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Meeting on the harvest outlook

September 17, 2013

President of Russia Vladimir Putin: Good afternoon, colleagues,

Today we’ll discuss the harvest outlook and we’ll see what kind of help is called for given the difficult situation in some regions.

I am pleased to say that everything is all right here, but there are some problem regions. Let me repeat that on the whole this region is doing quite well overall, but nevertheless there have been problems in the south as well. I am not even talking about the Far East – you know about the troubles there.

I must say from the outset that naturally all affected areas will receive government support. The relevant instructions have been given for the Far East. I just talked with the Minister [for the Development of the Russian Far East Alexander Galushka], and today I would like to hear from the Finance Ministry how this work is going. [Deputy Finance Minister] Mr Ivanov, you were there and saw how the situation is developing. Today I would like to hear whether resources have been allocated or not and, if not, when they finally will be. Alright? The issue is very serious and no delays are permissible.

I would like to remind you that by October 15 regions affected by flooding should receive subsidies to compensate the interest farmers must pay on loans and lease payments, as well as to help them restore flooded farmlands at a rate of 2,000 rubles per hectare. This is what we agreed, isn’t it [Agriculture Minister] Mr Fedorov? Please keep monitoring the whole process of disbursing these funds to agricultural producers.

Once again I want to stress that any failure is absolutely unacceptable. Our task is to support Far Eastern agribusiness companies as much as possible during this very difficult time and help them return to normal operation in time for next farming season.

As for regions affected by drought… Incidentally, do you remember, Mr Ivanov, when we talked about the Far East at the meeting, it was attended by some of our colleagues from the Republic of Bashkortostan and Chelyabinsk Region, and there were problems there too. These problems were not yet as widespread as in the Far East, but they existed; farmers and residents were affected. Please keep in mind that we must not forget about them either.

As for the regions affected by drought, I know that most of them have already applied for Government assistance, and submitted the relevant documentation. I would ask our colleagues to consider these requests without delay.

Now about the situation with the harvest itself. Work is ongoing, but we can nevertheless draw some preliminary conclusions.

In general, the harvest is progressing well throughout the country. By September 11, 64% of grain sown had been harvested, which amounts to 67.7 million tonnes. Last year’s entire harvest was just slightly higher –70.9 million tonnes. This year the Ministry of Agriculture originally forecasted 95 million tonnes, but because of climatic conditions and the weather it is clear that this figure will be more modest, just under 90. I hope that we will nevertheless get 90 [million tonnes], enough to meet our domestic demand and then some, to build up necessary reserves, and to use the corresponding export potential.

I would also note that the projected harvest of several other crops – potatoes, sunflower seeds and rapeseed – is higher than it was last year. At the same time, this does not mean that we can now relax. It is extremely important that we sow our winter crops efficiently and without any setbacks. As far as I can see from the information I have, not all things are proceeding as quickly as they should. I would ask you to pay attention to this, and today I would also ask you to report on how things are going as far as providing agricultural enterprises with the seeds, fertiliser, fuels and lubricants they require.

And let’s also talk about systemic issues. These are primarily related to our membership and full-scale accession to the World Trade Organisation.

As I already said and we are all aware, we have created opportunities for providing substantial government support for the sector. Funds allocated for these purposes increased from 137.6 billion rubles [over $4 billion] last year to 190.4 billion rubles this year. We will continue to use the full range of support mechanisms for rural areas as appropriate, from providing direct help to goods producers to investing in infrastructure.

At the same time I would also draw your attention to extant problems. For example, changes in the rules and mechanisms for granting subsidies mean that there is no clear understanding of the transition from targeted to untargeted subsidy schemes, or how farms will spend the resources they receive. In addition, there were some glitches related to funding specific farms. We must quickly refine and adjust all these procedures. I just talked with machine operators in the field, and those were basically their questions too. They did not formulate them exactly the same way, but some of the questions the machine operators raised are connected with precisely the problems I just mentioned.

There are representatives of federal and regional authorities, and heads of agricultural companies here today. I hope that we can discuss these sensitive topics as openly as possible and, most importantly, that we can do so productively.

Secondly, I would like to dwell on issues relating to agricultural insurance. This year the percentage of crop insurance is still quite low. Reasons for this include excessive bureaucracy and difficulty obtaining insurance payments. It is clear that we need to improve the regulatory framework in this field, to simplify insurance procedures themselves and, most importantly, reliably ensure compensation for the loss of crops and problems occasioned by other risks.

Another issue that I would suggest we discuss today relates to domestic agricultural machinery. I have already said that domestic sales of agricultural equipment, even competitive equipment, have declined by 20%. We need to find out the reasons for this. I understand that Russian equipment cannot always compete with its western equivalents, but even sales of competitive equipment fell across the country. We need to find out how this is connected with WTO accession; we have already talked about how the [agricultural] sector is running into difficulties because of accession. We outlined the ways to support it, and looked for tools with which to do so. So did they fail to achieve the desired result or were they not used?

Finally, I must point out that it is not enough to bring in the harvest. It is important, but it is not enough to ensure that it will be used efficiently and profitably, including with regards to its transport.

We need to think about declines in freight turnover. I looked up the latest statistics: our transport efficiency is very low. I already know what transport companies will say, but the situation will not improve if all of us make excuses citing existing problems. We need to propose solutions that will satisfy farmers and help the sector.

Let’s get to work.

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September 17, 2013