"We are posting more impressive harvests than last year. We have already harvested almost 100% more grain as compared to the same period in 2012."
Transcript:
Teleconference on the 2013 harvesting season
With Minister of Agriculture Nikolai Fyodorov
Teleconference on the 2013 harvesting season
Minister of Agriculture Nikolai Fyodorov and Head of the Federal Service for Hydrometeorology and Environmental Monitoring Alexander Frolov
Head of the Federal Tariff Service Sergei Novikov and Minister of Energy Alexander Novak
Teleconference on the 2013 harvesting season
Dmitry Medvedev: Good afternoon to all colleagues who can see and hear us. I am holding this teleconference in order to discuss the pace of the national harvesting season. The video conference mode makes it possible to discuss existing problems.
Grain and leguminous crops are being harvested full speed in southern Russia, including the North Caucasus Federal District, as well as the Belgorod, Kursk, Voronezh and Saratov regions. On the whole, the current harvest situation is quite good. To date, we are posting more impressive harvests than last year. We have already harvested almost 100% more grain as compared to the same period in 2012. To date, we have harvested 10.9 million tonnes compared to 5.8 million tonnes in 2012. In effect, fodder-procurement volumes also exceed 2012 figures, and, of course, this is also good.
Nevertheless, not everything is proceeding smoothly. In June and in early July, we have abnormally high temperatures in European Russia, and 13 regions were affected. Unfortunately, this situation has been repeating over the past few years, and this amounts to consecutive developments. Obviously, this can also negatively impact harvests. And, in this context, it is very important to monitor drought-stricken territories, to objectively assess harvest losses and material damage from crop failure. Mr Fyodorov (Addressing Nikolai Fyodorov), I would like to ask you and your colleagues, regional leaders, to quickly launch this work. Please inform me on the results every ten days.
We are connected to our colleagues, heads of regions, who are listening to us right now, and we are now going to discuss the progress of harvesting in your regions. It's been mentioned that the federal budget provides for 32 billion roubles in subsidies to support subdivisions of the crop production industry, with 14 billion allocated to crop producers. Still, we should think about insuring crop production again in view of the unusual weather conditions we are experiencing this year.
This year, 73 regions are expected to take part in government funded insurance programmes, with 5 billion roubles in the federal budget provided for crop insurance. I would like all colleagues to bear this in mind and use this money accordingly.
We need to monitor the process of signing insurance contracts with crop producers. There will always be some unfortunate events, so if there is an insurance contract, the crop producer will be faced with much less difficulty.
Prices on grain for human consumption are now declining on the Russian crop market, owing to the start of the harvest in a number of Russian regions. We will use a tried and true measure to stabilise the market in case of need – a grain market intervention. The volume of grain purchase for the state intervention fund in relation to the forecast crop production is… The forecast will have to be adjusted anyway but if 95 million tonnes of crop are produced, the fund may purchase up to 6 million tonnes. The Ministry of Agriculture must select and make agreements with organisations that would ensure safe storage of these reserves.
Dmitry Medvedev: "This year, 73 regions are expected to take part in government funded insurance programmes, with 5 billion roubles in the federal budget provided for crop insurance."
That's all I wanted to say to start out. Mr Fyodorov (addressing Minister of Agriculture Nikolai Fyodorov), please inform us about how things are going, and then we will speak with our colleagues.
With Minister of Agriculture Nikolai Fyodorov
Nikolai Fyodorov: Thank you, Mr Medvedev.
First of all, I would like to thank you, Mr Medvedev, on behalf of governors, colleagues and agricultural producers for proactively initiating this meeting and conversation on a very important issue for Russian farmers.
These are the results of the sowing season. As you often note, the country is large and diverse, and objectively speaking, the spring sowing work was done in keeping with good and even optimal deadlines. This is accurate, but when some farmers in some regions of Western Siberia or the Amur region hear this … Due to heavy rainfall, they were unable to work in the fields for two, three or even four weeks. And, of course, this aggravated the situation in some regions. But I can say that, despite all the ordeals, the mood of farmers is optimistic.
Nikolai Fyodorov: "According to preliminary data, spring crops have been sown on an area of 51 million hectares. In 2012, the area under spring crops was 50.7 million hectares. Taking into account the area of surviving winter grain crops (this is 14.7 million hectares, or almost one million hectares more than in 2012), we are determined to increase not just crop area, but agricultural produce volumes and grain volumes."
Dmitry Medvedev: That’s good.
Nikolai Fyodorov: According to preliminary data, spring crops have been sown on an area of 51 million hectares. In 2012, the area under spring crops was 50.7 million hectares. Taking into account the area of surviving winter grain crops (this is 14.7 million hectares, or almost one million hectares more than in 2012), we are determined to increase not just crop area, but agricultural produce volumes and grain volumes. You have mentioned these statistics. The Federal Service for Hydrometeorology and Environmental Monitoring (Roshydromet) estimates that … Mr Frolov (Alexander Frolov, Head of the Federal Service for Hydrometeorology and Environmental Monitoring) will discuss this later on … We are guided by agro-meteorological forecasts (experience and history show that these are the most accurate, baseline forecasts) in order to know what lies in store for us. Roshydromet projects a gross grain harvest of 90-94 million tonnes. The Russian Grain Union estimates that the grain harvest will reach 94-97 million tonnes. And the Institute for Agricultural Market Studies predicts that the gross grain harvests will total 91.5 million tonnes. We are monitoring the situation, as you’ve requested, in the course of our regular, daily discussions, and in cooperation with the agro-industrial management agencies of Russian regions. And I don’t like to talk about this very much … The weather forecast will change, and it will, of course, seriously affect …
Dmitry Medvedev: Why don’t you like to talk about this? This is absolutely normal.
Nikolai Fyodorov: Everyone would like our forecasts to be stable. But we change these forecasts, depending on the weather, just like the entire world does, by the way. The United States, which, as we know, has impressive capacity in this sphere, updates these forecasts every week. I am talking about forecasts of the US Agriculture Department. We are addressing this issue, as we are supposed to. Mr Medvedev, as of this morning (if you look at our slides, you will see that they contain July 5 data), July 8, the end of yesterday’s working day, our updated reports show that current initial grain harvest volumes are quite good. You have already noted this. To date, these harvests total 32 metric centners per hectare, and last year’s harvests were 25.9 metric centners. As of yesterday evening, almost 14.5 million tonnes of grain have been harvested …
Nikolai Fyodorov: "On the whole, 3.4 metric centners of fodder have been procured per one head of bighorn cattle nationwide, and this is 13% more compared to the same period of 2012."
This is much more than last year. On the whole, 3.4 metric centners of fodder have been procured per one head of bighorn cattle nationwide, and this is 13% more compared to the same period of 2012.
As for mineral fertilisers, accumulated mineral fertiliser resources, taking into account the 2012 surplus, total 1.7 million tonnes, or 40,000 tonnes less on 2012. The price of the most popular types of mineral fertiliser (including VAT, packing crates and distributor expenses) is the main problem here. The main fertiliser types have become more expensive, and this is a sensitive issue. We have only one source of leverage, primarily per-hectare dusting, the volume of which is increasing on your initiative and in accordance with your decision, in order to respond adequately. The relevant budget law amendments have been approved. Currently, we are working hard to inform agencies and regions about specific decisions and completing the decision-making process.
In June and the first few days of July, abnormally high temperatures were recorded in most regions of European Russia. Indeed, it should be said that many regions, including the Lipetsk, Voronezh, Ulyanovsk, Saratov, Orenburg, Samara and Kurgan Regions, Bashkortostan, a number of districts in the Chelyabinsk, Rostov, Volgograd and Astrakhan Regions, the Republic of Kalmykia and southern Tatarstan are all drought-prone. As of today, 6.5 million hectares have been affected by drought. Preliminary estimates show that harvests have been destroyed on an area of 1,450,000 hectares, or about 1.9% of the entire area under crops. This, too, is a nationwide average. But, if we look at the situation separately in Bashkortostan, southern Tatarstan and the Ulyanovsk Region, then, of course, they have incurred more substantial losses, that is, 10% and even 20% in some areas, judging by the regional statistics I’ve mentioned
We are compiling a forecast on locusts. There are plans to dust about 1.6 million hectares, and we have dusted about one million hectares. On the whole, we are monitoring the situation, and so far we are responding promptly to this problem.
Nikolai Fyodorov: "Speaking of petroleum, fuel and lubricants, as of July 1, agricultural businesses had 423,000 tonnes of diesel fuel and just over 73,000 tonnes of petrol. This accounts for virtually 100% of 2012 diesel fuel volumes and for 105.8% of petrol volumes."
Speaking of petroleum, fuel and lubricants, as of July 1, agricultural businesses had 423,000 tonnes of diesel fuel and just over 73,000 tonnes of petrol. This accounts for virtually 100% of 2012 diesel fuel volumes and for 105.8% of petrol volumes. As of July 1 agriculture’s stocks of diesel fuel stood at 423,000 tonnes, of petrol slightly more than 73,000 tonnes, which is 100% of diesel fuel compared to 2012 and 105.8% of petrol.
Prices for fuel and lubricants: the price of diesel fuel dropped by 0.3% and the price of petrol rose by 0.8% compared with January 10, 2013. I am citing these figures because in the past our operators unreasonably raised seasonal prices. There has been no problem of this kind this year. But I have to say that compared with the same period of last year, with last spring, diesel fuel price rose by 12% and petrol by 5.6%. This is due to inflation and certain other decisions.
The availability of machinery in 2012 (it has to be said, Mr Medvedev), of tractors, grain harvesters and fodder harvesters give little cause for rejoicing for our colleagues from the Finance Ministry… Funding and procurement stood at 41.7% of the state programme for tractors, 41.9% for harvester combines and 40% of the annual target for fodder harvesters. That means underfunding, shortage of resources and inability so far to provide the necessary benefits.
Nevertheless between 2010 and 2013 the drop in the number of units (partially, and that has to be stressed) is compensated for by the procurement of more powerful modern equipment. For the benefit of our colleagues from the regions I would like to say that we, the Government of the Russian Federation (and this was approved by the State Duma) added 5 billion roubles to the 2.3 billion allocated for buying machinery for agriculture at bargain prices, realising that there is a problem. I hope that all this money will be used to maximum effect by the end of the year. For my own part, as a lobbyist for agriculture, I would like the increased sum to remain to replenish the fleet of agricultural machines. Without it we would find it hard to preserve the harvest that we have grown. On the whole the readiness of the machinery for the harvesting season is higher than last year on every count.
On financing: considering the extra 10 billion roubles for per-hectare-related support, we enjoy subsidies in excess of 32 billion roubles. As of today, not 14 billion, but 16 billion roubles, that’s 72.2%, has been disbursed, and 88.3% has reached the recipients, that is, the farmers.
Regarding additional disbursements: non-tied assistance amounts to 10 billion and another 12 billion has been allocated to subsidise short-term credits in accordance with the changes initiated by the Government. The relevant instructions are pending before the Ministry of Regional Development and the Finance Ministry. We have agreed with the Finance Ministry… One good thing about these meetings, Mr Medvedev, is that a decision is passed for every high-level meeting.
Dmitry Medvedev: It’s always like this in our country: the boss has to visit a place in order for the roads to be mended and a conference to be held.
Nikolai Fyodorov: I don’t know if this is good or bad.
Dmitry Medvedev: Not very good, but unfortunately, that’s the way it is.
Nikolai Fyodorov: In this case, we have come to an arrangement and there are real opportunities… Governors, I have mentioned 10 billion and an additional 12 billion for non-tied support and short-term loan subsidies, that makes 22 billion roubles. So, if we work efficiently with the Finance Ministry, we may be able to submit as early as July (if possible, on July 25 when the Government is to meet) the allocation of a further 22 billion roubles, which will very much come in handy for the harvesting season and preparation for the sowing of winter crops. I would like the governors to make note of this because this is a lot of money and it is very timely.
As for insurance, you have cited the figure. I would like to cite the data for yesterday evening, the insurers (who are present here today) cited the total insurance sum of 88 billion roubles under all the contracts. The insured area is 6.1 million hectares, which is 117% of the total area under spring crops slated for insurance – not bad.
Dmitry Medvedev: What is the percentage insured? Can this be counted? Because I remember that previously the figures were dismal: 5%, then 10% and 15%. What is the current figure?
Nikolai Fyodorov: For winter crops it is 27-28%.
N.Fyodorov: In fact the grain intervention stocks today stand at 1.367 million tonnes, this is very decent, we expected there would be less (some experts said it would be down to 200,000 tonnes). That is, we have already met the needs and our commodity intervention prices are at the minimum initial level, that is, interventions have worked very effectively without any embargoes, in our estimation, and by sticking to market conditions we have managed to preserve a civilized situation in this market.
Dmitry Medvedev: This makes almost one-third.
Nikolai Fyodorov: For spring crops it is 18-19%. I have to say, Mr Medvedev, that state support of agriculture insurance, i.e. non-commercial, amounts to 5 billion for plant-growing. If everyone avails themselves of this, it would still cover no more than 20% of arable land, so if we demand further increases we would enter territory that would not be very pleasant in terms of budget restrictions. Actually there is the possibility of coping 100% with what we have so far, because in the past the threat (I hate to mention it again) of fraudulent schemes before this law was passed and some other things, for example, dodgy behaviour on the part of some insurers, deterred farmers from resorting to these instruments. We are now putting the situation right and the allocated resources are enough to meet the needs of all those who are ready to have a partnership with our side.
On the grain market: wheat, barley and rye prices are indeed tending to fall because harvesting has started and the results for these crops are not bad. Wholesale prices of wheat and rye flour are tending to go down, and this is good news for everyone except maybe those who want to get higher prices when selling grain. But in general these indicators are satisfactory for the economy and for the consumers in Russia. In fact the grain intervention stocks today stand at 1.367 million tonnes, this is very decent, we expected there would be less (some experts said it would be down to 200,000 tonnes). That is, we have already met the needs and our commodity intervention prices are at the minimum initial level, that is, interventions have worked very effectively without any embargoes, in our estimation, and by sticking to market conditions we have managed to preserve a civilized situation in this market.
Regarding procurement interventions. We are selecting organisations for grain storage, the process for which has practically been completed. We intend to buy up to 6 million tonnes through procurement interventions, as you have said. According to Rosselkhozbank, the credits allocated to the state agent for the intervention fund amount to 30 billion roubles, subsidies for these measures will be made available within the allocated amount, that is 4.659 billion roubles. The exact date of the start of procurement interventions will be determined as we go along, depending on the market situation during the peak of the harvesting season and regional grain balances, and we are in constant contact with the agro-industrial management bodies and governors. That's about all.
Dmitry Medvedev: Thank you.
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Briefing by Minister of Agriculture Nikolai Fyodorov
Question: Mr Fyodorov, how realistic are the requests and suggestions from farmers regarding increasing per-hectare subsidies?
Nikolai Fyodorov: They are 100% realistic, no question about it. First, the President and the Prime Minister spoke about the need to increase the so-called per-hectare or unrelated support. Second, when reviewing this new tool, even though this issue is related to the WTO requirement, all experts agreed that per-hectare support is much more progressive, fairer and more transparent than any benefits in kind, be it fuel, fertilizers or pesticides. Every time you deal with benefits, you end up with abuses or some dishonest people who start looking for ways to catch some fish in troubled waters, as they say in Russia. Therefore, we hope that the per-hectare support will increase, for sure.
First, an increase in subsidies is part of the state programme, but we want to speed up the per-hectare support, and the country's leadership understands this. Second, as we change the tools for providing additional support to farmers, we expect to get a more objective picture with regard to the size of the cropland. I’m sure you are aware that there are vested interests who are motivated to hide the size of their cropland and the kinds of crops that are planted.
The second argument in favour of per-hectare support is that the higher the yield and the intensity of farming (as stated in the Government resolution in accordance with the law), the more funds one can expect to receive from the federal and regional budgets. That’s another issue that has to do with hiding objective information, no matter how strange it may sound. If you are getting a good yield, you can show it and get more funds. However, according to the experts, farmers are hiding anywhere from eight to ten million tonnes of grains and cereals, while other experts say it is three to five million tonnes. I’m not sure why they are doing this. Perhaps they don’t trust the authorities and prefer to hide a portion of their crops in order to avoid requisitioning of surplus produce, as they did in the 1920s, or any other action by the state.
Therefore, I'm sure that we are on the right track. All farmers who have been working with the per-hectare support acknowledged how convenient it is in the very first year.
Nikolai Fyodorov: By the way, thanks to the per-hectare support they receive, honest farmers don’t have to borrow as much money (loans are more complicated and costly). That support comes in the form of cash, and they can use it as they see fit – buying fertilisers, crop protection products, or fuels and lubricants for farm equipment…
Question: Are you going to adjust your crop forecasts somehow? We hear that in two regions, crop estimates have now been revised down.
Nikolai Fyodorov: We monitor all regional forecast revisions, and we are going to analyse their estimates. In keeping with current regulations, they are subject to further assessment by federal government agencies, including the Emergencies Ministry, the Federal Service for Hydrometeorology and Environmental Monitoring, and so forth. All this will be additionally confirmed.
Based on the results of today’s session, the Federal Service for Hydrometeorology and Environmental Monitoring has reiterated its previous harvest estimates of 90-94 million tonnes. The Grain Union, which lives and breathes this topic, estimates the forthcoming harvest at 94-97 million tonnes. While the Agrarian Market Studies Institute’s forecast is 91-92 million tonnes.
We work in cooperation with industry executives to monitor, on a daily basis, regional crop forecast adjustments, including by the two regions you’ve just mentioned. As of today, there is, indeed, a threat of poorer quality crops owing to unfavourable weather conditions. But, as you may have noticed, some regions say the latest rainfall has also improved the situation somewhat, at least as far as spring crops are concerned. This is why we’ve left our estimates intact so far.
Question: How much grain can we hope to export, given the current weather conditions?
Nikolai Fyodorov: With our general estimates remaining within the previously established range, we’re likely to harvest at least 50 million tonnes of wheat (wheat is the crop you tend to be particularly interested in, don’t you?). That’s our pessimistic estimate. Other experts say that the amount may reach 54 million. Considering our domestic needs, we could export as much as 20 million tonnes.
Question: Does this apply to wheat or all types of cereals?
Nikolai Fyodorov: All cereals.
Question: Does the Agriculture Ministry have any targets for winter crop sowing areas?
Nikolai Fyodorov: Yes, it does. Our target is around 15 million hectares, normally. This year we’ve got 14.7 million, following a check on the demise of winter crops (you know how much has survived). Next autumn, we’re planning to get at least 16 million hectares sowed with winter crops, and that’s the target we’ve set for the regions.
In the longer term, our ambition is to have winter crops spread over an area of 20 million hectares. In this case, we’ll be better protected in terms of crop losses and unfavourable weather, because, as you know, winter crops – especially wheat – provide the most reliable crops. To us, this is very important in terms of prioritising as well as fostering the national agricultural headquarters’ cooperation with the regions. Those of the governors who have chosen to expand their winter cropland are better protected. This is a result of the agreements we’ve signed with the regions in an effort to expand winter crops.
Thank you.
