Visits within Russia

4 august, 2009 19:30

Prime Minister Vladimir Putin held a meeting on 2009 harvesting operations in Orenburg

Opening remarks by Vladimir Putin:

Good afternoon, colleagues,

One month ago, on July 3, I held a meeting in Krasnodar on preparations for harvesting. Let us take a look now at how my orders are being implemented in the current year's harvesting operations.

As you know, our country gathered a record-breaking harvest of grain in 2008. Forecasts for this year are also favourable. We will not have this harvest as big as last year's, though, as we can't expect such presents from nature twice in a row.

Nevertheless, the forecast is good. The gross yield of grain is expected to be around 85 million tons, which will more than cover our domestic needs and will enable us to continue grain exports. The export potential of around 20 million tons will remain through the current and the next years. The Agriculture Ministry says its will be even bigger, 22 to 23 million tons.

Meanwhile, despite the country's favourable situation overall, six regions are experiencing problems, as they have been hit by drought. It is not by chance that we are having this meeting here, in Orenburg, because this region accounts for 2,718,159 acres of the total 8,154,477 acres of drought-affected crop land.

We will have a separate discussion on what we should do to support those who are in trouble.

As I have already said today, the general performance of the Russian agricultural sector has been high and even shows a better ability to withstand the global economic crisis than some of the other sectors.

Support of agriculture is undoubtedly one of our priorities. The funding of that sector has increased significantly in recent years. We have substantially increased the capital of Rosselkhozbank and Rosagroleasing.

The decision to raise to 80% the level of subsidies for part of the cost of interest on loans, including loans taken out to buy fuel and fertiliser, went a long way to help agriculture.

We have also agreed that as of July 1 fuel and lubricants will be sold to farmers at a 10% discount on the wholesale price. I ask the Ministry of Energy to report on how that agreement is being fulfilled and how the declared quotas of fuel and lubricants are being used.

I have just had a meeting with the managers of drought-stricken farms and they say that things are going well. But I would like to have the full picture.

The Government is doing a lot of work to regulate the grain market in order to stimulate production. The mechanism of grain intervention is being used actively. In all, 8 million tons of the 2008 harvest have been procured at the cost of 38.6 billion roubles. That has kept prices at an economically valid level and prevented a fall in farmers' incomes.

Obviously, this year the financial performance of farms will depend on the results of harvesting.

The drought that has hit several regions has unfortunately deprived these farms of some of their incomes, which they need to pay back the loans, to pay for fuel, lubricants and farm machinery. It is vital for us to do everything so that this force majeure does not hamper the development of enterprises and does not result in a drop in output.

Droughts and other emergencies occur practically every year. The current situation is not an exception. We have been developing mechanisms of protecting farmers against such risks. I am referring above all to insuring crops. Federal and regional budgets allocate sizeable amounts to develop it every year.

In 2009 the federal budget will allocate 2 billion roubles. Already 970.9 million roubles, almost one billion, are in the accounts of regions.

Moreover, new rules for compensating the cost of crop insurance came into force in 2009. The federal budget reimburses to farmers 50% of their insurance premium.

Earlier I instructed the Ministry of Agriculture and the regions to expedite the work to expand the insurance system. Unfortunately, not nearly enough has been done yet.

Thus, only 8% of the total drought-stricken land has turned out to be insured and we again have to resort to direct budget injections to help farms thus supplanting normal market mechanisms. That has a negative impact on the sector's image and forces us to act in an old-fashioned way.

I ask the Minister of Agriculture to report how much arable land has been insured and what measures are being taken to fulfil earlier instructions. And I ask the heads of regions to report on the actions they are taking.

By the way, I think it would be fair to support first and foremost those farms that have invested in insurance.

Next. We should see to it that requests for aid are well-grounded to avoid abuses. The main thing is to make sure that aid reaches the producers and that the budget money is well spent.

Viktor Zubkov, Yelena Skrynnik and I have just been discussing the situation. I have talked with the managers of drought-stricken farms. Of course, the most important thing for us is to identify the sources of financing in order to address and close these problems. As I said, we have earmarked 2 billion roubles for insurance. One billion has been disbursed and one billion is still at the disposal of the Ministry of Agriculture. Some bean-counting has to be done of course, but I think that money could be recalled in order to use it to help the farms directly. Based on the results of the implementation of the federal budget for nine months, the money not used by the Ministry of Agriculture could be used for this purpose. That's another 1.5 billion roubles.

We have big enough commodity stocks, which we could use to help the stricken enterprises. At any rate, part of the money could be used for fodder and so on, money out of the intervention fund against guarantees of the budgets of the said regions.

I would like to ask the Finance Ministry to consider the possibility of issuing federal loans to Russian regions to implement emergency management measures. There is a balance, and a considerable one. Over 100 billion roubles. Please think about it and see if subsidies can be extended to balance the regional budgets.

We should see to it that after all these decisions are taken the money does not get stuck in the accounts of the regions and is promptly used to address the problems we are discussing.

Finally, about loans. Farmers are anxious to know what will happen to their relationships with credit institutions, with banks.

We have already made a decision on this matter that would extend short-term one-year loans by 6 months. We have discussed it. I think it can be extended from 6 to 9 months. It will enable the enterprises to complete the following year, to sell their crop and earn the money that they can use to pay back the loans.

I would like to draw the attention of the Ministry of Agriculture and your attention, Mr Zubkov, to the fact that an outstanding debt for which a deferment has been granted must not be an obstacle to taking out a new short-term loan against next year's harvest. Otherwise all our efforts will be meaningless; the farms will simply be unable to repay the old loans. They need turnover assets for the 2010 crop.

And finally I would like to stress the role of the regions. I think you can and must help farmers promptly, and I urge you to do it.

As for the enterprises which grow only grain crops - and I think there are some in the Orenburg Region - the loans to these enterprises should be extended to 3 years.

Let us start.

* * *

During the course of the meeting Vladimir Putin said: As for the farms that have been stricken by drought we will not leave anyone in the lurch, but on the other hand we do not want any free riders. Everybody must work hard at the federal and regional levels and at enterprise level.