in agriculture. In fact we have been allocating funds for this purpose consistently, and will increase the total funding to 2.5 billion roubles this year. This is my first point.

Second. Many of those present here should know what I am talking about, as many of you have raised the issue of government support for the so-called large regional projects many times, including last March. A decision has been made, and we will begin providing that support this year.

Next. We will begin providing support for pedigree livestock ranches (the first time from the federal budget) and start-up farmers and family farms.

You have raised a few more issues here. We have agreed that, once Russia joins the WTO, we will be able to spend the equivalent of $9 billion to support agriculture. So Mr Tretyakov here (chairman of the Association of Farm Holdings and Agricultural Cooperatives for the Lipetsk Region) asks me, why aren’t we doing this? Well, we haven’t joined the WTO yet Mr Tretyakov! We will not pass this resolution until this summer, when the fiscal year will be almost over. But, jokes aside, this amount is very large. We could provide this much, and maybe even more. This figure is a financing limit. You know that we increase support every year – I mean we are doing more than direct financing. Take the discounts on fuels and lubricants – this isn’t direct financing, but it will save you a total of 11 billion in the first half of this year. There are other forms of support that are essentially direct, although formally they aren’t.

As for the legal status of farms: frankly, I have overlooked it somehow. I will make a note for myself and return to this later. You were right again Mr Tretyakov. A farming business’s property is its only source of collateral. We’ll return to this and provide a relevant instruction. The minister is here, so let’s discuss this with the Economic Development Ministry and return to this issue. The same goes for extensions: we will consider an extension of the current status and include it in the same package of proposals.

Now about… Mr Pavlov, is it? (Valery Pavlov, chairman of the Chuvash Republic union of consumer societies) About support for consumer cooperatives, and particularly investment loans – we could think about this. We are currently providing some support, not exactly for investment loans, but for short-term acquisitions of products required for operation. This requires additional resources. Subsidies are money. Give me some time to make some estimates, will you?

The size of social security contributions is a very sensitive and difficult issue. We have cut the premium for a very limited group of businesses working in the high tech segment or in the social sector. But we’ll think about this and return to it later. The problem is where social security taxes go: they go into pensions, that’s where. Today’s social security payments are tomorrow’s pensions. But we’ll reconsider this, all right?


Vladimir Putin answers questions of forum participants

Vladimir Plotnikov: Mr Putin, my name is Vladimir Plotnikov, and I represent the association of Russian farmers. We have been discussing something on the sidelines, and many would have wanted to ask this question, but they seem a bit afraid or shy maybe. But, as we represent farmers…

Vladimir Putin: They can’t be. These aren’t those kinds of people, and this isn’t the first time I’ve spoken to this audience…

Vladimir Plotnikov: We would like – I would like – to make this point, something that many of us would have wanted to tell you directly…

Vladimir Putin: Just go ahead.

Vladimir Plotnikov: This is about a very important issue. The decisions made at the government level – the results take a long time to reach the farmers in the regions. When we see how they get distorted along the way – like they were reflected in a trick mirror… I mean important policies, which the sector really needs, do not effectively reach the farmers. This, in fact, happens because some of the regional governors are weak, unprofessional and incompetent, Mr Putin. Such governors really discredit the government in general. People say, they let Putin down, that’s what they do. I wouldn’t share a foxhole with any of them.

Vladimir Putin: You know what? You just handed me the perfect opportunity to shift the responsibility to someone else. But that’s not how I behave. I must respond that we do have a strong gubernatorial corps. There are some problems out there, although governors are a very limited group. Still, I agree that some of these issues exist.. But we do make personnel decisions whenever necessary, including the regional governors. We can’t stage a witch-hunt here. We need to proceed with caution. There are many rural leaders here, and they certainly know that human resources are a difficult area. The situation isn’t exactly favourable sometimes, to put it mildly. In the past 15 years, everyone has complained about the Soviet era, and many of those complaints were justified. Suffice it to recall the time when peasants were stripped of their passports and not allowed to travel or relocate. They were effectively turned into serfs.

And I will not talk now about profitability in agriculture and so on, I am not going to talk about this now. But they worked well with the personnel: there was a personnel reserve, a personnel pool of sorts, and people were promoted from within this pool. But everything was very ideologised, which was terrible. That was the main mistake, a system-wide mistake. On the whole, though, technically speaking, things got done. Today there is practically no personnel work of this kind. But it must be done, there is no doubt about it. So, in that respect we will work steadily, without undue haste. But I have to say that if some decisions do not reach lower levels – of course, much of the responsibility regarding this lies at the regional level – but if the federal decisions do not reach them, and I am ready to assume part of the responsibility, that means the decisions were not formulated well enough and compliance with these instructions was not properly monitored. We will work together, it is more reliable if we work with you.

Question: Good afternoon. My name is Yulia Kolobova, from the Republic of Karelia. A new programme, The Young Farmer, has been signed and I would like a clarification: all the grant programmes are taxed at 13%, the personal income tax. Because this is a very large sum, it appears that… 

Vladimir Putin: You think 13% is a large sum?

Yulia Kolobova: It is a lot considering the grant amount, 1.75 million. Can some arrangement be reached with the tax inspection to reduce this amount, or perhaps exempt the grant from taxation?

Vladimir Putin: This is not about the tax inspection, it is acting according to the law. Its duty is to keep watch. Decisions must be made at the government level in order to exempt grants from personal income tax. 

Yulia Kolobova: That is why I am asking that question.

Vladimir Putin: Maybe. But after all, it is income. A grant is income.

Yulia Kolobova: An individual's income… an individual is an entrepreneur, yes… He derives his income from entrepreneurial activities…

Vladimir Putin: That is true. But then you have to issue further instructions to the Finance Ministry, which would put half of the people at the ministry into a coma.

Yulia Kolobova: Perhaps this can be done some time in the future?

Vladimir Putin: We'll see. I will tell you why. The Finance Ministry is correct in formulating its position. When we start granting various exemptions, exceptions from the general rules, especially in the sphere of taxes, before we know it we will come face to face with a situation in which we have only exemptions and no budget revenue. All this can destroy the budget process and the country’s economy. That is not the way to go about addressing such cases. If the law envisages 13% deductions, then the grant itself should be increased. That's it. We will think about it, all right? 

Question: Mr Putin, my name is Lyudmila Orlova from Yevrotekhnika, a Russian-German enterprise. You have said that you managed to save 11 billion on fuel and lubricants. But if…

Vladimir Putin: Not me, you…

Lyudmila Orlova: We have been able to.

Vladimir Putin: Not we, but specifically you. Well, actually, we did it together.

Lyudmila Orlova: Yes, all of us together. I meant you and we – that is, Russia.  

Vladimir Putin: Yes.  

Lyudmila Orlova: I have a suggestion. In joining the WTO we are entering a new era…

Vladimir Putin: I agree.

Lyudmila Orlova: …of development.

Vladimir Putin: Sorry to interrupt you, I was reporting all this cheerfully, but actually I am worried myself, to be honest with you.

Lyudmila Orlova: I would like to propose the establishment of research and education centres on the basis of a public-private partnership – 20 centres in the main farming regions of Russia, and to provide them with cutting-edge equipment through Rosagrolizing. This could be done very quickly. What would be the benefits? If we carry this out and train students, instruct the youth, train teachers for universities and upgrade qualifications, it would cost 2 billion roubles. I have calculated that the most up-to-date equipment for one plant-growing complex would cost 1 billion, and 200 million annually would go towards various research. As a result Russia will have what it does not have today: an approach to technology. And what is technology? We can save up to 80-100 billion in current spending if we switch Russia’s grain producing area to frugal or more precision farming technology. That would be extremely helpful, more helpful than any help in science, and it would promote cooperation between science and business. One more thing, Mr Putin, I know that there are problems with personnel, but this new era demands a new kind of workforce, a higher level of professionalism, greater patriotism, concern for the interests of the state – the kind of personnel that, together with you, could become integrated into the WTO and improve the well-being of the Russian people and make agriculture a profitable sector, an important contributor to the Russian budget, similarly to the oil and gas industry. But what does it take? Look at the enterprises that were investing and developing production during the years of the crisis: this is your support base, these are the people that associate themselves with Russia.

Vladimir Putin: And that is how we proceeded. You will remember what we said last year: we offered a 5 billion rouble bonus to those enterprises that preserve their cattle populations. As far as I know the bonus has reached the producers.

Question: My name is Lyudmila Kosteva, director-general of the Volzhanin poultry farm in the Yaroslavl Region. We produce eggs. Mr Putin, I have two questions for you. But first I would like to say that you have repeatedly stressed the importance of the poultry industry, which was one of the first to launch priority government programmes. As a result the sector has achieved spectacular success: it produces 25 kilograms of white meat, protein, and 17 kilograms of egg mass, which is also protein, per capita.

Our enterprise has invested about 3 billion roubles in the short-term development of egg production. As a result we have increased the production volume seven times over, labour productivity eight times over, compared with the design capacity, and earnings per worker reached 3 million roubles. These indicators are practically the same as in Europe. We have built a plant for deep processing of eggs whose products will meet the most exacting requirements, including the Japanese who make crab sticks from proteins. In short, we can do everything. But here is our question: is there any way that the procedure for awarding municipal and state orders could be changed in favour of the producer, because this right is currently exercised by middlemen. The result would guarantee the quality of the products supplied to all municipal enterprises. And the second question is also very important for the producers. We would like you to include in the 2012-2020 programme a provision on subsidising the interest rate on the acquisition of non-liquid enterprises in order to revive them because this is something we can do. Thank you and the best of luck.

Vladimir Putin: Thank you for both of your questions, especially for the second one. Really, it is an unexpected question, totally unexpected and very interesting. Let us see what can be done, because if the potential is there (and I feel that there is potential in production) along with the determination to try to get the enterprises that are in dire straits back on their feet, then of course it must be done. Viktor Zubkov, who is sitting next to you, is a major expert. He was put in charge of a state-owned farm that was on its last legs and he lifted it up and was rewarded by being put in charge of another dying collective farm in the Leningrad Region, and he lifted it up, too. It is a very interesting suggestion. So, Mr Zubkov, let us put our heads together and see what can be done.

Regarding your first question – middlemen and state procurement. Of course, we proceeded on the basis… when I issued that directive I assumed that it would be mainly agricultural producers who would be involved in state procurement. Procurement to the Army and various public organizations, and so on. But sometimes an intermediary is necessary because one often has to assume responsibility for deliveries, for possible disruptions in supplies and so on, and then, of course, intermediaries are involved in crediting. Let's revisit that issue. Of course, I would like state procurement to be a direct and effective instrument of support for agricultural producers, and if you feel that there is a problem, we will revisit that issue, I promise.

Alexander Tyan (Mayor of Usinsk, Republic of Komi): Good afternoon, friends. Mr Putin, here is my question. We have been talking about cattle, but I would like to speak about deer herding, which also falls into that sector.

I am the mayor of Usinsk, the Republic of Komi. This area is often called the oil capital, but I also have 16 rural communities where deer herders live. My question also involves a request because the interests of several ministries intersect here, at the issue of military conscription. I addressed the previous State Duma and I spoke at the Ministry of Regional Development suggesting that potential army recruits be given the option to go into alternative service working in the deer herding industry.

You know, our work in the North is very special, and if young people from Komi leave to serve in the army deer herding will perish. Don’t misunderstand me, the northern peoples cannot always adapt themselves to civilisation and more often than not they perish. I ask you to consider the work of the deer herder as an alternative to military service. This is the case with small peoples. But small peoples are considered to be those that number up to 50,000. The people of Komi numbers 230,000. I would like to ask you for a great favour to help us resolve this issue, otherwise we may lose our deer herding industry.

And the second question. I am sorry, Mr Putin, for trespassing on your time. On February 26-27 Usinsk, the Republic of Komi, hosted a national forum of the small cities of the Russian Federation, attended by 90 mayors from 38 regions, and they all gave very high marks to your work, believe me, I speak from experience. A great deal has been done: production sharing, heavy industry, the machine-building industry and all that, but a lot more still needs to be done. We would like to go on working together with you and I have been delegated to present the forum’s resolution to you (I should probably give it to your assistants). And when you fly – and you do a lot of flying – look down on the city of Usinsk, the Republic of Komi, and you can be assured of our support.   

Vladimir Putin: Thank you very much. You know that elections are coming up and I should be making promises left and right. But I cannot bring myself to act in this manner – rather, I’ll speak to you honestly about the actual state of things. The truth is that we have problems recruiting for the Armed Forces. We have cut the time of service in the Armed Forces to 12 months. That means that the number of recruits has dropped. And this is coupled with demographic problems. Indeed, between 1992 and 2002, during those ten years, our demography fell into a pit: the birth rate in Russia dropped sharply from 1992-2002. The situation began to improve gradually in 2002. The current trend is positive: the birth rate is rising, the death rate has dropped across the board. But we have this demographic pit, you see. And it will be felt. To make things clearer, you know that professional dancers are exempt from army service, musicians are exempt, those who work in the defence industry are exempt, members of the clergy are exempt – just about everyone is exempt from army service. That would leave the two of us to serve in the army.

You see, it is a very important issue. If you'll allow me, I'd like to pause over it for a moment. We are planning to introduce an all-volunteer army and we are planning to contract more than 450,000 servicemen a year. When we reach that target, when our economy is able to afford it (and we will strive to achieve that goal) then we will expand the categories of people exempt from military service. There will be very few conscripts in practice. And then of course we will increase the number of people who will not be called up at all. We will keep your problem in mind, okay?  Thank you. Next question.

R. Galimov: I am the head of the Sukharevskoye rural community, Nizhnekamsk municipal district, Republic of Tatarstan. Mr Putin, many good things are being done for our rural folk in the republic and in our community. The deputies in our community have built a billiard room, a fitness centre, a wrestling centre – in short, many good things are being done. But I would like to say that we have many federal programmes operating here. The building of family farms, and credit – 39 members of our community have taken out credits in the amount of 19 million roubles (which is very good), we already have three family farms working and six more have filed applications. So, our village is growing and what is being done under the federal programme benefits the members of our community. I would like to note that infrastructure remains a problem, but you have mentioned this yourself. Could the building of rural roads begin in our community?

Vladimir Putin: Yes. We will do it.

R.Galimov: The Sukharevskoye community, Nizhnekamsk municipal district.

Vladimir Putin: Once again, what is the name of the settlement?

R. Galimov: Sukharevskoye, Nizhnekamsk municipal district, Republic of Tatarstan. 

Vladimir Putin: Yes, I’ll tell Minnikhanov (President of the Republic of Tatarstan), he will do it. He is a good man, and a good leader. Some leaders have been criticised here: he will probably be criticised on some points, but in general he works well. Next question. 

Question: My name is Sergei, Amur Region in the Far East. The positions of producers in the European part of Russia and in the Far East are different. So we at least need to preserve the current cargo carriage rail tariffs and, better still, to cut them further. That’s number one.

Vladimir Putin: Wait a moment. Let's start with this. The cut rate tariff begins from a distance of 1,100 km, I think. It is still in place.

Remark: Make it permanent. That’s the minimum requirement.

Vladimir Putin: Very well.

Question: And number two. You said that the volume of cut prices for diesel fuel this year… 

Vladimir Putin: Not only for diesel fuel, but also for petrol, an increase of 10%.

Question: The Amur Region needs 20,000 tonnes… Would it be possible…

Vladimir Putin: To look at the Amur Region? Agreed. Did you have enough last year?

Answer: Yes, but…

Vladimir Putin: You had enough, but you still need more. That’s the spirit, well done.

Question: Mr Putin. I represent the Samara Veles livestock centre. My name is Nikolai Ankuda. Our centre is designed to address the problems of livestock breeders. The centre was set up in 2010 upon the intervention of our Governor Vladimir Artyakov. The main task of the centre is to hand over breeding stock on terms of goods credit practically without compensation for the credit rate – that is, the regional budget compensates for the credit rate. Over the last two years the regional budget allocated 300 million roubles to us, which enabled us to deliver about 6,000 head of quality cattle, and if you take into account the offspring during these two years, the population should practically total 8,000. Seeing that the programme has been very popular the governor made it a long-term programme and an extra 160 million roubles were allocated to us for 2012. Our work has been appreciated by the federal government. We reported to First Deputy Prime Minister Viktor Zubkov and presented our project at the agro-industrial complex presentation held at the initiative of Agriculture Minister Yelena Skrynnik in July of last year. I must say that this programme is not confined only to the procurement and delivery of cattle. We also produce fodder, we conduct selection breeding and very soon our enterprise will receive a license to provide selection cattle. Our colleagues from other regions, and from our region, who were hoping that I would be able to ask my question, endowed me with a big gift, because my question is as follows. I would like to ask you to consider compensating for some of the cost the enterprises will incur to buy young breeding stock. Well, now they have heard an answer to their question. Thank you very much. 

Vladimir Putin: Yes, I have spoken about it. I signed a government resolution today. Mr Zubkov, what is the target for financing selection cattle breeding?

Viktor Zubkov: One billion.

Vladimir Putin: That will make a difference, to start. Yes, you please.

Remark: Good afternoon. I am Irina Novikova of the Unitary State Enterprise production corporation, Chelyabinsk Region.  

Vladimir Putin: Hello.

Irina Novikova: The question of taxation was raised during the roundtable meeting yesterday. As you know, most agricultural producers use the system of a single agricultural tax. But they consume energy, they buy basic assets (fuel and lubricants, spare parts and other material resources). VAT is included in their costs, they do not deduct it. Suppliers of these resources, on the other hand, do pay VAT, resulting in a surplus of that tax in the budget. Next. Agricultural processing enterprises that buy their raw materials from agricultural producers actually increase the cost by an amount equal to that tax. Following our governor’s instructions we have worked out proposals, for example, to allow agricultural processing enterprises that buy raw materials from agricultural producers that work under special procedures, to separate VAT by a calculation and deduct it. This measure, you understand, will make it possible to cut production costs and make our products more competitive. It is a measure that will be useful in connection with our accession to the WTO. We have proposed amendments to four articles of the Tax Code, we have sent these amendments to the Ministry of Economic Development and to the Finance Ministry, but we have not received an answer. Apparently the issue cannot be resolved without your intervention. As far as I understand all the agricultural processing and producing enterprises will support me. Please consider this issue and help us to resolve it. 

Vladimir Putin: Irina, give your documents to Viktor Zubkov. Mr Zubkov, please take them.

Irina Novikova: Very well, thank you.

Vladimir Putin: We will make a point of looking into this matter. As you know in the tax sphere every step that is taken leads to consequences, but we will see what can be done.

Viktor Zubkov: Mr Putin, a question that has to do with exemptions and taxes is never easy. You are well aware of this but as you have said, you signed five government resolutions today that envisage state support for agriculture in many areas, from selection cattle breeding to family farms. We will take another hard look at the matter together with the Finance Ministry. All the proceedings here are being recorded… I think that we will work on all your instructions and directives and we will report back to you.

Vladimir Putin: We should take a close look, I am not entirely clear as to whether or not there were any shortfalls.

Viktor Zubkov: We should take a look. Honestly, I am not prepared to answer this question now.

Vladimir Putin: Let us move over to this side.

Question: My name is Sergei Bocharov. I am a farmer in the Kursk Region, chairman of the Kursk Farmers’ Association. Mr Putin, permit me once again to thank you on behalf of all the agricultural producers for discounts on the price of fuel. And here is my question: could you ask your colleagues in the government to work quickly to present the figures for fuel at a discounted price by region and issue a command to enforce this? At present we know that some fuel companies have reduced the number of outlets for fuel and lubricants, and today one has to travel more than 100 km in some regions. And the spring farming season is at hand. Thank you.

Vladimir Putin: We will have a Government Presidium meeting tomorrow or the day after tomorrow. I will issue a directive to the Energy Ministry.

Sergei Bocharov: Thank you.

Vladimir Putin: Let's now move to this side.

Remark: My name is Alexander Gorbunov, I am the director of an agricultural enterprise in the Perm Territory.

Vladimir Putin: Yes, go ahead.

Alexander Gorbunov: A state-owned enterprise was liquidated in 2006 and a limited liability company, Perspektiva, was formed in its place. It’s a good name, we have been working profitably for six years. Here is my question: we have been litigating with the territorial branch for six years…

Vladimir Putin: With whom?

Alexander Gorbunov: With Rosimushchestvo (the State Property Committee). We are on federal land and they refuse to lease this land to us.

Vladimir Putin: Why is that?

Alexander Gorbunov: You issued a good directive…

Vladimir Putin: Is it a regional branch of Rosimushchestvo?

Alexander Gorbunov: Yes, the Perm regional branch. The problem does not concern our enterprise alone. It concerns the whole region. And this story… You issued a good instruction in Saransk on June 10, 2011 stating in black and white that the issue should be considered and the people who work on this land should stay there. As it is, the reverse has happened. They have sped up the process. They took land away from us this year. And that is not all. They decided to bankrupt us in order to kill our enterprise so that we would not complain. The law suit was unjustified… The enterprise sells 50 million roubles worth of products a year. They sued us for 67 million. They claim that we are raking in profits from this land.

Vladimir Putin: What is the name of your enterprise?

Alexander Gorbunov: Perspektiva, Perm Territory. Kuyedinsky District.

Vladimir Putin: Perspektiva? Is that it?

Alexander Gorbunov: Yes. Here are the questions from my work collective: should we accept bankruptcy and send our people to the labour exchange or should I prepare my people to go out into the field?

Vladimir Putin: Let us come back to the issue later. I hope they will look at it more attentively this time.

Alexander  Gorbunov: We hope so too. Thank you.

Question: My name is Stanislav Sadalsky, Veliky Novgorod. Mr Putin, I represent consumer cooperatives in the Novgorod Region which maintain the chain from the producer to the consumer, above all for private subsidiary plots, all those living in the region, and serve small villages (there are more than 2,700 villages in the Novgorod Region with 50 inhabitants or less). We deliver bread and cereals on time. I am glad that today you have provided some advice concerning consumer cooperatives and I hope that positive decisions will be made. But there is one more question: a law is currently being prepared that would abolish the single imputed income tax as of 2013. For consumer cooperatives, most of the shops located in small villages… The single tax is easy to administer, it is economical, and abolishing that tax would create problems. The press has reported that the abolition of the tax has been postponed until 2018. Can you confirm this today? Thank you.  

Vladimir Putin: We have discussed the issue many times and tax law specialists believe that no harm would be done. Do you believe that the abolition of this tax will create new problems? If so, tell us, what problems?

Stanislav Sadalsky: If the tax is lifted, Mr Putin, the first thing all the village shops will have to do is buy cash machines. Each cash machine costs 16,000 roubles. You need to make a down payment of 16 million and thereafter spend 6 million a year for maintenance. We would have to hire additional managerial staff because it is one thing to administer the single imputed income tax when we pay based on the floor space of the shop, and it is another thing to consider VAT for each item that we sell. That will mean a massive increase of costs. It will be a major hindrance in serving small rural communities.

Vladimir Putin: Very well. We will come back to that issue… Mr Zubkov, I'll ask you to formulate this issue. Don’t tell me anything now, I am familiar with the problem. When we are back please remind me and we will get together once more and discuss the issue again. As for cash machines, you see, we are talking about the interests of consumers, so everything should be understandable and stable. I see your point, but let us look at the structure of the tax, at the proposals on the table and the likely consequences. Perhaps we could move things a little to the right. We shall see.

 You, please.

Remark: I am Viktor Pechatko, of Mordovia. Mr Putin, colleagues, we have done a good two days’ worth of work and held a good exchange of views, particularly in what regards leasing and credit resources. But we all feel offended when those at Bolotnaya Square humiliate us and call us names. I just want to give you an example…

Vladimir Putin: “I know you are, but who am I…” like we said in the school yard.

Viktor Pechatko: But don’t they see how much has been done in Russia over the last 10 years? We are no longer in a deep hole. Mr Putin, a book was released in England yesterday – Putin. In England, mind you. There was a commentary last week…

Vladimir Putin: They probably didn’t write anything good in it.

Viktor Pechatko: Yes, good things. I was surprised, Mr Putin. I was reluctant even to listen to it. Ten journalists wrote it over the last six years and I thought they’d be like: “Bury him!” But let me give you just two examples. One commentator said: “Were it not for Putin, there would have been no Russia today.” Another commentator said: “A different man wouldn’t have achieved in 40 years what Putin has done during a decade.” And Russians, farmers support you because of this.

And now, Mr Putin, we have one main problem left, because you have answered several questions like the WTO and so on. We have made large investments and taken out loans. Occasionally you can hear people in high places say that we in the countryside drive around in Mercedes cars. They can come visit us and take a ride around and see for themselves.

It is true that we have taken out many loans – between 500 and 700 million roubles apiece. People, I mean, business leaders take many risks, Mr Putin; they have put up everything, down to their last coin – they shouldn’t be humiliated. But the drought has hurt us. You have given us much help, and it has been effective, for our losses amounted to just 10%. We had short-term loans rescheduled by three years, and now the time has come to pay for it. Selkhozbank (Agricultural Bank) has refused to grant us any new short-term loans, because we must first repay the ones we have already received. But many businesses are unable to pay. I can say we have no grudge against Selkhozbank; they have been doing a good job – no hard feelings – we have been cooperating.

But why can’t the businesses pay? Because there are many businesses – 35 agro-industrial firms, as they are called – that have to pay back each year more than 30% of their annual revenue. That’s just not possible. If you get strict with them right now, we’ll lose everything we have done during the last ten years. Our proposal is this: reschedule these loans for four years. Only the short-term loans, Mr Putin. We are committed to repay the long-term loans in full. If we see that there is a system, we’ll keep the cattle and build up production. Mordovia is one of the top five in terms of per capita milk and meat production, and we are number one in eggs. We produce 1.2 billion eggs and sell 70% of our product. The head of our republic has drawn a loan from the federal budget that has been handed over to us so that we can preserve our cattle. Last year, this helped us increase milk, meat and egg production by 14%, 14%, and 19.5% respectively. We met our objectives. All the agrarians – I am speaking on behalf of this audience, because they are serious people, who, in effect, have pledged all their personal property three times now, and even their wives have signed pledge certificates and guarantees – they ask you to help us solve this problem for the sake of future development.

I have one more question to ask, Mr Putin, on behalf of the group. I am referring to the technical regulations that were approved in 2010. They have attracted a lot of criticism. There is too much room for deception. But we all know what vegetable fat is. The law seems to be a good one, but its application is not strict enough. Mr Onishchenko (Gennady Onishchenko, Head of the Federal Service for Supervision of Consumer Protection and Welfare) has been commenting on this at length, and he seems to know the subject. The matter calls for a probe: everyone must know what they are eating. For the farmers, this is also a very important question. Thank you.

Vladimir Putin: You heaped so much praise on me in the first part of your address that I simply can’t refuse to deal with what you’ve mentioned in the second part. I’m literally with my back against the wall. As far as Russia is concerned, I think you will agree with me that Russia was here before you and I were born and it will be here after we are gone, and no one will be able to push it aside. Where the loans and some other problems are involved, let’s go back and make calculations. In rescheduling the loans, what did we proceed from? From the assumption that this country was hit by a drought, that farmers had to reap a good harvest first, and then sell it at a profit. They did harvest their crops and mostly sold their produce. Well, we have to analyse the problem and talk to the banks. We recapitalised all our banks, including Rosselkhozbank, several times during the crisis, because they grant loans, and then these loans are never repaid. Some time ago, we established this Rosselkhozbank in keeping with your request – not yours personally, but one from an audience like this one. This bank has done an extremely huge deal of work, of course, due to the fact that it is not an ordinary financial and lending institution. It provides a considerable amount of its resources on favorable terms, and it will go bankrupt if we stop supporting it. We have supported it consistently from the federal budget. But it was established like this so it could support agriculture. Let us return to the problem of loans a little later and see what can be done. Is that OK with you?

As regards the technical regulations and vegetable fat, I must agree with you in general. The decision has been accepted, of course, but I am not sure that things are carried out the way they should. We must either toughen the penalties or improve the oversight. We’ll have a closer look at that.

Next, go ahead.

Remark: Mr Putin, I am Igor Kuyimov, member of the Board of Directors of the Russian Poultry Industry Union (Rosptitsesoyuz). Breeder support for the poultry industry is a frequent source of anxiety for us because the poultry industry has been developing very strongly indeed. You often say as much in your addresses. But the breeder support today…

Vladimir Putin: I have been blowing the horn about your achievements.

Igor Kuyimov: We are worried about that too, because now that we are in the WTO, the support, the subsidies, and other things… When you are praised too much, you start worrying that this is a sign of possible cuts.

Vladimir Putin: No. You will retain whatever you have now. Moreover, we will build it up. Otherwise we will not be able to withstand the growing competition. This is obvious.

Igor Kuyimov: But this is the main issue that worries the breeders. We will go on increasing our output, and thank you very much for the work.

Vladimir Putin: We cannot do otherwise and we are well aware of that. This is why this resolution was signed earlier today. True, it is about animal husbandry, but this is just another step that we must take with regard to cattle.

Igor Kuyimov: Thank you.

Vladimir Putin: Generally, much has been done for the poultry industry, but we won’t let up, because we have come close to a point where we can meet domestic demand. But there are imports as well. Is it 300,000 tonnes? Last year imports stood at less than 200,000 tonnes. This means there is still potential for building up domestic production to meet our own market requirements.

You, go ahead.

Remark: I am Alexander Nikitin, chairman of Alantal Cheese Cooperative. Mr Putin, I was glad for Russia and was happy to hear about the successes of our pig farmers and poultry farmers. Everything is really going well, but the comparison makes me ashamed of my own industry. I represent cheese producers. None of our businesses can boast operating profits in 2011. Even the local cheese producing giant, Belebei, faces problems. I know this from my own experience because I often have contacts with my colleagues within the framework of the National Union of Milk Producers (Soyuzmoloko). Mr Putin, please pay attention to our industry. We may lose cheese production unless it receives some support. Thank you.

Vladimir Putin: We have the same problem as with the fats. They certainly stand in the way of Russia’s cheese production. Not so long ago, I had a meeting with your colleagues in one of the regions. They also talked about these problems and the cheese production cycle in much detail. We are aware of them and will certainly help you.

You’ve also mentioned pig husbandry and its achievements. There is a certain amount of anxiety in this regard, prompted by our accession to the WTO. Regrettably, their problems are large and difficult. We have envisaged six billion roubles for the support of pig farming in 2012. We have almost completed a three-year programme. Each year we will allocate six billion roubles, and the whole sum is 18 billion.

Next, go ahead.

Remark: Mr Putin, first of all, thank you very much for this hearty meeting. We know that you feel comfortable meeting with farmers, because farmers admire you from the bottom of their heart. The discussions held yesterday and today dealt with many issues involved in the development of the agriculture industry. Everyone agreed that some impressive, qualitative changes have occurred in recent years. These changes are due to the assistance of the government and the Ministry of Agriculture. In this connection, I would like to say that in your articles and at your meetings with rectors of higher educational institutions you have outlined sizable and urgent tasks related to economic development, innovation development and personnel support. Our agricultural universities and faculties are able to do that. We are ready to address these issues at the same level that you laid out in your programme. Thank you very much. I would like to believe that the success, which you mentioned in your address, is also our success. Why success? Because we associate our well-being, both personal and collective, with your work as President. This is why we in our collectives are working and will do our best to ensure your victory in the first round of voting. But I have one request.

Vladimir Putin: That would only be natural.

Remark: Please reassign the funds earmarked for the second round to the agriculture sector.

Vladimir Putin: The previous speaker raised a very important problem: personnel training in the countryside. Our agricultural science and higher educational institutions have very strong traditions. They employ highly qualified specialists, who are devoted to their occupation and able to instil in young people affection for the land and for their country.

Don’t be angry with me, but it is high time we adjourned. I’d like to wish you success. Thank you very much and goodbye. May you be successful this year.

We will try to proceed from what we have discussed today. This week the government will go back to some issues you have raised here – loans, subsidies, interest rates, fuel and lubricants, fertiliser, long-range freight rates, and more. We won’t forget anything. No one and nothing is forgotten. Thank you.