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Russia to lend agricultural producers a hand

August 13, 2014, 16:49 UTC+3 Alexandrova Lyudmila

MOSCOW, August 13. /ITAR-TASS/. Having banned food imports from countries that backed anti-Russian sanctions, the government now plans to adopt additional measures to support agricultural producers at home. State financing will be increased in a course of import substitution, but bringing agriculture to a new level will take time, experts warn.

Prime Minister Dmitry Medvedev instructed the government on Tuesday to increase the state financing programfor 2013-2020 “to develop Russian agriculture, which is significantly reliant on imports”. “We are opening a new page of agricultural development in our country,” he said. “We are the country that will be able and should feed itself and also supply products to other countries.”

The amount to be added to the already adopted program has not been disclosed yet. The current program suggests federal financing of 1.5 trillion rubles, or $41.6 billion. With other funds included, financing amounts to 2.5 trillion rubles, or $69.4 billion, until 2020, of which 500.5 billion rubles, or $13.9 billion, will be spent in 2014-2016, Vedomosti daily wrote. Subsidies for investment loan interest rates constitute the main expenditure.

The sector needs funding, and considerable funding at that, but the situation will not change overnight, experts say. Agricultural technical capacity stalled at the 1970 level, said deputy chairman of the Chamber of Commerce and Industry agricultural committee and director of a large Moscow region state-run farm Pavel Grudinin. Agricultural producers owed banks more than two trillion rubles, the equivalent of $55.5 billion, which is more than the annual agricultural gross domestic product, the expert said.

“Potato production takes at least a year,” he said. “Milk production takes two-and-a-half years, the period a calf needs to grow up and become a cow. To get apples, you need first to plant an orchard, which means at least 5-8 years. Nothing happens fast in agriculture.”

“Russia could become entirely self-reliant in dairy products within seven years,” said chairman of Damate milk processor and Rusmolko milk producer Naum Babaev, quoted by Vedomosti. However, this required cheap lending at a rate no higher than 2-3% a year, while the current rate for agricultural producers is 14-15%, with only eight percent subsidised, he added. Timely subsidies were also important.

Russian producers accounted for only 70% of the domestic pork market, said Russia’s leading meat producer Cherkizovo. Russian pig farmers would be able to satisfy market demand within two or three years, but only with broad state support, said group spokesman Alexander Kostikov.

The ban on European vegetable imports forced the Belgorod-based company AgroMir to revise its development strategy. Last week, it imported Romanian and Polish vegetables but has now decided to grow vegetables in greenhouse complexes to be constructed in the Belgorod region in 2015 and then in the Ural city of Yekaterinburg.

“The favorable time has come to fill this niche with Russian products,” company owner Alexander Mashoshnin was quoted by RBC daily as saying.


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