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Speech at meeting of State Council Presidium On Measures to Accelerate Development of Livestock Farming as a Priority to Ensure Food Security in Russia

July 13, 2010, Malobykovo, Belgorod Region

President of Russia Dmitry Medvedev: Let’s begin our work and the Presidium meeting. It’s quite pleasant to have such a working environment not only in Moscow but in other areas nearby, in the Moscow Region and other Russian regions too, — not just in regional centres, but in relatively small provincial towns as well. This is very nice.

Today’s meeting will address the development of livestock farming. We have agreed to hold a Presidium meeting on this topic. But today, given the current weather conditions, we need to discuss another topic as well – a topic we didn’t plan to discuss, but it has become very urgent: the situation caused by the drought. I would like for top executives in charge of agriculture – including Viktor Zubkov, Yelena Skrynnik, and regional governors present here today – to report on the measures being taken. Yesterday, part of a Cabinet meeting was devoted to this subject. I would like to hear about what steps do you suggest taking, how effective these steps might be, and whether these measures might work, realizing, of course, that there is no way we can influence weather conditions, but we can take certain steps. This is a major problem. It has been many years since we’ve had such abnormal weather in our nation – decades, perhaps. Now, we must figure out how to save at least part of the harvest that was planned, both at major enterprises and small farms, including private farm holdings.

Now, I would like to return to our main topic, livestock farming. We believe that this is a priority for ensuring food security in our nation. We know that this sector suffered a deep decline in the 1990s. As a result, our nation (we did not want this – it happened against our will, so to speak) has become the biggest importer of meat, and this is bad. This situation needs to be changed. Even knowing that this affects our relations with major trade partners, we must produce enough of our own meat – enough to maintain our food independence. Everyone knows these figures; they have been brought up many times. Nevertheless, in 2006, within the framework of the national project to develop the agro-industrial complex, systemic measures were taken to support livestock farming. Thanks to these measures, including a government programme for agriculture development, the production grew (40 percent for pork and 76 percent for poultry) and exceeded the 1990 level. Time has shown that these measures were effective, and the sector reached a turning point. My talking points say ‘radical change,’ but I cannot state that. A radical change has not yet occurred, as we all know. But we have seen a turning point, and our task is to maintain what has been achieved in this period, understanding that we still have problems with financing, as well as other problems. Nevertheless, our spending here proved to be fruitful. In the short period of time between 2005 and 2009, production grew by 29 percent. This is a good result, especially given the rather sad history of livestock farming during the Soviet era. We understand that this began long ago. In the Soviet Union livestock farming was highly, extremely ineffective. But what happened next was nothing short of dramatic. Now, we are redressing this situation. Subsidised interest rates on investment loans, as well as several other measures, played a key role in the development and rebirth of livestock farming. This attracted private investments to finance major projects in poultry and pork production, which had a significant effect on the structure of meat consumption as well. It became more like the structure that exists in other nations, in that these proportions are somewhat more balanced than they were during Soviet times.

The situation with beef production is somewhat worse; we have only been able to stabilise production levels, and this has not even been true in all regions. We have yet to develop a clear system of incentives in this sector that can boost milk and meat production. We have had some successes, but still, the situation remains complicated. Beef production in most regions is still in the red. Annual per capita consumption of beef is down from 31 kilograms (in 1990) to 16 kilograms, and only 12 kilograms are produced in our nation. We were discussing this during our flight over here. The truth is, these figures are somewhat misleading. We know that the 31 kilograms in 1990 consisted mainly of bones. But statistics are a tricky thing, and these are the resulting figures. Still, the fact that we are importing so much is certainly saddening.

Everyone here understands the importance of import regulation for our meat market. I think that we will touch on this issue. We will need to make all the key decisions soon, including coordination of our domestic interests with talks on Russia’s accession to the WTO, which are currently underway, and the formation of the Customs Union. In any event, none of the things we are doing should make the position of our domestic producers any worse. Trade interests of our partners – even our most respected partners – and the need to maintain balance in the market are, of course, important things, but what is more important is to support domestic production and maintain predictable, stable prices on farm production. The Government should work based on this principle.

The most rapid development is registered in the regions where special programmes have been developed and integrated meat production facilities have been created. We have visited farms like this many times; here, we have executives and governors who deal with these matters. Speaking frankly, Belgorod Region looks like a modern European region in this regard, like our neighbouring nations where these facilities have been developing for a long time, making good headway. Naturally, this is an example to be used in other regions. A factor especially important here and in other places where we see good progress is that much of the growth has been achieved thanks to re-equipment and construction of poultry plants and pig complexes that use all world-class technologies. In this sense, we have our own leaders: Belgorod Region of course, as well as Voronezh Region, Rostov Region, Altai Territory, and the Republic of Tatarstan, so they should serve as examples.

The working group of the State Council has analysed the situation in livestock farming and suggested developing a Strategy for its development until 2020. The key challenge here involves reconstruction of feeding units and processing facilities, and dealing with waste disposal using, naturally, resource-saving and environmentally friendly methods. I also suggest that we address several issues here.

First of all, and this has already been said, we need to reduce the dependence of our meat market on imports. Russia still buys much of its breeding and high-yielding animals abroad. We discussed this, and incidentally, this is not the first meeting I’m holding to address this matter; our domestic breeding and genetic centres must develop their own solutions that are in line with global genetics. Unfortunately, we do not yet have this. When I was still working in the Cabinet, we raised this issue many times. We need to make our centres work in a modern way. Research in this area is not only a factor critical for livestock farming development, but also a part of the global business.

Second, and this might be most important, is increasing the volume of domestic production, and thus, increasing domestic consumption and export opportunities for our products. Our success in poultry farming and pork production allow us to count on this in the future. Naturally, our priority is domestic consumption; that is what we must focus on. Therefore, we need to work on preparing long-term meat consumption forecasts with due regard to the food security doctrine.

Current forecasts predict a significant growth in meat consumption throughout the world – mainly in poultry and pork. Russian meat is already exported on a regular basis to countries like China and Vietnam. At the end of 2009, as far as I understand, the figure stood at about 10 thousand tonnes of meat. These are relatively small volumes for now, but we need to start somewhere. In this case, new opportunities open up for Russia to become a major player in the international food market. Therefore, we need to work on balancing the situation domestically and deal with our export opportunities, because without exports, we will not be able to create properly functioning livestock farming. We need to do everything necessary to reach this strategic goal: we must create financial mechanisms, infrastructure, and a legal framework. At the same time, we must take into account our obligations within the framework of international associations. Now, we need to take these factors into account regardless.

There is another highly important issue that usually becomes a serious problem; I am referring to preventing disease outbreaks among animals. Such an outbreak even in a single region can threaten our entire nation, affecting our domestic production and exports. We had serious problems with swine cholera in the North Caucasus Federal District in 2008, 2009, and 2010, and this showed that the primary focus of infection may be located at private farm holdings, which are not subject to any form of mandatory registration or supervision by veterinary services, but which must fall under strict and rigorous control to prevent any such scenarios in the future.

Overall, livestock farming plays a very important role in developing agricultural areas. Everyone here knows from personal experience that the livestock sector uses some of the most cutting-edge technologies in agriculture; these are products with a high added value. That is why we have problems with this sector, but we also have new opportunities. The advantages this sector gives include a year-round employment, which is also important for our nation. There are true perspectives to achieve sustainable growth and create new jobs, and ultimately, improve living conditions in rural areas. That is what I would like to say in my opening remarks. Let’s get to work.

* * *

I would like to have the attention of the Cabinet and the Presidential Executive Office, which is recording our meeting. With regard to the Customs Union, this union is hard-won, this is our strategic course, and naturally, we are not veering away. On the contrary, we want to achieve an ever greater degree of integration. So far, there are difficulties pertaining to its formation. This is an objective process. Naturally, there is a set of different interests that need to be brought together. I am certain that we will succeed; there is nothing overly complicated about it. But we need to understand now what will happen with our livestock farming, for example, and our poultry breeding, as a result of the Customs Union creation. Here, I agree that we need to analyze the balances we will get as a result of creating such a union, taking into account Belarus’ potential and the union’s capabilities in general, since we are creating a common, open market.

What will happen when we are all happy, when the market is saturated and we need to decide what to do next? This is the right, smart way to ask this question. I feel that first of all, this question demonstrates that our colleagues from Belgorod Region are thinking about this, and so it becomes clear why there has been such success here. This is indeed a question for the government. I would like the Cabinet to make a note it as well. We must answer our farmers directly and honestly about what will happen to the market in 2012 and 2013. Or we will develop our export capacity to such an extent that we will have good prospects for further development. This would be good. Indeed, this would be the best-case scenario. But in order for it to happen, we need to win over new markets. We cannot simply offer grains, which we have already learned to sell. We understand that our success in the grain market is due in part to the fact that we do not have properly-developed livestock farming. This is absolutely clear. Thus, we cannot just sit back and be proud, although naturally, we do have something to be proud of.

The second possibility would be a negative scenario; we might come to see that our export opportunities are limited, that markets are closed, for whatever reason. I don’t know why; anything could happen. And then, we would have to make a temporary decision not to create any further capacities, hoping that the market will keep growing anyway. Incidentally, I am sure that the first scenario is more likely. After all, look at what happened even during the crisis year: everything else dropped, but we saw growth in agriculture. It is impossible to lower consumption, even during a financial crisis. But we need a forecast, and our farmers have the right to get a straight answer from the government: a yes or a no.

Finally, the last thing I would like to support here, something we discussed at other meetings and presidiums, is green energy. We talked about it repeatedly at the G20 and G8 meetings, but it is time to put these words into action. We need ‘green’ tariffs. Otherwise, no one will ever go into this sector, and our respected energy partners will continue to replicate themselves. Thus, I am instructing members of the Cabinet and [Deputy Prime Minister] Igor Sechin personally to work on this issue.

July 13, 2010, Malobykovo, Belgorod Region