OREANDA-NEWS. February 29, 2012. Vladimir Putin’s speech: Good afternoon. I’m pleased to welcome all participants to the national agrarian forum. This is a period of great responsibility: preparations for spring fieldwork are in full swing. You are laying the groundwork for a future harvest, and above all, I’d like to wish you success in the current season.

Talking about strategic industries, we primarily refer to the defence industry, machine building and space. This is certainly true but it is also true that the agrarian sector of our economy is also strategic – it deals with food security, allows for the extensive use of high-tech achievements and creates new jobs. And, finally, we should not forget that all experts say that food and water will become the most important resources in the near future. Obviously, we have many opportunities for developing these resources. This is why it is so important that today, agriculture is becoming one of the locomotives of Russia’s development and our national growth, refuting all stereotypes to the effect that no amount of money or effort can pull our agro-industrial sector out of its problems.

I’d like to note that agriculture has proven to be one of the most lucrative industries in the national economy. Measures that have been taken to support it have proven very effective. Since 2006 investment in our agro-industrial complex – some of you may be aware of this figure but probably not all of you, and it’s a huge figure – has exceeded 1.5 trillion roubles. These solid funds have produced tangible results and not just by upgrading production. The development of our agro-industrial sector has become an objective factor in ensuring the sustainable development of our economy as a whole, and improving the living standards of millions of people. I’d like to mention the record low inflation that was achieved in 2011 – the lowest this country has seen in the last 20 years. No doubt, rural workers have contributed significantly to the resolution of this macroeconomic task. It is thanks to your efforts that we have managed not only to receive a good harvest but also to keep prices at an acceptable level. All these factors helped to curb inflation. After the extremely difficult seasons of 2009 and 2010, when droughts and natural fires destroyed more than one third of all harvests, our farmers did not become desperate, but rather preserved and consolidated the development potential. I’d like to mention just a few figures – last year the growth of agricultural production exceeded 22%; production of pork grew by 10% and of poultry by 12%. I’m sure that other directions of livestock farming, especially of cattle, will also gain momentum.

Last year grain harvest amounted to almost 94 million tonnes, which allowed us to replenish our reserves and not only to fully meet our domestic demand but also to export about 27-28 million tonnes. This is a good figure and we once again rank third place among the world’s top grain exporters. You’ve done an excellent job and we will continue supporting all those who work on land – there is no doubt about that.

We have allocated 170 billion roubles in the federal budget for support of the agro-industrial sector. In addition, our biggest banks with state participation (both Rosselkhozbank and Sberbank) will additionally provide no less than 150 billion roubles worth of loans. We will keep an eye on the accessibility of loans at all times. I’d like our bankers to remember that crediting of small and medium-sized companies must be at the top of their list of priorities.

As in the past few years, agricultural producers will enjoy a discount on fuel and lubricants – 30% off the price that was fixed on December 31 of last year in each specific region. Importantly, this discount will apply to wholesale rather than retail prices, which will lower the costs of fuel and lubricants even further. Supplies of discounted fuel will be increased by 10% as compared with last year’s level. This will allow agricultural producers to save 11 billion roubles in the first half of this year.

Last year producers saved 18 billion roubles and this time they will have saved 11 billion roubles in the first half of the year. We will continue replacing obsolete agricultural equipment with new models. Last year Rosagroleasing received 3.7 billion roubles for this purpose. As a result, agricultural producers purchased more than 5,000 units of equipment at a 50% discount. This year Rosagroleasing will also supply domestic equipment on easy terms. They will not have to make a down payment and will be able to postpone the first contribution for half a year.

I hope many producers will find this helpful. All in all, 8.5 billion roubles are earmarked for this programme. Starting this year we are also going to use federal budgetary funds to make up for about half of all expenses on the construction and modernisation of intra-farm land reclamation networks. This will be done under regional programmes.

I’d like to emphasise that we have supported and will support all forms of work in the countryside. At last year’s convention of the Association of Farm Holdings and Agricultural Cooperatives (AKKOR), we spoke about support for budding farmers and self-employed entrepreneurs in the countryside. We said how important it is to help them get on their feet and build their farms and houses. Many colleagues spoke about this. We are going to launch a relevant programme sometime in the next few months. We will allocate two billion roubles from the federal budget toward this programme and hope that the regions will contribute as well. In addition, we will expand the programme on family dairy farms.

Last year we helped farmers with land registration -- the federal and regional budgets earmarked 120 million roubles for this purpose. This year we have allocated much larger funds – 1.4 billion roubles – to this end.

I’d like to touch on another issue that is often raised by farmers, agrarian businesses and unions. I’m referring to extension of the zero revenue tax rate for agricultural producers. This issue is being worked on by the government as well. To be honest, there’s no answer to this question yet. We need to re-assess our capabilities, but we will operate in accordance with the interests of agricultural producers no matter what. The tariff decisions made this year have been of great help to all farm businesses. Natural gas and electricity rates have remained unchanged, which will also help agrarian businesses cut their costs and save resources. This is particularly important during the spring. Our decisions in the area of power supply  are also designed to help the agro-industrial sector: from now on, energy companies will not fine consumers for under- or over-consumption of electricity. I hope this will amount to a tangible contribution to our joint work.

I’d like to add that it’s important that we protect the agrarian business against abuses by monopoly operators, including infrastructure monopolies. As you may be aware, we are introducing serious measures of anti-corruption oversight with respect to major companies, including income disclosure requirements for senior executives. I believe that we need to apply the same approach to regional suppliers of electricity and other resources. Obscure state and municipal unitary enterprises and various other entities should be brought out of the shadows. Retail and wholesale agricultural markets will continue to be overseen by the state. Our goal is to facilitate the sale of produce by farmers without the involvement of any middleman. Occasionally, this is impossible to avoid, but their numbers should be kept to a minimum. We should focus on building a modern and civil infrastructure for selling farm products, such as farmers’ markets, fairs and specialised co-ops. However, we should do so in a measured and balanced way so as to not impinge upon the interests of producers and consumers.

This is exactly why the government decided to put off the phased-in transition of farmers’ markets to specially outfitted capital buildings. At the request of the Russian regions, the deadline for transitioning farmers’ markets was put off until 2015. But time passes quickly. Governors should begin preparing the infrastructure now, and they should do it in such a way that farmers don’t become ultimately responsible for covering these costs when they lease their trading spaces, and so they won’t have to increase prices for their produce. At the same time, we need to make wider use of popular weekend markets, and provide free and unfettered access to such markets for farmers and owners of private farm holdings. Any and all access charges should be made illegal. I’d like to emphasise that this should fall under the direct responsibility of local authorities. We will certainly develop the agricultural cooperative business, as well as the procurement, processing and sales businesses, and we will think of the best ways to use the capabilities offered by Rosselkhozbank and Rosagrolizing.

Speaking about the prospects of the Russian agricultural business, we can’t avoid talking about Russia’s accession to the WTO. I’m aware that this concerns many of our agricultural producers; therefore, I will elaborate on it. As we know from the experience of most of the WTO member states, joining the organisation provides major additional opportunities, the most important of which includes free access to the international market. We have already said that our export potential will increase (it’s up at 25-28 million tonnes of grain). However, in order to be able to protect the interests of producers, and later, of exporters, Russia needs to be a full-fledged member of the WTO, because otherwise we will always end up in a situation where our interests are infringed upon. Greater transparency and attractiveness of national economies to domestic and foreign investors is also a major factor during accession to the WTO and an effective tool against unfair competition both domestically and internationally.

In order for us to be able to use these opportunities to the fullest, we should adopt the best practices used by the WTO old-timers, learn to use all forms of support, both direct and indirect, provided to agrarian producers. There are many such tools, and all WTO member countries are using them with great success. Our goal is to use them wisely in our development strategy and make them work toward the further promotion of our agro-industrial sector.

Allow me to repeat: we will not permit anyone else use our agrarian resources, or any other part of the Russian economy for that matter. We will not put the industry at a disadvantage against stronger competitors. Obviously, the point of reviving Russian industry and the agriculture industry in particular and investing 1.5 trillion roubles in the process is not to get everything ready to be gobbled up by some unfair competition. Allow me to emphasise this: we have many tools that we can use to protect domestic producers. We only need the concerned departments to give these tools some consideration in advance. We still have time, since the final accession will only take place after we are done with our internal procedures sometime this summer. Now is the time to think about market protection tools.

I’d like to point out that, first, many WTO standards have already become part of our routine work. In addition, 90% of what we are doing now is in line with WTO international rules and requirements even without us being a member. As far as the Customs Union and the single economic space go, they were built on WTO principles. Our union with Belarus and Kazakhstan, including the Customs Union and the single economic space, are completely based on WTO precepts.

Second, adaptation procedures will be applied in a number of sensitive industries, primarily the automobile industry and agricultural equipment manufacturing, and in poultry and hog farming. In order to be able to protect these industries and help them ease into a new competitive environment, we will certainly use any available tool and work together with you on pinpointing solutions which are really needed in a given agro-industrial sector.

Finally, WTO rules primarily involve direct support for agricultural producers, but they are in no way related to programmes for the comprehensive development of rural areas. I just want to point this out. As far as direct support goes, we agreed on something that we haven’t even had before. This year we are allocating USD 5.5 billion, in equivalent dollars for agricultural support. We have agreed with the WTO that we would be entitled to provide this kind of support in an amount up to USD 9 billion. We will be entitled to provide the same amount next year as well, and then this amount will start gradually decreasing. Again, indirect forms of support are available, and they include primarily the development of infrastructure, such as roads, co-ops and so forth. There are many components in this that can be used to support and help agricultural producers be more effective and competitive. We are in no way limited in our investments in rural infrastructure.

I’d like to remind you about our decision to use regional road fund resources. They should be primarily used for building rural roads and improving the infrastructure at all urban and rural centres in Russia, including the maintenance of municipal and rural roads. In all, this project should receive financing in the amount of at least 130 billion roubles over the next two years. I’m here to tell you that this much money has never before been invested in rural roads or for the upgrade of urban and rural centres.

We will also expand staff training and research programmes for the needs of agriculture, and we will certainly keep expanding the social infrastructure. We have built over 15 million square metres of housing under the federal targeted programme Social Development of Rural Areas, and installed water and gas supply lines to more than half of all rural buildings. In addition, we have improved power and telephone service in rural areas. All of that improves the quality of rural life, opens new opportunities for economic growth, strengthens Russian producers’ positions, creates new jobs and attracts young people to rural areas. We have also decided to extend the federal targeted programme Social Development of Rural Areas until 2013.

However, I believe that we should pursue a more ambitious goal. We need to build a truly modern rural social policy that would meet in full the interests of the people, especially in education and health care. I can tell you that a programme for the sustainable development of rural areas is being developed now, which will include key social needs: utility systems and building infrastructure.

We will need to adopt one more strategic document this year -- a state programme for the development of the agriculture industry until 2020, which will determine the industry’s key priorities and support mechanisms. By the way, this programme will be fully adapted to the WTO environment. We will provide a powerful and lasting impetus for agriculture, including small- and medium-sized rural businesses and create proper conditions for improving domestic producers’ competitiveness. Of course, we need to accelerate the process of replacing imported food with domestically produced food and strengthen our positions in the Russian food market, which is particularly important given our upcoming WTO membership, something I have covered extensively.

I am confident that we have all it takes in order to be able to focus not only on quantity, but on quality as well. The quality and affordability of domestically produced food should be the focus of our national agrarian policy. No doubt, the prosperity and new opportunities for millions of people in our country greatly depend on progress in rural areas.

Thank you for your time. Thank you very much.