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Vladimir Putin: Good afternoon.

As you know, the Russian agro-industrial sector has been showing some, if only timid, signs of improvement. Witness the overall growth of agricultural output and the drop of the number of loss-making enterprises. Advanced technologies are being introduced and investment is increasing. If these trends hold, the agribusiness will cease to be a traditional headache and start turning into a dynamic sector of the economy. So, I think it is extremely important to reveal and consolidate the positive trends, to identify these positive trends and properly use the points of growth that have emerged.

Reviving the agro-industrial sector is a key pre-requisite for bringing about an upsurge of the national economy as a whole, but equally important, it is an issue of the future opportunities and the way of life of millions of our fellow citizens.

Today it is particularly important to introduce new and modern forms of economic management that contribute to effective interaction between all the links in the production chain, beginning with financing, to production, processing and sales.

Undoubtedly, not only the agents in the agro-industrial sector, but the government, too, each have to do their share of the work. Both the federal and the regional authorities must contribute to the creation of large integrated complexes, find ways to insure against agrarian risks, promote the development of leasing schemes and generally provide incentives for the use of the most suitable, the most advanced methods of farming.

The growth of agricultural production is still unfortunately impeded by administrative barriers. A poorly developed market infrastructure and a lack of an advanced legal framework are other obstacles. During the past two years we have made significant progress in the sphere of land legislation. The Land Code has come into force and most recently the law on the sale and purchase of agricultural land has been passed. I would like to note that we have managed to take into account both the national interest and the regional specifics – and I expect to hear your opinions about it. The law identifies the issue of rent as one of the most common current forms of land use.

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I would like to dwell on the undoubtedly important topic of protecting the domestic farmer. Now that Russia is preparing to become a fully-fledged member of the WTO that topic takes on added importance. We know very well that the countries of Europe, the United States and our other foreign partners zealously guard the interests of their domestic producers. We too must work out our strategy and tactics in order to take into account the interests of our agro-industrial sector in the WTO negotiating process. But here it is important, and I think many will agree with me, to strike the right balance. A lack of competition and the creation of sheltered conditions for the domestic agricultural sector will do no good.

Reverting to an inefficient system of subsidies is a recipe for stagnation. These subsidies, of course, can keep production afloat but will certainly not contribute to the development ofagribusiness. Having said that, I am aware thatthis is a very pressing issue for the development of any sector of the economy, but especially for agriculture, for the farmer. Our partners have worked out a whole system for protecting their own interests. I have publicly commented on this more than once: the more we are integrated into the European and world economy, the more frequently we confront theissue of protecting our national interests through administrative, absolutely non-market methods, whatever they may be called. This does not mean that we should in all cases proceed on a quid pro quo basis, but we must always keep in mind our own interests and the interests of our producers. That is true.

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