OREANDA-NEWS. May 28, 2010. The roundtable discussion on the topic "Creating Stable Development System for Agricultural Production Industry of Nizhny Novgorod. Mechanisms for Financial Support and Minimization of Agricultural Producers’ Risks" was held on the basis of the Nizhny Novgorod State Agricultural Academy. The event had been organized by the Agricultural and Natural Risks Insurance Department of OJSC IC ROSNO, reported the press-centre of ROSNO.

The discussion was attended by 18 experts directly involved in the development of the regional agricultural business — representatives of the leading agricultural producers, suppliers of fertilizers, processing enterprises, banking sector, insurers, science and rural professional development institutions, and the Ministry of Agriculture and Food Resources of the Nizhny Novgorod Regional Government. The participants discussed the issues of utmost importance for the Nizhny Novgorod agrarians and outlined the possible options for resolution thereof.

According to the Deputy Minister of Agriculture and Food Resources of the Nizhny Novgorod Regional Government Mr. Vladimir Makarychev, the situation in the region’s agricultural sector is difficult, but calling it critical would be inappropriate. Food security is not threatened, since the region possesses the grain stock it will need before the new spring crops. "Crop insurance is of extreme importance today. The amount of subsidies allocated from the federal budget to our region’s farms in order to compensate the costs of winter crop insurance is less than needed. As regards spring crop insurance, the scale of state support is presently discussed within the RF Government".

"The major issues which have to be solved today in order for the agricultural production to grow efficiently and steadily are as follows: creating an efficient state regulation system, availability of resources for the farms, securing domestic and foreign demand, expanding the lending system and actively implementing the agricultural risks protection models through using the new agricultural insurance technologies", noted Mr. Leonid Golovanov, head of the Agricultural and Natural Risks Insurance Department of OJSC IC ROSNO. — To make maximum use of the Russian agricultural industry’s potential, an effective public-private partnership model has to be implemented".

The chronic shortage of free circulating assets (a peculiarity of the agricultural production due to the continuous technological cycle) is a main factor impeding development of the agricultural production sector. "Unlike manufacturing, agriculture is not located „under the roof“ or protected against weather anomalies. Our crops heavily depend on the freaks of nature. And, given the decreasing grain prices and the absence of instruments guaranteeing demand for harvested crops, we are left with no option but to seek state support and assistance from the financial sector", notes Mr. Pavel Kondakov, head of the Marx agricultural production farm located in Gaginsky district, the Nizhny Novgorod Region.

One of the indispensable rural support instruments is the agricultural risks insurance system. According to Ms. Marina Lanko, head of the Corporate Sales Department No.5 (agriculture) in the Nizhny Novgorod branch of OJSC IC ROSNO, "to reduce the weight of insurance contributions in the farms’ budgets, ROSNO offers various financial instruments and applies individual approach to each and every client. Unfortunately, the development of agricultural insurance, which is widely used abroad, is inhibited in Russia due to one more factor: the agrarians’ low awareness about the terms and technologies of insurance coverage".

According to experts, another way out from the shortage of circulating assets may be to make loans to the agricultural enterprises against pledged future crops. Today, this approach is actively followed by Rosselkhozbank. Active lending may be facilitated by the development of index-based insurance, allowing to evaluate losses, based upon the successfully tested crop weather dependence models. Banks will be able to perform independent analysis of the risks borne by farms and fully satisfy their needs in borrowed funds.

Upon conclusion of the event, the agricultural market participants acknowledged that such meeting format (an open dialogue of the parties) represents the most effective way to form a common vision of the situation and identify the avenues for cooperation.