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National Forum of Agricultural Producers

March 12, 2018, Krasnodar

Vladimir Putin took part in the plenary session of the National Forum of Agricultural Producers. The forum opened on March 11 at the Kuban State Agrarian University in Krasnodar.

Before the plenary session, the President toured an exhibition of innovations and technology start-ups for young researchers in the agribusiness.

As part of his working trip to the Krasnodar Territory, Vladimir Putin also visited the Lukyanenko National Grain Centre.

Also, after the session, Vladimir Putin met with Acting Governor of the Omsk Region Alexander Burkov. They discussed current socioeconomic development in the region, in particular, provision of healthcare services to the population.

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Transcript of plenary session of the National Forum of Agricultural Producers

President of Russia Vladimir Putin: Good afternoon, colleagues, friends,

First, I would like to thank you for inviting me to the National Forum of Agricultural Producers. I am sincerely happy to meet with those who develop and promote Russia’s agro-industrial complex with hard work in the field at farms and companies, who provide high quality products to our stores and explore new markets outside the country.

Thanks to your efforts, the efforts of those who work in the fields, Russian agriculture has changed drastically in recent years and has become a competitive, high-tech area, a growth driver for the Russian economy. When could we have imagined that? I am saying this, and I cannot believe it.

It is necessary to constantly improve the quality of Russian products, increase the competitiveness of domestic enterprises, including in foreign markets. 

Do you remember how people talked about agriculture not long ago? Now, thank god, this is in the past. The volume of agricultural production in Russia has grown five years in a row starting in 2013. In addition, the volume of livestock farming has increased for 13 straight years. Let me note that. I have seen reference files myself, and I would like to say this again: this volume has been growing since 2005, and this is not just because our domestic market is closed to competitors due to the events that you are all aware of. Since 2005, we have seen consistent growth; last year, it was 2.4 percent and it was 3.4 in the last four years in general.

Compared to 2000, the output of agricultural products has almost doubled. The production of cereals, sugar beets, greenhouse vegetables, livestock, and poultry has sharply increased, and the production of food products has doubled. According to the updated data (I think you know this) the harvest amounted to 135.4 million tonnes last year. Of course, this is an amazing result. This is exactly twice as much as in 2000.

I remember 2000 well – 65.4 million tonnes. I remember how I was happy that we had enough to meet our needs. I remember my feeling then. It would not have occurred to me that we would grow this much – 135.4 million tonnes last year. In comparison with 2000, the sugar beet and sunflower harvest increased threefold in 2017, soybean and rapeseed grew by 10 times and so on. This is just great. I would like to note once again that today Russia fully provides for itself all the basic food types.

I would like to ask our monitoring bodies to attentively monitor the safety and quality of food products distributed abroad and in cooperation with the Russian Export Centre, to provide any necessary assistance to our producers that are expanding into new markets.

At the same time, I want to emphasise that the format of this meeting allows us to talk not only about successes – of course, this is always pleasant and it is necessary to talk about it. But more importantly, the format of today's meeting provides an opportunity to discuss the challenges faced by the industry, to determine the steps that are necessary for the further growth of the agro-industrial complex, increasing the incomes of people working in this area, and developing the rural infrastructure.

What would I like to emphasise, to focus on?

First, it is necessary to constantly improve the quality of Russian products, increase the competitiveness of domestic enterprises, including in foreign markets. Our agricultural enterprises are capable of solving these problems.

Compared to 2000, exports of agricultural products and food products have grown by 16 times, such a great figure. Simply amazing. Today, this exceeds by one-third the value from the export of arms and military equipment. I remember two years ago I said this was incredible, but in terms of exports, the agro-industrial complex was equal to arms exports. Today it exceeds it by one-third: 20.7 billion is the export earnings of the agro-industrial complex, while the export earnings in the defence industry are 15.6 billion.

Even 20 years ago, our country bought grain from abroad, and today Russia is the largest exporter of wheat; we rank first. We are second in the world for the supply of cereals as a whole. The exports of sugar, vegetable oil, pork and poultry are increasing.

What is important? That the industry has become more attractive for investment. New jobs are being created. The myth about a permanent depression no longer interests anyone. I am sure that in the next few years Russia will become a leader in the global agro-industrial market.

To increase the capacity of domestic agriculture, we need to modernise existing production, stimulate the construction of new modern facilities and increase self-sufficiency for specific commodity items.

You may have noticed that I said in my Address that four years from now, we plan to supplying more food to global markets than we will be importing from abroad. In other words, Russia will become a net food exporter. We also need to increase the export of meat products and goods with high added value.

To do that we need to modernise the infrastructure and agro-logistics, to remove bottlenecks in railway transport and to increase the capacities of seaports, grain elevators and storage terminals.

The Far East with its ports to the dynamically developing markets of Asia-Pacific region are key areas of development. We will also develop logistics centres in the northwest, and the Azov and Black Sea regions, which still have infrastructure restrictions.

Of course, it is essential to increase the efficiency of the instruments for supporting exporters. Thus, we had difficulties with storing and transporting grain because of last year’s record harvest. As you know, to help the industry we discounted rates for railway grain shipments.

This measure was used a lot. It is necessary to extend these kinds of incentives, as I said, to the next grain seasons, paying special attention to the logistics of the producers in the Urals and Siberia, which are located far from seaports.

And one more point. The demand for ecologically clean high-quality food products is steadily growing throughout the world. Leading countries set high requirements on the access of goods to their markets. Products need to undergo certification and include compliance documentation.

Another key area is the development of domestic breeding and genetics. This is a matter of food security and independence.

I would like to ask our monitoring bodies, primarily Rosselkhoznadzor (Federal Service for Veterinary and Phytosanitary Surveillance) to attentively monitor, in cooperation with the Russian Export Centre, the safety and quality of food products distributed abroad and in cooperation with the Russian Export Centre, to provide any necessary assistance to our producers that are expanding into new markets and to protect them, that is, your interests. I am sure we will hear more proposals on the support of agricultural exporters at the forum. We will attentively review and discuss this by all means.

Second, to increase the capacity of domestic agriculture, we need to modernise existing production, stimulate the construction of new modern facilities and increase self-sufficiency for specific commodity items such as beef, milk, greenhouse vegetables, food ingredients and feed additives.

Last year, more than 40 percent of the state support, or over 95 billion rubles, was allocated to investments in dairy and beef cattle breeding, greenhouse vegetable cultivation and horticulture, the modernisation of machinery and equipment. At the same time, we gave more opportunities to the Russian regions to determine the priorities for supporting the industry and combined 26 state entities into one single subsidy, which also allowed us to accelerate the distribution of funds to the final recipient. At least, that was the intent. If this is not so, I want you to speak to this today.

Last year, a mechanism was introduced for concessional lending to agrarians at a rate of up to 5 percent. As a result, the volume of investment loans to agricultural enterprises increased three-fold over the year.

The future of the Russian agro-industrial complex and its prospects are not just connected to the progress of large agro holdings. Small farms must have an increasingly noticeable part in the domestic market.

At the same time, small entrepreneurs talk about difficulties in obtaining subsidised loans. I have already talked about this, and I want to repeat it: I would ask the Government to analyse this situation, to see what solutions need to be proposed here.

Another key area is the development of domestic breeding and genetics. This is a matter of food security and independence.

Today, here in Krasnodar, I managed to visit a research centre. I must emphasise that it is extremely important to ensure the strategic partnership between science and business in agriculture, to support promising achievements and scientific research.

Over the past two years, 21 selection centres for crop and livestock breeding have received state support. Under the federal scientific and technical programme for the development of agriculture, we will surely continue this work. We have wonderful traditions and wonderful specialists.

Third, as I said in the Address, the future of the Russian agro-industrial complex and its prospects are not just connected to the progress of large agro holdings, even though this is apparent. Small farms must have an increasingly noticeable part in the domestic market. Their share of agricultural output has grown four-fold in the past 17 years. This is a good number, very strong, and production volume increased by about ten times.

In fact, an entire class of farmers is emerging in Russia who know exactly what kind of products the customer needs; who know how to work on the land and how to succeed. These people’s energy and initiatives must be supported, and any barriers to their produce entering the market must be lifted.

We must improve the living standards in rural areas. We have managed to do a lot as part of the village development federal programme.

Thanks to grants, 18,000 farms have been set up in the past six years, 5,000 family livestock farms and 426 agricultural cooperatives were supported. We will continue to support greater employment in rural areas, to resolve the issues of providing land, and affordable financial resources; we will increase their economic sustainability.

I just spoke to some of you as I was visiting a breeding station, and the farmers there raised these issues. But regarding access to financing, we agreed that the Federal Corporation for the Development of Small and Medium Business would assist farmers inobtaining credit under its obligations.

The land issue is an acute problem after amendments were made to the law governing land provision for farmers. I have just been informed that a couple of years ago a clause was dropped under which land was allocated to farmers without a tender if there were no other bids from farmers, or via a tender if there was a bid from another farmer. This was done because there had been abuses with the use of allocated agricultural lands.

As we moved over to this hall from a previous meeting, we agreed with the agriculture minister – he has a respective directive – that we will go back to the provision in the law on land allocations to farmers that existed earlier. We will bring this back.

Amendments will be introduced that will not allow the manipulation of allocated land outside the tender process, and which must be used exclusively for agricultural purposes. These elements will be additionally introduced there. We will sort out how to make it so that no manipulation can occur. I proceed from the fact that the privileged allocation of land to farmers is quite justifiable.

It is necessary to provide closer integration of the rural areas and the common economic and social space in the country. To do this, we must accelerate the development of the telecommunications network and improve the conditions of local and regional roads.

Of course, it is crucial to support cooperation between small producers, it will enable them to more efficiently collaborate with retail networks, cut costs and increase the quality of produce. I would like to stress that much depends on the regional authorities regarding the development of small farming and agricultural cooperation.

I expect that they will support and focus on farms and agricultural cooperatives, including protecting them from unfair competition from large companies and any forms of administrative pressure.

Fourth, as I said, we must improve the living standards in rural areas. We have managed to do a lot as part of the village development federal programme. This came into effect in 2003, and, of course, it will continue.

In addition, let me stress that we need to gain momentum in the development of infrastructure and the social sphere in villages. I mean easy access to medicine, to primary healthcare as well as the construction and equipping of rural schools and cultural centres.

We will increase the level of gas supply provision in villages and provide high-quality drinking water: both steps are crucial. Although we have seen advances, significant ones, in the first area, gasification. We will definitely continue. And, of course, it is necessary to provide closer integration of the rural areas and the common economic and social space in the country. To do this, we must accelerate the development of the telecommunications network and improve the conditions of local and regional roads, first of all, of course, local roads. These are the priorities of our systematic work for the years to come.

By the way, I have seen the reference. We talk about the roads all the time, especially local roads. It is forecasted that, starting from January 2019, the indexes will be 50.6 percent, and 52.6 percent by 1 January 2020, which is according to the regulations.

Today it is 48.6 percent. This growth is too slow. Of course, this is not the subject of our discussion today; we will have to discuss this with the government separately. But 4 percent growth – 48, 49, 50 and 52 – is too little. Just too small. We will have to work on this with the regions. With the regions and, of course, with the government. We will focus our attention on this.

Let me note once again that we must make life in the villages more comfortable and attractive and start the process of constant change for the better that all people, each person, can feel. Only when we create conditions that improve living standards will we be providing for the sustainable development of Russian villages and sure prosperity in the future.

Colleagues, the issues that the agricultural forum discusses go beyond the industry and, without exaggeration, concern the life of the entire country. Your expertise, initiative and aspiration to achieve even better results are very important for Russia’s well-being and its advancement.

I would like to express my gratitude to you and all of your colleagues for your work, your love for your land and the ability to carry out your business effectively and responsibly.

Thank you for your attention.

Plenary session moderator, TV journalist Sergei Brilyov: Mr President, thank you so much for joining us. I would like to introduce the other panellists.

Stepan Lesnichin graduated from the Free University of Berlin. He now grows onions somewhere between the Volgograd and Astrakhan regions. By the way, he is not just a farmer, but also a member of a cooperative society. I wanted to mention this fact in the light of what you have just said.

Yevgenia Uvarkina represents the Lipetsk Region she loves so much and the company Trio. She works in many different fields, including potatoes, but today we are going to discuss the subject of milk with her.

And finally, Viktor Linnik, who heads Miratorg, a company whose name has become synonymous to meat in Russia. I will certainly give him the floor today.

I must say that during our last interview we talked about covert intelligence, but now we are discussing agriculture. So, in order to justify my presence here, I can say that with the agricultural segment gaining so much momentum lately in Russia, we must remind ourselves that 90 percent of us were peasants three or four generations ago. And my second point it that as an anchor of a federal television network, it is my duty to have a better understanding of this wonderful and very interesting sector.

Vladimir Putin: What were we discussing during my last interview with you?

Sergei Brilyov: The history of covert intelligence, Mr President.

Vladimir Putin: You hardly need any intelligence if there is no bread, am I right?

Sergei Brilyov: Exactly.

Vladimir Putin: Once the bread is on the table, you can start thinking about intelligence.

Sergei Brilyov: Yes, there is some bread on the table. And we will also talk about butter.

One of the most visible developments is that over the last few years or so we saw Russia move from import replacement to exporting agricultural goods. I am obviously referring to the National Export Strategy. In connection to this, I would like to ask Viktor Linnik to share with us his perspective on this subject.

Viktor Linnik: Mr President, colleagues,

I absolutely agree that over a period of the last decade we have made a breakthrough in agricultural production largely due to the cooperation between the state and the investors.

I want to add something to what Mr President said: meat consumption per capita has grown to 75 kilogrammes. Meat has become more accessible, both physically and economically, and I believe this is one of the main results of the cooperation.

The share of imports in 2017 dropped to less than 10 percent. Over 1 trillion rubles was invested in the meat industry alone, modern facilities were built, the industry was modernised, and a foundation was created for further developing as well as successfully increasing agricultural production.

When it comes to exporting meat, we are at the stage of taking baby steps, but already doing this to over 30 countries. We have begun exporting to Saudi Arabia, Kuwait, Bahrein, Iraq, mostly to the Persian Gulf countries.

In general, exports have reached a record: $21 billion, more than weapons exports. I am sure this is only the beginning. The results are impressive but we cannot stop here. Russia has a great potential in terms of the quantity and quality of agricultural and meat production. We need to increase the production and the capacity in order to increase physical and economic accessibility of meat for Russian consumers, which will improve their wellbeing.

I would like to remind you that the price for poultry meat has not changed for 4 years now. As of last year the price of pork went down by 25 percent, so it has become more accessible to Russian consumers.

This happened because of the development of our own efficient, modern production of pork. It is important to understand that exports depend on a strong domestic production. If we have a strong production and competition, there will be exports.

We can see that our competitors stopped thinking about their own market saturation long ago. For example, Canada produces 30 percent less pork than Russia while it exports 70 percent of it.

Last year, the agriculture growth in Germany was 5.7 percent and 4 percent in the US. This means we have no time to lose, we must make another leap forward.

The expansion of the Russian agricultural products to the global market is of strategic importance. We have every opportunity to increase the agricultural export to a sum that now seems fantastic – $40 billion by 2025.

I would like to talk separately about meat. Mr President, you were absolutely right saying that it is of strategic importance for us to develop exports and products with a higher added value. Last year, we exported a record volume: 250,000 tonnes.

I believe this is just the beginning. I think that by 2025, we could increase this number five or seven times and export up to $4–5 billion worth of Russian meat to global markets. In general, we have all the conditions for this.

We must not forget that our WTO partners have been working on the markets that are interesting for us for a long time: the US, the European Union and Brazil. This means that no one is waiting for us there, and the competition will be tough. Of course, your support, Mr President, and the support of the state are salient to get access to these markets.

A good example: we spent three years together with the Federal Service for Veterinary and Phytosanitary Supervision to get access to the Saudi market; I mean we had a lot of technical level talks.

However, two months later after your meeting with the King of Saudi Arabia we got the access and started exporting our beef to the Saudi market, and this is economically the best market in the Persian Gulf. (Applause.)

Vladimir Putin: This applause goes to the King of Saudi Arabia. The thanks goes very much to him. I will convey this applause and your gratitude to him.

Viktor Linnik: Their discipline is good, Mr President, exactly.

The next important step for us is, of course, receiving access to the markets of China, Japan, South Korea and other countries of Southeast Asia. In this region, there is no climate or other conditions for providing the population with good product quality, everyone knows this. But the Chinese market is still closed for us. I hope there will be some improvements this year.

I would like to say once again that the development of exports is only possible given a strong competitive domestic market and domestic production. For that the industry needs stronger support. We should not limit ourselves to just keeping it up – we will need to use the instruments to develop it; I mean increasing the funding for concessional lending of investment loans, increasing capital indemnification, supporting everything that allows us to create new modern production facilities, everything that does not create situations where we are inefficient. We still have a lot of outdated facilities, but we have laid the foundation for new ones.

It is also important, as you said, Mr President, to amend the state programme of the transport system development, in order to adjust it to the agricultural production growth and exports, to improve the capacity of Russian roads and railways, as well as river and sea ports.

Here is an example: during the seven years of our project in Bryansk, we have increased cargo transportation volume to 5 million tonnes. This is fodder, production and livestock. And the regional and municipal roads could not cope with such a load. So large infrastructure projects must be supported by the federal centre in terms of road infrastructure.

I would like to focus on another important thing. The Federal Service for Veterinary and Phytosanitary Supervision, our stronghold in the Agriculture Ministry, protects us from unsafe imports and helps us develop exports. In all, the service is working very efficiently.

But apart from this, we face the absence of a single federal veterinary service. Now we have 85 regional veterinary services. Due to this situation, it is almost impossible to fight epizooties, dangerous animal diseases. We can see it is high time we worked on this issue seriously.

I mean it is important that we solve the matter of establishing a single federal veterinary service that would be financed from the federal budget, we will definitely improve the epizootic situation, increase the investment attractiveness of animal farming and expand opportunities for exports thanks to the increasing confidence to the Russian State Veterinary Service from the countries that import our food.

I would also like to talk about cooperation with farmers and small businesses using the example of our company. You know we have been implementing a large beef farming project since 2010. Thanks to state support and the beef farming development programme, we have created a unique, as I think, infrastructure: the “cow – calf” production; this means feeding and fattening houses, slaughter facilities plus processing.

Now we have some of the best Aberdeen Angus geneticists in the world. We have a breeding reproducer and are opening a sexed semen laboratory, a genomic selection laboratory to accelerate the genetic process and select the best animals.

This infrastructure allows us to buy large cattle for slaughtering from beef farmers in 28 Russian regions in five federal districts. The area of shipping is almost 6,000 kilometres, including Buryatia, Khakassia and Altai.

Thanks to this, we raised the price for the farmers’ basic products, I mean an item, by 15–20 percent. Firstly, we have no middlemen involved, so the income grows directly for the producer, for the people who work with the basic production – “cow – calf” – where the beef production industry is established, or where the meat is born, roughly speaking.

The obstacles we face are the same again. From the south of Russia, from Caucasus… We have livestock, but it is prohibited to import because of the dangerous epizooties, and we are afraid to spread it, so it is prohibited.

The second part of the story is some parochial mentality; I mean that several regions use veterinary services to limit the movement of the livestock. This way they create an advantage for their processors. On the other hand, they bite the hand that feeds them: I mean the foundation of the beef farming, because there is no just price for livestock.

The solution to this problem is a single federal veterinary service. Once again I repeat that without this decision we will be unable to make a qualitative and quantitative breakthrough in the production of all types of meat.

The second way of cooperation is the involvement of farmers in ”cow – calf“ production, where farmers have the highest expertise. Using our holding company as an example, we prepared out-of-the-box solutions for developing cooperation in specialised beef cattle breeding: the supply of livestock with high genetics and the subsequent purchase of calves from farmers in this case.

We, like all other large companies, are interested in integrating and increasing the amount of livestock slaughter. I think it is ineffective and will take too long to solve this problem without farmers. Now we are launching several pilot projects in the Tula Region, and by the end of the year, Bryansk, Smolensk and the Kaluga Region will work in the same format.

What is necessary? For farmers, the crucial point is not only the availability of concessional lending, but the simplicity in obtaining loans. It is clear that they do not have highly qualified lawyers and economists. The procedures must be simplified as much as possible.

For this, Mr President, it is necessary to increase the volume of concessional lending to small businesses through Rosselkhozbank and to use the mechanisms of concessional lending, guarantees and warranties from MSP Bank (the Russian Bank for Small and Medium Enterprises Support) and Rosagroleasing to ensure a deferment of leasing payments for small businesses for three years.

I am confident that this will make it much easier for farmers to receive financing, as they will clearly understand where they buy high-quality livestock and, accordingly, where they will sell their products at fixed prices with guaranteed profit and profitability.

Mr President,

We are proud that agricultural exports in monetary terms exceeded arms exports. When it comes to the global production of and trade in agricultural products, only those countries win where producers and the state work together to develop production and promote products for export. We have all the conditions for a breakthrough in the expansion of agricultural production and exports.

Your support and the huge capacity of Russia will allow us to achieve those ambitious goals that we set for the next 10 years.

Vladimir Putin: First of all, about supporting the farmers. I already said that we will expand concessional lending, including on the security of the MSP Bank. Relevant decisions have been developed and are being formalised now. I hope it will work. The same will be with the so-called finance lease. We will do this too.

I think that everything related to the assistance to farmers in order to include them in the chain of large producers is a very good area. Your suggestion that farmers take large cattle to raise it is probably one of the most serious and ambitious areas there.

As to the veterinary service: I agree with you, I think it is time to give the Agriculture Ministry additional powers and create a system that will work efficiently there. Why? Because it is important for both domestic consumption and for our work on foreign markets too.

You mentioned the Asian markets; we all know that it is related to the quality of production. No less important is the quality of grain exports. I will not talk too much about it here, but those who are engaged in it know that there are things that require additional attention.

We need to work on all these matters: you on your part and the state on its part, providing you with access to these markets. We will definitely do all this. So, we practically agree with everything you said, and we will work on it.

We also have agricultural attachés there. We will develop this system. I know that in European countries there is not much need for them, and there are not enough of them in countries where such markets are beginning to open up.

There has been a decision to expand this system to 14 countries, first of all, to those countries which are especially interesting to our agricultural producers in terms of promoting their production.

Viktor Linnik: Absolutely, it is about time.

Sergei Brilyov: Mr President, one way or another the matter with the farmers has been voiced more than once, but I would like to once again introduce Stepan Lesnichin, who is both a farmer and a member of a farming cooperative.

But, frankly, I was also amazed by the details of his personal biography: a native of St Petersburg earns a doctoral degree from the Free University of Berlin to work on the border of the Volgograd and Astrakhan regions – an unusual combination.

Nevertheless, farmers and cooperative members, allow me to emphasize this, farmers are growing even more rapidly compared to other entities across the industry, but it is clear that there are problems of both access to the market and access to investment.

Stepan, what could be done to improve this situation? To a certain extent, this is probably an extension of what Viktor was talking about.

Stepan Lesnichin: Good afternoon, Mr President, colleagues.

It is a great honour and responsibility for me to speak here on this stage today. Mr President, you said very important things for all farmers. Thank you for appreciating our work.

Today I am authorised to talk on behalf of all farmers in Russia, their number exceeds 200,000, to talk about our successes and plans for the future. Today, farmers are the main support and driving force for the development of rural areas. Small business is developing in the country, as was already mentioned. Over the past five years, farmers have increased production 2.5-times in cash equivalent. Today we produce about half of all agricultural products in the country.

Farmers are growing. Thus, over the past decades, the average land per farm has increased 140 percent, and over the past three years, we have increased potato production by six percent; vegetables by 23 percent; and milk by 24 percent. Also, livestock and poultry population are growing, and the productivity of farms is increasing.

For example, farms have made the biggest contribution to the growth of milk production, which Russia achieved last year. We grew by eight percent, while large agricultural companies, only by three. All this became possible due to government support.

Today, farmers get green box subsidies, subsidies per litre of milk, subsidised loans and grants. Over the last four years government support provided to farmers in all areas was up 30 percent. Farmers received more than 30 billion rubles just as subsidies over the last six years.

Vladimir Putin: I think that the figure stands at 31.8.

Stepan Lesnichin: I would like to thank the Agriculture Ministry for extending grants to agricultural cooperative societies. As many as 426 societies of this kind benefited from more than 3 billion rubles in grants.

Mr President, I would like to highlight what you said about the single subsidy. A number of regions will be able to increase allocations at their own initiative. That said, money tends to run short. Farmers are queuing up for grants, and it is not uncommon that only one in five receives one.

This kind of support is very popular. On behalf of all the farmers I would like to ask you to keep it in place and expand, if possible. After all, farmers and cooperative societies who received those grants created 27,000 jobs.

For example, the cooperative society I represent, YugOvoshchSbyt, is from the Astrakhan Region. It has received three grants worth a total of 34 million rubles. We also invested our own money, bringing the overall investment to 58 million.

This enabled us to build within a very tight schedule a set of vegetable warehouse facilities that can store 15,000 tonnes of produce, equip them with cutting-edge equipment that extends the shelf life of vegetables, since we operate year-round, and buy the equipment we needed for processing our goods. This season our cooperative society handled some 26,000 tonnes of vegetables and melons.

The cooperative society permanently employs 60 local residents, who earn above-average wages for the Astrakhan Region. We worked with retail chains to ensure steady demand and guarantee profits to our members.

However, if you look at the general picture across Russia, farmers and cooperative societies are only taking their first steps. Only 12 percent of farmers take part in cooperative societies. This can be explained by the psychological factor, among other things. It is always hard to trust one another when you are just starting out. But these doubts should become a thing of the past.

For example, cooperative societies are booming in the Lipetsk and Tyumen regions. They should serve as an example for other regions. Keeping farmers informed is essential.

Today the Ministry of Agriculture helps us. They develop methodology guidelines. By the way, every participant at the forum has got the basic set for beginner farmers and co-operators. There is a lot of useful information on the ministry’s website, including ready business plans and examples of successful projects.

The Corporation for the Development of Small and Medium Business (SME Corporation) also does an enormous amount of work. They have created a number of special standard solutions and services especially for cooperative farms, including concessional lending, leasing programmes and marketing support.

But we have to give this information to the farmer. To do this, we need information and consultation centres in the regions; centres created especially for farmers and cooperatives. There are such centres in 19 regions, where regional authorities support the ideas of farming and cooperation actively.

If this work was carried out or done more quickly in other regions, it would significantly ease the life for small businesses in the villages. I would like the governors to pay attention to this.

Another thing is loans, mostly soft ones, with the rate under five percent. You have already spoken, Mr President, and Mr Linnik as well, about the problems with concessional lending. Most problems arise because farmers have not enough collateral or because of their credit history.

One possible solution is… As I know, there is a draft law under consideration, which would make farming land a more attractive collateral for banks; and land is the main thing a farmer has. In this case the collateral will not be enough. In this case, they will have to use guarantees from pledge funds or the SME Corporation.

There are other matters concerning the land. The land that is not in use is a sore point. Many farmers would like to expand their farms, and it seems like there are plots next to theirs, but the owner is not using the land. Thank you for approving the law on land plot extradition from lazy owners.

Let’s increase fines for sections that are not in use or the tax rate for such owners to make this law work more effectively and for them to be motivated to start cultivating the land again or sell it to those who are really farming hard.

Another important topic is to lease the land to beginners as well as experienced farmers, as you said, without holding an auction. In short, these were our main subjects.

I would like to thank you again, Mr President, for your support. Thank you to the Ministry of Agriculture ‒ today they work with us, they hear us. This year, for the first time, government support to the regions came in February, when it is especially needed. And on our part, I would like to assure you that we are ready to continue to work and show good results.

Thank you for your attention.

Vladimir Putin: Regarding unused land and your proposal on increasing the fines. Today, fines are applied in line with the usual rates ‒ 0.3 percent, but it has long been decided that this may be 1.5 percent of the cost. This solution already exists, and it just needs to be used.

And in this sense, probably, it is important to create those information centres you spoke about. Are sites open in the Ministry of Agriculture? How many sites do you have, Mr Tkachev [Minister of Agriculture]? A lot, enough. And Rosselkhozbank also has them. Nevertheless, apparently this is not enough, so such centres must be established at the regional level.

Although, if I go back to where I started, I completely agree with you. Of course, it is necessary to carry out an inventory and establish a normal turnover of land, taking into account the fact that a lot of land is received but not used for its intended purpose. Here we need additional mechanisms to restore order. I fully agree with you.

As for using land as collateral for obtaining loans, it is also possible and necessary to do so. Banks really cannot yet use this tool, although, bearing in mind that we still have risky farming, there is a danger that banks will get it, and then it will become the subject of all kinds of speculation. Think about it, please. This matter requires a careful approach. I really would like to, I want to have as many instruments of support and access to lending, especially subsidised, as possible. But there is also a dangerous side to the matter. We need to carefully approach this.

As for guarantees from the SME Corporation, it is necessary to refine and launch this mechanism as soon as possible. It seems to me that this would be painless and less dangerous for farmers.

Although, if we employ this mechanism of land collateral, this would give a push to development. But we should think about how to avoid creating additional problems such as deceived co-investors. Therefore, we must approach this very carefully. But I agree that we need to think on it.

Sergei Brilyov: We will now give the floor to Yevgenia Uvarkina.

But first of all, a few words. Here I can see those with whom we held the Moscow Region Dairy Forum three or four years ago: we worried about the situation back then, because it was not clear what would happen to milk production and how we could support it.

Today the government support has likely worked; at the same time, we have the production growth, but those who produce low-quality products, which we sometimes cannot stop, or real counterfeit rushed to our markets.

It is clear that, in global trade, this is something theoretic, but in reality, a number of states have very effective measures to stop counterfeit or low-quality products even if they are cheaper.

In this case, I would like to ask Ms Uvarkina: how do you see the mechanisms for further cooperation between the producers and the state so that, while supporting milk production, we could teach the society and those who control these processes to always send high-quality products to the shops?

Yevgenia Uvarkina: Mr President, colleagues,

Of course, it is too early yet for the dairy industry to be proud of the amazing results agriculture in general shows making its significant contribution to our exports. Nevertheless, the development dynamics has been positive in recent years.

The most important thing is that we have finally gone from a decrease to growth when it comes to milk production. We have increased the volume of the produced milk by two million tonnes since 2013, which allowed lowering the import of dairy products from nine to seven million tonnes.

During a period of three years, over 62 billion rubles of government support have been allocated for the dairy industry, including such important and necessary measures (many thanks for this) as compensation for a part of the expenses on constructing and upgrading dairy units: all agricultural industries thank you for the concessional loans.

During this time, almost 200 dairy units have been built or upgraded. Last year alone we started building and upgrading 90 dairy units. The implementation of these projects will make it possible to increase the production of milk by another two million tonnes in the future.

Of course, Mr President, we could not have reached such results without your attention to the industry matters as well as the multifaceted support we receive from the government and the Ministry of Agriculture.

Despite the positive trends, we have still a long way to go. First and foremost, it has to be taken into consideration that dairy consumption has not reached the desired level so far. Unfortunately, we are still behind countries like Germany and Finland. We know that dairy products are essential for the health of our children. As a mother of six I know this all too well.

We still import a lot of dairy products at a rate of 30 percent of the production volume. There is an understanding that it is critical that incentives to invest in the dairy industry remain in place and the construction and upgrading of dairy farms continue using state-of-the-art technology for livestock handling as well as feeding.

Today, only 12 percent of farms operate this way. It is clear to us that such farms have the highest possible level of productivity. A number of companies have already reached productivity levels comparable to those of the farms in the US and Israel. We also see that these farms produce goods which are of very high quality. It is these farms that young specialists want to work for.

At the same time, fair competition is definitely the key objective when it comes to promoting steady growth in the dairy industry. We know that the Russian dairy industry can make quality products for our consumers. We know that we can be competitive, including on foreign markets, but only when there is fair competition.

Unfortunately, who are we competing against today? These are primarily grey imports, counterfeited goods with dairy products still coming from countries facing import restrictions.

As far as we can see, grey schemes are still used to bring to the Russian market cheap powdered milk made using unpasteurised milk from the Baltic states, where prices dropped due to counter sanctions introduced by Russia, or powdered milk from the EU intervention stock.

A separate issue is cheese products of Ukrainian origin using vegetable fats. In fact, these are protein-vegetable concentrates. We understand that today this product in the amount of 150,000 tonnes reaches our market, and this is almost a million tonnes of raw milk.

In fact, today there is no control over cheese-like products at checkpoints by the veterinary service, and this lets poor-quality products get to our market, and most importantly, it causes considerable economic damage to the Russian dairy industry.

It is important to note that at the Congress of Milk Producers in February, the Minister of Belarus said that they banned the production and circulation of cheese-like products in their country. This measure is primarily aimed at protecting Belarusian producers.

It is also worth noting that since 2013, imports from Belarus have almost doubled from 44 to 80 percent. And this is almost 5.5 million tonnes in terms of raw milk, which is 25 percent of the production of commercial milk in the Russian Federation.

What else are we up against? Falsification in the domestic market, certainly. And of course, there is a lot of controversy here. It cannot be said that the Government does nothing about it. A lot is done, nevertheless we understand that cheese products, including those coming from Ukraine, are re-packaged and land on store shelves as cheese, not as cheese products. Sour cream products, cottage cheese products are placed on the shelves as sour cream and cottage cheese, and all this misleads our consumer. And most importantly, currently there is no adequate accountability for those who violate the law and those who put out fakes, and so business owners are not afraid to do this.

Attending the plenary session yesterday was Stefan Durr, the largest milk producer, at more than 1,200 tonnes per day, and we cannot keep up with how fast Stefan is growing. By the way, we can say that we are proud of such dynamics, and that Stefan received Russian citizenship. Thank you for all the great examples here in Russia. So, he said that we are able to compete, but not with vegetable fat, not with palm oil, and gave the striking example of how crab sticks cannot be compared with real crab meat.

I would like to focus separately on the issue of digital veterinary certification. We can see the significance of this tool. It allows tracking from farm to store shelf. It will contribute to the elimination of counterfeit goods and grey market imports. The most important thing is that, as a result, it will guarantee demand for our milk and fair competition.

I understand your being approached by some, usually small processing businesses with their concerns. Any new tool requires effort and seems complex when first introduced. I can tell you that as an agricultural producer, I have been working within the Mercury system throughout 2017, and it has simplified the agricultural producer’s work, and cut costs. However, all the difficulties and problems we are facing are incomparable to the losses the industry bears due to grey market imports and counterfeit goods.

To conclude, I would like to mention another critical issue that impacts the progress of the industry, the social development of villages. You have said a lot about this today and in the March 1 Address. People will not stay to work and live in rural areas unless we provide adequate conditions, not just working conditions but general living conditions.

The state programme, ongoing since 2003, has proved its efficiency basically by the fact that one ruble of state support attracts almost a ruble and a half in extra budgetary revenue.

Unfortunately, we see that, so far, social development lags behind industrial development in rural areas. In 2018, 16 billion were allocated whereas the regions applied for 48. This is three times less. We are aware that the budget is not limitless, nevertheless, knowing how much attention you pay to this issue, Mr President, allow me to address you and ask you to find and allocate the additional funds needed for social infrastructure.

This is very important both from the human perspective and from the perspective of developing the production potential of rural areas. We understand that the programme is primarily implemented where investment projects are realised, and this means comprehensive development of rural areas.

Of course, you also talked about this, thank you very much; it is important for us that the subprogramme for the sustainable development of rural areas should remain within the state programme to 2030, and the Agriculture Ministry should remain the administrator as a responsible master who is accountable for the development of agriculture, something that is impossible without rural development.

Vladimir Plotnikov made the following suggestion yesterday – to append the name of the state programme for the development of agriculture with “development of rural territories.”

Going back to the dairy industry, I would like to say that this is one the key industries that can engage the largest number of people in rural areas. By ensuring sustainable progress in the dairy industry, we can secure and preserve, and – the key – develop rural territories.

Therefore, summing up, I would like to ask you, Mr President, to give relevant instructions to your subordinates.

The first is to support a proposal to introduce mandatory control of cheese-like products and, of course, help our partners – members of the Eurasian Union – to abide by their commitments on food imports to our market to ensure honest competition.

To speed up the elaboration of a draft law on tougher sanctions for the manufacture and sale of counterfeit products.

To increase to the extent possible the programme for the development of rural areas in 2018 and, of course, to continue the programme of the sustainable development of rural areas under the state programme until 2030.

Thank you for your attention.

Vladimir Putin: As for the development of rural areas, requests are always above what the budget is capable of. This is my first point.

The second is that we are always in dialogue with our colleagues in the regions. They must make a fair contribution to the development of their own areas.

The third, some aspects of rural development are covered by other programmes, not the programme for the social development of rural areas. I am referring to mobile medical outposts. They are all for the countryside but they will be part of the healthcare programme. The same applies to education, culture and so on.

Nevertheless, I fully agree with you and that is why I singled this issue out in today’s speech – because it is necessary to advance the social development of rural areas anyway. This is obvious. And we will do this proceeding from our capabilities and probably even exceeding these capabilities in some periods of time because it is necessary to achieve advanced growth rates in this area. This is my first point.

The second, regarding the industrial part – there is not one point in what you said that I did not support. This concerns inspections of cheese-like products, powdered milk and the like. We are continuously in dialogue on these issues with our partners in the EAEU, including our Belarusian friends.

The law that you just mentioned, the one initiated by Belarus, also enjoys our support. Our Ministry of Agriculture supports the same approaches to cheese-like products. This applies to “grey” imports and all the aspects that you spoke about. We will introduce all these instruments by all means in order to ensure healthy, normal and fair competition.

After all, when we established all these associations we assumed that free movement of goods, capital, people and manpower will increase our common competitive ability. Needless to say, nobody thought that the established institutions and instruments would be dishonestly violated, especially if this is linked with the so-called sanctions imposed on us by European countries and our reciprocal measures.

Naturally, the EAEU’s external border should not be transparent for goods, the imports of which are limited on our customs territory. We understand this and we are continuously working on this. Mr Dankvert [Head of the Federal Service for Veterinary and Phytosanitary Surveillance] is sitting here and smiling. He deals with this and his actions sometimes cause a stormy response from our partners. But we will do this all the same. We will increase liability for all violations. Everything is good in moderation but we will also follow this path.

Sergei Brilyov: Mr President, most of us listened to your recent Address and we know that, in addition to agriculture, you are interested in many other things, especially ballistic trajectory change, which is unpredictable. Still, I would like to ask you my question and then we will let you go and continue without you.

There is an interesting exhibit downstairs. Several nice young people, young entrepreneurs and innovators – a lot of interesting items there. They are 20 to 25 years old. I have just talked to them and all of them say farming is trendy again. They are neither lawyers nor economists. You can see a digital separator, organic Kuban apple orchards and other things. Just looking at these young people…

Vladimir Putin: I saw some of it…

Sergei Brilyov: Have youseen the exhibit?Just looking at these guys you understand that our agriculture has an interesting future, especially with this kind of state support. Still, we realise that this nonsense with sanctions will come to an end one day. What do you think will follow?

Vladimir Putin: It is not exactly nonsense. You may ask…

Sergei Brilyov: Of course. What do you think will happen next? Do you see that our agricultural industry has a chance to maintain its strength, that it will be secure after the sanctions are lifted? Do you also think that it will be harder for foreign companies to return to the Russian market?

Vladimir Putin: This will be the case for sure. Indeed, what is the reason for this explosive growth? It is that competition in our domestic market was backbreaking for our agricultural producers.

First, there is both strong overt and covert support for agriculture in the West. We know this. All the controversy in the World Trade Organisation mostly revolves around agriculture.

What is this about? Countries with advanced economies will not listen to countries with developing economies and they create conditions for generating poverty on the world market, primarily among agricultural producers, and then they give them assistance through all kinds of UN institutions instead of helping them develop their agricultural industry and instead of limiting their secret and their open support for their own agriculture. This is the main reason most WTO-initiated talks have been stalled for so many years and have actually ground to a halt.

They were actually helpful with these sanctions, giving us an opportunity to assist our agricultural producers in the domestic market. As you have seen, our agriculture has taken advantage of this opportunity.

I must say and I think all those present in the hall will agree with this: if this happened not three years ago, not in 2014 but in 2000, it would have been probably impossible to achieve such results. This is so because in 2000 we did not have the required conditions for development. We did not have our own agricultural producers that have now amassed some strength. We did not have our own modern agricultural production that would have been competitive.

All this appeared by 2014. We were short only of one thing—freedom of the market at home because these cheap cheese-like products – even of good quality but with large covert and overt state subsidies – suppressed our own Russian producers.

What is happening now and what will happen next? Take tomatoes again. Our friends, our Turkish partners understand well that now we will develop our own production and they will find life difficult because everything that is produced on Russian territory will always be cheaper and will not be inferior in quality or the technology used.

It is cheaper here because our consumers are closer and there is no need to ship anything by sea. Some components that form the final price are also cheaper here. This covers all components: taxes, energy and the like. So, this is a very specific example but it applies to practically all agricultural produce.

If our agricultural producers gain momentum, say in beef farming, cattle breeding, it will be practically impossible to compete with them inside Russia. This is the first point.

Second, as you know we have overcome the “infantile disorder of leftism in communism,” to quote a classic writer of ours. We have learned very well how to distinguish quasi-liberal, market blab from real life.

I am saying that despite all the external signs of the implementation of WTO requirements, in reality the advanced economies are using a very large set of instruments to support domestic, that is, their own producers. We will do this in the future as well, without violating the principles and requirements of the World Trade Organisation.

Therefore, I am sure that the future of our agriculture is secure. I wish you success. And we will help you and do everything for you to be successful.

Sergei Brilyov: Thank you, Mr President. We will continue working here and let you go. You have a country to run.

Vladimir Putin: Are you kicking me out? (Laughter)

Thank you very much for the invitation and for today’s discussion. I sincerely wish you all the best.

March 12, 2018, Krasnodar