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President of Russia Vladimir Putin: Good afternoon, colleagues,

Today we will talk about the performance of the agricultural sector. Harvesting is nearing completion and I want to thank all the farmers for their hard work, dedication and overall performance. This year has been very difficult in terms of weather conditions, and, unfortunately, this affected the harvest. All of this will be the subject of today's discussion.

However, despite the fact that the harvest will not be as good as last year’s, I should say that Russian agribusiness has undoubtedly remained competitive and in recent years has gained a very good pace, which gives us confidence that this year we will not experience any major setbacks in the supply of food, feed grain and so on.

Let me remind you that even during the severe drought in 2010 we produced enough grain and other basic crops to satisfy the domestic demand. Last year we had a good harvest, which allowed us to restore and strengthen Russia’s position in the global food markets. This year, the weather conditions have been difficult, as I have said, and as a result, the grain yield is lower than last year. We will hear the Agriculture Minister’s report on this issue. My understanding is that a little over 70 million tonnes have been harvested this year, and last year we had more than 94 million tonnes – that’s a big difference. However, I repeat, this is not a catastrophe. Adverse weather conditions have had a negative impact on the grain harvest, as well as the harvest of several other crops, not just cereals.

”The Government has already decided to start grain interventions. Part of the state fund will be put on the market to stabilise the situation on the grain market in the Siberian Federal District, the Urals and the Far East.“

There is a point I want to underscore, however. I have already said and I want to reiterate that this year’s harvest is sufficient to meet the domestic demand for bread, potatoes and other vegetables, and to supply the processing plants with the necessary raw materials for the production of flour, oil, sugar and all the major food products.

At the same time, grain prices are rising and this gives some cause for concern. We will discuss this today since it is the main reason for our meeting. There’s nothing unusual about it: when the harvest is low, the prices grow and when the harvest is good, the prices fall. In the latter case, farmers begin to experience problem, because their aim is to keep the prices at a steady level. There is always a need to find a middle ground, a balance, and we have certain mechanisms at our disposal to help us achieve this. In recent years, we have used these mechanisms with some success.

The most difficult situation has developed on the grain market in the Siberian Federal District. The grain harvest is almost one third lower than last year. As a result, the prices for the main grains in Siberia are much higher than in other Russian regions. Although traditionally, as you know, Siberia has always had the lowest grain prices in the country.

We must also bear in mind that the grain prices directly affect the cost of feed and, therefore, livestock products. In this situation, we must act quickly yet we must think through all our decisions carefully so that we have a full understanding of the possible consequences for both the consumers and producers of agricultural products.

Let me outline several aspects I see as most important here and to which I would like to draw your attention.

A week ago, I talked about the need to consider ways to stabilise grain prices. The Government has already decided to start grain interventions. Part of the state fund will be put on the market to stabilise the situation on the grain market in the Siberian Federal District, the Urals and the Far East.

”We are not going to introduce a ban on exports, which was justified following a devastating drought in 2010. Today the situation is different. At the same time, we must make certain that our exports are made up primarily of grain surpluses and do not affect domestic stability and the Russian market.“

I would like to hear your reports today on the progress made, what has already been done, in which Russian regions the grain will be sold, the criteria for granting access to trading, and whether there have been any problems in cooperation with the regional authorities.

Another point I would like to stress is that state grain reserves must not be used for profiteering or in any other way other than their intended purpose. We must not allow the export of the grain from our reserves under any circumstances. This is a shared responsibility of the federal and regional authorities.

Through careful and targeted measures, the Government must impact the price situation on the market, and ultimately the prices of socially important and sensitive products. This is a crucial economic and social policy challenge.

I ask the Government and the regional authorities to carefully monitor the grain interventions, their impact on the market and the way this will be reflected in the end situation at bread shops.

Second. A major price component is the grain and flour transportation costs. The reduced rail transportation tariffs for grain from Siberia and the Far East will be in effect until the end of the year.

I suggest we consider the possible support measures for our farmers starting from 2013, particularly with regard to grain transportation.

Third. This year, almost all of the world’s major grain producers have been hit by adverse weather conditions. The conditions were unfavourable in just about every major grain producing country. This is nothing for us to rejoice about because it will impact the entire global grain market, and the rise in grain prices will be felt globally.

Naturally, this makes it more profitable for businesses to export grain, but we must be aware that such actions will inevitably push up prices in the domestic market. I stress that in the current situation the main criterion for local agricultural producers must be to meet the demands of the Russian market.

”In order to lay a solid foundation for next year’s harvest, we must now take the utmost care with the autumn sowing campaign. Farms must be provided with seeds, equipment, fuels and lubricants, and fertilisers. I ask the Government and the regional authorities to closely monitor the autumn fieldwork.“

Of course, we are not going to introduce a ban on exports, which was justified following a devastating drought in 2010. At that time the problem was exacerbated by the fact the heatwave of 2010 had been preceded by the drought of 2009, so the weather affected the harvest for two consecutive years. Today the situation is different. At the same time, we must make certain that our exports are made up primarily of grain surpluses and do not affect domestic stability and the Russian market.

In order to lay a solid foundation for next year’s harvest, we must now take the utmost care with the autumn sowing campaign, which must be as efficient as possible and conducted at the optimum time. Farms must be provided with seeds, equipment, fuels and lubricants, and fertilisers. You know all that already. I ask the Government and the regional authorities to closely monitor the autumn fieldwork.

Finally, another important issue that I would like to discuss with you. Our country has become a full member of the World Trade Organisation. We have secured special terms of agricultural support. We returned again and again to the subject of what timely measures are to be taken to ensure the interests of our agricultural sector, and we talked about a variety of support mechanisms. I know that the previous Government worked on this issue and the current Government is continuing it, in fact jointly with the Presidential Executive Office, and individual Government departments on the other hand. Let us return to this highly sensitive issue today.

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