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Analyst says Russia is not doing enough for its food security yet

April 21, 2015, 18:39 UTC+3 Alexandrova Lyudmila
© Mikhail Pochuyev/TASS

MOSCOW, April 21. /TASS/. Russia’s food security is not so easy to guarantee as it might seem at first sight, experts say. Although the government has been doing a great deal to ensure the shelves of supermarkets remain full, the development of the agri-industrial complex requires not just funding but real reform, first and foremost, support for small and medium businesses.

The performance of Russia’s farming and food manufacturing industries show that the country’s food security is guaranteed and all fears the supermarket shelves may go empty are groundless, Prime Minister Dmitry Medvedev told the State Duma on Tuesday as he presented the Cabinet’s annual report to legislators.

Medvedev recalled the record-high grain harvest in 2014 and the $189-billion subsidies injected into the agrarian sector in the same year.

He said the state program for the development of farming was complemented considerably, and a road map for import substitution in the industry was drawn up. A specific list of 464 projects for investing 265 billion roubles ($5.3 billion) into import substitution was authorized.

Medvedev said the industry would receive extra financial support this year, too.

"The necessary funds have been reserved in the investment program - nearly 188 billion roubles ($3.7 billion), and the plan for priority measures was complemented with another 50 billion ($970 million).

"Although certain successes are obvious, large farming enterprises are in the best position, while small businesses and farms are merely struggling for survival," Russian Academy of Sciences member, deputy chief of the economic and business management chair at the presidential academy RANEPA, Elmira Krylatykh, told TASS.

She believes that there must be a specific and clear system of support for small and medium businesses, sufficient lending, support for the necessary social incentives in rural areas that would persuade people stay. The agricultural science is in crisis, too, Krylatykh said. "Enthusiasts are leaving," she said with regret.

The problems of import substation, Krylatykh went on to say, are extremely hard to tackle. "Substitutes will have to be found not for imported foods, which will take 4-5 years, but also for the seeds, know-hows, pedigree cattle breeding, and equipment for the processing industries and farm machinery."

"The system of lending to farms remains unclear - what share the government will be prepared to compensate for and for what period of time loans will be issued. We have not created a smoothly functioning system of primary production, transportation, processing and storage yet. In the meantime it is very important.

"True, supermarket shelves will not go empty, of course, but we should give thought to whether customers with average incomes will be able to afford to buy essentials for the family’s normal diet. According to the latest statistics, 25% of customers cannot afford this." In the meantime, food security implies the availability of all foods that guarantee normal nourishment to all groups of the population, including financial availability.

The analyst believes that real shifts in the agri-industrial sector can be achieved only if financing is stepped up and reforms capable of yielding more effective returns are implemented. While poultry farming shows significant progress, dairy farming has encountered great problems. For the time being the government’s whole support is being used to create some safety net that would guarantee the marketing of dairy products at least not below the production costs. But more investment is needed to develop new technologies.

"Russia does have the potential: the land, the water and the enthusiasm. But know-hows and science require investment," Krylatykh said.

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