Meeting in the Voronezh Region
Dmitry Medvedev’s opening remarks:
Let’s speak about dairy stock farming today. This is one of the most important socially significant industries. In plain terms, this is probably the most difficult industry in agriculture. It provides jobs to rural residents and affects the performance of the processing and food industries. <… >
Of course, dairy products must be of high quality and we are interested in producing a considerable amount, or the overwhelming majority of these products in Russia, if only because we have a vast country and we are capable of producing enough food, including dairy products.
We have an excellent fodder base and can make the most of it if we use it rationally. Our agrarian technology is not bad but we are also actively borrowing foreign methods that are introduced by investors. Therefore, we have every opportunity to become one of the world’s leading dairy producers.
The dairy industry underwent difficult times in the 1990s. Our shops were filled with imports for the most part, and of varying quality. The situation changed radically after this period, largely owing to the national project on the development of the agro-industrial sector and the subsequent adoption of the state agricultural programme. In the past five years the federal budget spent almost 100 billion roubles to support dairy stock farming, in particular, on building more than 400 dairy farms (I’m referring only to new farms rather than reconstructed ones). In all, a thousand facilities have been upgraded. Now Russia produces a little more than 30 million tonnes of milk per year.
This is approximately as much as Germany, which has a smaller population but is Europe’s most advanced country. China, with a population of 1.5 billion people, produces as much as we do. This means that our positions are not so bad for today. We produce more milk than France, an industrialised country with advanced agriculture, and this is also an achievement.
Experts assess the domestic market at about 40 million tonnes. Importantly, milk consumption is gradually growing. Last year it amounted to about 250 kg per capita. In 1999, a very difficult year, it was a bit over 200 kg, so the growth in consumption is obvious. It seems the demand should generate the supply, promoting the industry’s development, but we are seeing a varied picture. However, milk production is approximately at the same level as in the past year.
Livestock breeding is not very attractive for investors. It takes a long time for projects to pay themselves off, and there are risks of seasonal price fluctuations. All these factors are a source of concern for those who invest in agriculture. However, there is still development. The Government is using a system of incentives in practically all agrarian states. This is very important for Russia, but we must comply with the WTO regulations and the terms of establishing the Common Economic Space.
This year the budget allocates about 16 billion roubles to support a new state agricultural programme. About 13 billion roubles are envisaged for the recently-introduced type of subsidy for one kilo of sold milk, considering additional funds earmarked to offset higher fodder prices. This is a new type of subsidy and we must see how it works to estimate its pros and cons. There are both obvious difficulties and positive factors. I know that milk producers count on the preserving and increasing of subsidies. However, now that the budget is restricted we should enhance the effectiveness of the existing instruments of government support.
One more problem is the huge debt load of agricultural farms. There are several reasons for this. They are common knowledge. One of them is that federal and regional budgets do not have enough money to subsidise investment projects.
But there are many proposals. For instance, the Ministry of Agriculture suggests that the term of subsidised loans should be extended to 15 years. I instructed experts to elaborate mechanisms for subsidising these loans. Today I spoke to the head of our agricultural farm, who was invited to attend the meeting. This is a very interesting farm, because it received part of its money by playing the stock exchange. I was truly surprised because this is the first time an agrarian company, moreover a livestock breeding one, received about five billion roubles by using European bonds on a European market. This is quite an achievement. I understand that its experienced director came from Germany but nonetheless…
Rural areas are not all about the economy. Under the targeted programme we continue building new housing, the gas supply programme, the construction of roads, schools and kindergartens.
We must primarily focus on projects that will bring modern technology and processing. We’ll try to preserve all current forms of support, providing it to large agrarian holdings, relatively small family farms and those who are just getting started in farming.
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