Prime Minister Vladimir Putin chaired a meeting on improving the effectiveness of state agricultural policy
19 May 2008
Выступление В.В.Путина на совещании по вопросу повышения эффективности государственной аграрной политики
19.05.2008
Good afternoon.
As agreed, we will first concern ourselves with the problems of agriculture and the agro-industrial sector. This is our first meeting on the subject.
You know that a sharp rise in prices on the world food markets has had a serious effect on the situation in this country. It hit senior citizens, large families, and other vulnerable strata of the population, i.e. those for whom food takes up the biggest part of their family budgets.
In these conditions we ought to pay close attention to the development of the agro-industrial complex and the strengthening of stability on the domestic food market.
Russia has a unique agricultural potential. It allows us not only to meet our needs in full but also be a key player on the world food market.
The basis for that is already provided, and a national agricultural project has been one of the factors. The development of that complex has become a priority in the work of federal and regional bodies of authority. Billions in investment are flowing into the sector.
I have just spoken with the agriculture minister and we recalled that in the late 1990s 90% of farms in the country were loss-making. Imagine, 90%! Today their number is still large, but the figure is down to 25%. Not 90%. We now see that the mood of those living and working in the countryside is improving.
The adoption of a federal law on agriculture and a five-year state programme marked a milestone in our policy. Massive funds are currently being allocated at federal and regional levels to pursue the state's agricultural policy. Our key objectives are: to ensure the sustainable development of rural areas, to improve the quality of life in the countryside, and secure a substantive increase in the efficiency of the agro-industrial sector and competiveness of Russian-made products. In other words, we must protect ourselves against sharp fluctuations in world markets.
In doing so, our policy must guarantee our people affordable and stable food prices. At the same time we have to create incentives for the promotion of effective farming".
I would like to dwell on the following key points.
First. We need to substantially increase the production of basic types of farm produce. This concerns above all meat, milk and grains. Particular attention should be paid to grains - the prime source of all agricultural production.
In world practice, an optimum annual figure is one tonne of grain per head of population. We have done a lot to raise the output of grains lately. You know that we have a fairly good export potential. But in order to reach the level I indicated, we need not only to expand sown areas but also get down in earnest to improving yields and effectiveness of grain production.
Second. We must think of a technical and technological "retooling" of the industry. For these purposes we must develop effective leasing instruments and practice long-term loans.
Third. Prices for basic resources consumed in the agro-industrial sector must be stable. I am not telling you anything new here: these are fuel, lubricants and fertilisers. To keep their prices steady, we must give more teeth to anti-monopoly legislation and make wider use of subsidies.
Fourth. We must introduce a modern system of risk management. The state programme provides for measures to develop agricultural insurance. In practice, insurance is not widely used yet. The situation must be drastically altered.
Fifth. We need up-to-date market mechanisms for responding to changes in basic farm prices. A system of constant monitoring must be set up. And if prices overshoot their boundaries, appropriate mechanisms must be automatically triggered. I mean, of course, market mechanisms: purchase and commodity interventions, and customs and tariff regulation. This set of tools exists and is occasionally used, but in an unsystematic way and often, unfortunately, too tardily.
In a highly volatile business situation and with prices growing on the world food markets, the Ministry of Economic Development and the Ministry of Industry and Trade must make an inventory of all Russia's foreign trade agreements in the agro-industrial sphere and jointly with the Ministry of Agriculture make suggestions on improving the state of affairs in this area. Being guided, of course, by the interests of domestic producers and consumers.
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