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Taqking part in the meeting were Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister Viktoria Abramchenko, Presidential Aide Maxim Oreshkin, Minister of Industry and Trade Denis Manturov, Minister of Agriculture Dmitry Patrushev, Minister of Economic Development Maxim Reshetnikov, Minister of Finance Anton Siluanov, Minister of Science and Higher Education Valery Falkov, Altai Territory Governor, Head of the State Council Commission on Agriculture Viktor Tomenko, and Moscow Mayor, First Deputy Chair of the Government Commission on Improving the Resilience of the Russian Economy under Sanctions Sergei Sobyanin.

Also among the participants were senior executives from the Federal Service for Veterinary and Phytosanitary Supervision, the Federal Agency for Fishery, Sberbank, VTB, the Russian Agricultural Bank, United Shipbuilding Corporation, Rosagroleasing, the National Dairy Producers’ Union, the Sugar Producers’ Union of Russia, the Russian Association of Fertilizer Producers, the Centre for Research in Perspective Technologies, the Russian Association of Specialised Machinery and Equipment Manufacturers, the National Association of Fisheries Enterprises, Entrepreneurs and Exporters, the Grain Exporters’ Union, the National Poultry Union, the Russian Union of Oils and Fats, the Russian Union of Chemical Crop Protection Agents, the National Union of Fruit and Vegetable Producers, and the National Meat Association.

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President of Russia Vladimir Putin: Colleagues, good afternoon.

I see that all the participants are here.

Today, we continue the series of meetings on key sectors of the economy to discuss measures designed to ensure the steady operation of our businesses and reliable domestic supplies both in the current situation and in the long term.

At the top of the agenda today is food production and the processing industry. We will consider all the factors, including the area of cultivated land, land reclamation, and the availability of fertilisers, seeds, agricultural machinery and equipment for the food industry. In a word, we will discuss everything that influences the quantity and quality of goods on the shelves of Russian shops, and consequently, to a certain extent, the price of foods.

As you know, the situation on the global food market has become noticeably more challenging over the past two years. I meant it when I said two years. The mistakes the developed countries have made in their economic, energy and food policies have led to a sharp rise in food prices around the world even two years ago.

The situation has, if anything, worsened in recent weeks. With the minimal food supplies available in the world, new sanctions are being introduced; companies’ operation and the logistics of supplying fertilisers from Russia and Belarus are blocked; and their own fertiliser production in the West is shrinking due to high natural gas prices, which is also the result of their actions – our Western partners’ actions.

Again, the situation on the energy market is deteriorating as a result of non-market, crude measures, including administrative pressure on our Gazprom in some European countries. We are witnessing yet another attempt by our partners to shift the blame for their own blunders in the economic and energy sectors onto Russia, and to resolve the ensuing problems again at our expense. Moreover, we are already hearing statements from officials about the possible nationalisation of some of our assets. Well, that can take us all any length. Please remember that this is a double-edged weapon.

Back to the discussion at hand, I would say that in this situation, a shortage of fertilisers on the global market is inevitable. Not all countries will be able to purchase the amount of fertilisers they need for the current season, which means that crop yields will also decrease.

At the same time, it is important to note that developed economies will try to redirect food flows to their advantage using the mechanism of money emission. But this will inevitably exacerbate food shortages in the poorest regions of the world, will spur new waves of migration, and generally will drive global food prices even higher.

I repeat, this scenario is more than realistic, and we in Russia need to be prepared for it. This means being able to minimise the negative external effects on our citizens, to increase the manufacturing and supply of high-quality and affordable food on the domestic market, including fish products. This is a key objective for this year. At the same time, it is strategically important to reduce the Russian agriculture and fishing industry’s dependence on imports, including the entire chain from the field to the counter.

I would like to highlight such items as seeds and pedigree stock, vitamins, feed supplements and plant protection agents. Here, we need to clearly determine our import substitution benchmarks and pursue them assertively starting now. Considering the potential of the Russian agricultural industry, our science and industrial production, we have all the resources to succeed.

Let me remind you that after the sanctions were imposed against Russia in 2014, our producers used that window of opportunity in the agricultural sector to enter available niches in the domestic market and gain a powerful impetus for streamlined and advanced development – naturally, with support from the state and the Government.

Over the past seven years, Russia’s agricultural production has grown by 15 percent and food – by more than 25 percent. Our market is fully self-sufficient when it comes to major food categories and domestic production. For some products such as sunflower oil and grain, Russian companies have more than enough capacity to satisfy demand, creating very good export potential.

As of 2020, our country became a net exporter of agricultural products – that is, we sell more food and agricultural products abroad than we buy. It seemed almost impossible and incredible even 20 years ago. Today our exports go to about 160 countries.

I want to stress that these results were also achievable during the pandemic despite the supply chains disruptions in the world. However, our farmers met this challenge with flying colours and even elevated their status.

It goes without saying that this year, in view of the global food shortage, we will have to be more careful about food exports. We will have to closely monitor our exports to the countries that adhere to a hostile policy towards Russia.

I would like to specifically note that, thanks to the expanded scope of production, we can ensure that food prices in Russia remain lower than on the global market. Food self-sufficiency is Russia’s competitive advantage, and our citizens should feel its benefits. We must protect them from market fluctuations and price hikes on the global market. I want to stress this specifically for the Government: this work must be continuous, with a clear and visible outcome for people and businesses.

In the same context, I want to remind you that we have a floating export duty rate on grain and sunflower oil. The fertiliser market is regulated to ensure the stable operation of agricultural producers. We took those decisions pre-emptively and it was the right thing to do.

It is necessary to monitor the industry’s supply of fuel and lubricants, seeds, and breeding stock. Naturally, companies should have an opportunity to receive the loans they need to perform their current tasks. In addition, under external restrictions, it is crucial for modern equipment and spare parts to be available. I would like to ask my colleagues from the Government to report today on how these problems are being resolved. I would also like representatives of the industry who are taking part in our meeting today to assess whether the measures taken are sufficient.

I would like to emphasise again that the key task for the Government, regional governors and company directors is to preserve, support business activity in Russian agriculture. We should enable our agrarians, fisheries, and food producers in general to open up new companies, create new jobs and increase the production of groups of goods that we still have to buy in part abroad. Naturally, we do not grow bananas, and this is a separate item of our imports.

I believe we should set ourselves a quite realistic, well-grounded objective: in the next few years, our agriculture, food production and supporting industrial branches should reach much higher growth rates. As you say yourselves, and I am bound to agree with you, they should exceed three percent a year.

To achieve this, we will have to increase several times over the scale of reclamation, introduce new agricultural lands and intensify their use via nutrient application, large-scale mechanisation and modern IT. It so happens that IT is very much in demand in agriculture. Of course, it is necessary to make loans more affordable for upgrading production and the fishery fleet. We have been long dealing with it – quotas for vessels and so on – I will not go into detail now. Let us return to this next time. Today, I hope to hear specific initiatives on this issue.

I would like to add that our absolute priority is the comprehensive development of agricultural lands and the construction of roads and other infrastructure, social facilities and modern housing. It is very important to let people who work in rural areas and feed the country to live in comfortable, modern conditions. I would like you to consider these priorities in today’s discussion of the Government’s proposals.

I have already reviewed with several colleagues this morning what we will focus on in today’s discussion. Let us get down to business. I am giving the floor to Mr Patrushev. Go ahead, please.

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Vladimir Putin: Summing it up, I would like to point out that, given the imbalanced global food market and the unprecedented pressure on the Russian economy and our domestic companies, it is critically important to minimise the external negative effects for our people. This is our top priority. As a result of their own policies – I mentioned this in my opening remarks – a number of countries, including those in Europe, have already seen price hikes and food shortages, and the same is happening in the United States. There are other countries, this is already happening there.

Our so-called partners will try to export these problems to Russia. We have all we need to prevent this from happening. On the contrary, we will increase the availability of food for our customers by increasing the capacity of Russian enterprises and improving food supplies to the domestic market and grocery stores.

In addition to monitoring the situation at all times, it is necessary to use the entire arsenal of means and tools offered through state support for the agro-industrial complex (we covered various aspects of this), including the customs and tariff policy mechanisms, temporary restrictions on exports, and low import duties on certain foods. I agree with these proposals. Please document these proposals. Also, the low-cost loans that we talked about on several occasions today and reimbursing food processing costs.

What specific decisions do I consider necessary to formulate or support, since the proposals have already been made?

First, it is imperative to ensure stable operation of agricultural businesses this year. In this regard, I support the Government’s proposal to allocate at least an additional 153 billion rubles from the federal budget (please think about how to make this work and report back to me, I am ready to support it) and, of course, direct these funds primarily to soft short-term and investment loans for the industry.

Second, our systemic goal is to ensure a reliable supply of fertiliser to our agricultural producers. Here, the Ministry of Industry and Trade and the entire Government need to follow the situation very closely. Our farmers’ needs should be the top priority. Nevertheless, I propose leaving the current contract-based arrangements in place. As far as I remember, they have three components: the regions, producers, and agricultural producers. We will not be switching to export licensing yet. Please keep this in mind. This does not mean that we have decided on it once and for all. No. We will give it more thought, but we will not be changing anything yet.

Third. As I have said, it is important to reduce imports in the production of Russian agricultural produce. Seed production is one of the main areas here, as well as the development and introduction of Russian breeding solutions, including in cattle and poultry farming. This year, we will allocate at least an additional five billion rubles to support seed-growing and breeding centres.

Fourth, it is necessary to significantly step up our own, Russian manufacture of agricultural machinery, food equipment and components, as well as fishing vessels. We have hardly spoken about this today, but it is a very important area. Moreover, this should be done without delay, at a fast, dynamic pace. We will discuss approaches to addressing this issue in the near future. I would like to ask the Government to systematise all proposals and provide the necessary funding for the relevant programmes.

And the last thing. In 2020, the Agricultural and Fishing Development Strategy was adopted. It is clear that today enterprises in these sectors have faced new challenges that will stay with us for a long time. In this regard, I suggest reviewing the current Strategy, adjusting its targets and deadlines, and providing for a comprehensive set of state support measures and the necessary amount of budgetary funds, including for land reclamation and agricultural use, as well as for establishing new areas for exports of finished products.

Development of the agriculture and food industry as modern, dynamic spheres of our economy with an annual growth rate faster than that of the overall economic growth must be the key objective of the adopted Strategy. I would like to ask the Government and the State Council to adjust the Strategy by July 1, 2022.

And once again about fertilisers. I would like to say this once again: let us not make any changes today and agree with the proposal of the Ministry of Agriculture in general, but I suggest discussing this issue once again soon. Let me repeat, I would like to stress it: we do not want to harm anyone. Not ever. We should carefully deal with all this: logistics, insurers, everyone. There is a deficit today. It will be Bought up. It will be. Nobody wants to die of hunger. We must carefully look at all these problems and solve them, primarily based on our own interests.

Thank you very much. All the best.