President of Russia Vladimir Putin: Mr Patrushev, you planned to start with last year’s performance, didn’t you?
Minister of Agriculture Dmitry Patrushev: Yes, I would like to do that, if I may. I will give a short presentation to outline the sector’s performance in 2020 and plans for this year.
Despite the objective difficulties, the agro-industrial sector was working quite steadily last year, and today we continue implementing the tasks previously set before us. I would like to note that we hold weekly consultations with the regions’ headquarters.
This is what I can report. According to the Federal Service for State Statistics, farms harvested 133.5 million tonnes of grain net in 2020. This is 12 percent more than the five-year average.
Actually, it was the second largest harvest in history, and the farms did quite well. Of course, the weather helped, yet I believe that overall, the work of our farmers was planned quite well.
As for our plans for this season, we continue monitoring the winter crops, which we planted on 19.4 million hectares. Eighty percent of them are in satisfactory condition. This is worse than last year, because we had extremely little rain last autumn, but the situation is improving. I hope we will attain the targets set out in the state programme, weather permitting.
The sowing season has begun in the North Caucasus, the Central and Southern federal districts. The area will be increased by 600,000 hectares this year, with 51.5 million to be cultivated with spring crops. Therefore, as I have already mentioned, we hope to attain the targets of the state programme.
Here is a small problem. Last year, during the pandemic, we managed to make do with our own resources and hardly engaged any foreign workforce. We involved students and people who were unemployed at the moment. This year, we will, however, need foreign workers. In crop farming, we will need around 35,000 people. We are currently dealing with this matter, to make sure that the sowing season goes as planned and later we can manage the harvesting season.
But, considering all the nuances, we will, of course, take into account the epidemiological situation before anything else, in order to keep people safe.
Vladimir Putin: Why were sugar beet crop areas slightly reduced last year?
Dmitry Patrushev: Mr President, we harvested a great deal of sugar beets in 2019.
Vladimir Putin: So it was intentional.
Dmitry Patrushev: It was intentional because sugar beet production was less cost-effective. Due to the amounts harvested, the cost of sugar beets dropped significantly in 2019. Therefore, we made a decision to reduce the cultivation area. But this year, we will ramp up the volumes so that our domestic production is sufficient and we can meet the domestic demand for sugar beets.
Allow me to say a few words about the second slide. I will start with equipment. The agricultural industry currently uses 938,000 units of equipment. Last year was important; we purchased some 59,000 units and managed to overturn a long-term negative trend – that is, when our agricultural equipment had to be discarded before we could update the fleet. Last year, we managed to reverse this situation. It is expected that in 2021, we will purchase some 62,800 units of equipment. Here I should note, of course, that this is thanks to the extensive scope of support measures and, of course, concessional leasing. Last year, we completed the capitalization of Rosagroleasing, which helped deliver 9,700 units of equipment to our agricultural producers. This is excellent groundwork.
(The Minister then spoke about prices of fuel and mineral fertilisers. He noted that no fertiliser shortages are expected. Dmitry Patrushev also spoke about efforts to utilise unused farmland, which is an important method to increase the commodity weight of agricultural produce in general. Another issue he covered was reducing the wear on irrigation systems.)
The next topic is animal husbandry. Objectively, the pandemic has had quite a drastic impact on this segment, but at the same time, the production of livestock and poultry in 2020 amounted to 15.6 million tonnes; with milk we exceeded the 32 million-tonne mark. The slide shows where we stand in global rankings in the output of livestock products; we are actually moving forward. I would like to note here that in 2021, the livestock farms will target a boost in the production of beef and milk, and we are working hard on this.
Here I cannot help but to mention the epizootic situation. Last year was extremely tense in this regard, and the damage from especially dangerous animal diseases in Russia exceeded 3 billion rubles.
I must say that bird flu outbreaks were raging all over the world in 2020. In France alone, the damage from bird flu exceeded 2.3 billion euros. We have responded appropriately here in Russia to stabilise the situation; the measures taken helped to prevent the most negative scenario. In particular, we supported the farmers who suffered losses from ASF and avian flu, and provided an opportunity for them to roll over their preferential loans.
Nevertheless, the situation concerning avian flu puts a very important issue on the agenda: we need to ensure local production and sufficient capacities here in Russia.
As regards genetics, I will speak about this a bit later, this is a very important component, but it involves a fairly long-term perspective. As a more expeditious decision, the Ministry of Agriculture has formulated proposals for a package of support measures that would make up to 90 percent of parent stock available locally by 2025. Our farmers will be able to produce their own hatching eggs for chicken production – something we mainly buy abroad at present.
The next slide is about the food and processing industry. Growth was recorded for a number of key products in 2020, including semi-finished meat products, butter, sunflower oil, and also cheese. This year, for most products, the production volume will remain at the 2020 level.
At the same time, I would like to mention certain risks. One of them is a significant investment in dairy companies for the purchase of labeling equipment. These costs can subsequently affect the cost of the finished product. For our part, we have proposed a number of measures to support milk processors. The labeling problems have been resolved, and labeling of dairy products will begin as of June 1.
The second risk that we can see is the availability of raw feed for processing enterprises. This primarily concerns, as you correctly noted, sugar beet and sunflowers. As I have said, this year, we plan to expand both sunflower and sugar beet acreage, and we just hope that the weather will allow us to collect a decent harvest.
I would like to point out that the global trend last year was towards an increase of food prices. Of course, this is affecting the affordability of food products. In general, to neutralise this negative effect we have taken additional support measures and customs and tariff regulation measures, about which I will speak a little later on.
What I would like to note is the following. In addition to traditional food products, Russian companies are increasing the output of processed foods. This is quite a positive field, because in the past we turned out mostly plain foods, but now that we can make use of the state support measures we are receiving, we have launched the production of various modified starches, concentrated plant-based proteins and amino acids. These products are being used not only in the agro-industrial sector, but also in the pharmaceuticals, chemical and pulp and paper sectors.
While speaking about this block of subjects, I would like to say a few words about vine growing and wine making. Based on the outcome of last year, a new law has been adopted as per your instructions. This has had a positive effect on this sector. We have stopped nearly entirely the import of base wine. It has been reduced by tens of times, which has boosted wide production in the country. In other words, wine is now made from grapes grown domestically, while wine made from base wine is labelled “wine-based drink,” which is increasing the marketing of domestic wines. It can be said now that up to 60 percent of wines on the shelves of the larger chain stores are Russian-made wines. I am not talking about premium class shops now, but Russian wines account for up to 60 percent and sometimes even more of the wines available in ordinary shops.
Overall, the production index in the agro-industrial sector was 102.5 percent last year. It actually includes the agricultural production index, the food production index and the beverage production index.
I will tell you now about the profitability of our agricultural companies based on preliminary data. We expect it to be approximately at 18 percent together with subsidies, and about 14 percent without subsidies. This is more than the year before. I believe it would be reasonable to…
Vladimir Putin: That is, compared to 2019?
Dmitry Patrushev: Yes, I am speaking about the 2020 figures.
The share of unprofitable enterprises is decreasing every year. Generally speaking, it will be 11.5 percent as of last year, due to modernisation efforts and increased transparency. We continue working in 2021 and will try to keep up the pace.
I would like to note that salaries have increased in our sector. In 2018, the average monthly salary in agriculture was 25,500 rubles, and by the end of 2020 it was almost 31,000 rubles. Of course, there is still room for improvement, but there is a positive trend, depending on the region.
Vladimir Putin: It is 63,000 rubles in Sakhalin, I see.
Dmitry Patrushev: Yes.
A few words about legislation activity. In 2020, 15 federal laws were adopted, including landmark laws, that is, the law on grain and the law regulating the circulation of pesticides and agrochemicals. I know that you have received a request to regulate this area. I hope that the situation improves as the law has been passed. We will continue this work in 2021.
Vladimir Putin: Do you mean the law on beekeeping and regulations for agricultural land?
Dmitry Patrushev: Yes.
Vladimir Putin: A very important law.
Dmitry Patrushev: In 2021, we also plan to adopt a law on seed production. This is a very complex law, and it is long overdue. We have been working on it since 1997. As of now, it has been submitted to the State Duma.
Vladimir Putin: Is this the marking on this slide?
Dmitry Patrushev: Yes. This is Merkury, our traceability system that is connected to the Ministry of Industry and Trade’s marking system. Advanced traceability systems are being developed; they are also important. But this is a long-term goal, we will keep working on it.
The next slide shows information on food security. In some areas, we have already reached the planned numbers. Nevertheless, hard work is ahead regarding milk and dairy products. Our goal is 90 percent, currently we are at 84.4 percent. But we have been stimulating businesses and providing them with state support, so milk production grows every year.
We did not reach our goal regarding potato self-sufficiency in 2020, which remained at 86 percent against the planned 95 percent. This was because of the pandemic and the weather. We have increased the number of potato farms and we hope the situation will improve.
As for vegetables and cucurbits, we are 87 percent self-sufficient against the goal outlined by the Food Security Doctrine for 2020 of 90 percent. We will take the relevant decisions to reach the goal by 2024.
Work regarding fruit and berries is also underway. As per your instructions, we have developed a roadmap and will reach the planned 60 percent self-sufficiency.
Vladimir Putin: Today’s level is quite low. You need to plant gardens and help farmers.
Dmitry Patrushev: Yes, we have been doing all that. In addition, we will provide preferential loans, support the growing of seedlings and will see what can be done in terms of gardens.
Vladimir Putin: Yes, like seeds, seedlings require special attention.
Dmitry Patrushev: Yes, we will do that and work on seedlings as part of the Federal Research and Technical Programme for the Development of Agriculture for 2017–2025.
As for seeds, we have not reached the required level of self-sufficiency yet. The goal is 75 percent and the current level is 65 percent. I expect the seed raising law to help develop the domestic market of quality seeds.
The next slide is about agricultural sciences. I will say a few words here about breeding and genetics. Under your instructions, the Federal Science and Technology Programme of agricultural development for 2017–2025 began in 2018. Its goals, frankly, are quite challenging. You met with businesses, and sometimes businesses looked with some incredulity at the programme's capabilities. But the situation is gradually changing. We have had some success in breeding, where two subprogrammes have been approved: for potatoes and for beets. For these crops, for sugar beets, we have our own seeds. Let me emphasise that this work, of course, is entirely being carried out in dialogue with market participants. New domestic varieties and hybrids are in no way inferior to foreign selection products, but on the contrary, they are more suitable for our soil, as well as for our natural and climatic conditions.
In 2021, the subprogrammes for oilseed and viticulture will be completed. The programmes for corn, vegetables and gardening are in the pipeline – just like you said. We will expedite this work and will try to complete it as soon as possible.
As for the development of domestic genetics, the Federal Programme includes a subprogramme to create a cross between meat chickens, approved last year. Also in 2021, subprogrammes will be completed for beef and dairy cattle. This topic is also important; unfortunately, we have not developed it at the proper level yet.
Mr President, a few words about exports, if you permit.
The development of our export potential is of the essence; it is very important to keep our previously gained foothold in foreign markets. Russia’s foreign trade grew almost 20 percent in 2020 and amounted to $30.7 billion. I will note that Russian agricultural exports actually exceeded imports for the first time in 2020. Russia has become a net food exporter. This is a first indeed, as this never happened in the Soviet Union, or later, as far as I know.
Vladimir Putin: It never happened indeed.
Dmitry Patrushev: But at the same time, due to stable development and ongoing government support for agriculture, we can consistently move away from just grain exports and strengthen other exports with higher added value. In 2020, a significant increase was achieved in products with high added value. We are developing the export of fish and fish products. We did face objective difficulties in 2020 because of the pandemic – in particular, we had restrictions on the supply of products to China. In this connection, we are now conducting a regular dialogue with our colleagues from China and of course, we have opened alternative routes and sales markets, across Japan and to Korea, respectively.
During the pandemic, we did not stop expanding exports of Russian goods. Last year, we were granted the right to supply 38 types of our produce to 24 new countries. In addition to this (and we believe it is also important), we are expanding the export geography for our niche products. For example, Russian ice cream is exported to 35 countries and Russian honey to 29 countries. The number of such examples is increasing every single year.
I would like to say a few words about supporting exports in the agricultural industry. We understand that the balance between the state and businesses is extremely important. We also understand that during a certain period in 2020, some of the export support measures turned out to be excessive. Mr President, we refined our approaches; however, for the purpose of stabilising the situation on the market, as of January 1, 2021, we suspended partial reimbursement of export-related transport expenses for such products as sugar, potatoes, buckwheat, bottled sunflower oil and grain.
Vladimir Putin: Exports with a high added value need support.
Dmitry Patrushev: Yes, we will do it by redirecting support. However, exporters have a reasonably large scope of tools that help them stay on foreign markets.
Vladimir Putin: Where is our grain mostly used to make flour?
Dmitry Patrushev: Mr President, we export grain to Turkey where they make flour. Meanwhile, our flour production has slightly declined. We should try focusing on higher added value.
I would now like to say just a few words about state support for the sector. Last year, the Ministry of Agriculture was allocated 312.8 billion rubles, 99.7 percent of which have been spent. I would like to note an extremely important synergy. The state invests substantial funds in this industry on a regular basis, thus maintaining the investment appeal of the agricultural industry. The investment into the agricultural sector in 2020 exceeded 750 billion rubles, which is almost 27 billion rubles more than in 2019. It is expected that in 2021, the amount of investment will increase, if only slightly.
Now, a few words about the key mechanisms of state support. Of course, subsidised loans remain the most popular mechanism. Lending agreements worth over 1 trillion rubles were executed in 2020. This year, the list of areas where subsidised loans can be used has also been extended. I should note here that state-supported insurance of agricultural businesses is developing at a rapid pace. Some 4.4 billion rubles have been allocated for this support mechanism in 2021, or double of what it was in 2020. Essentially, our agricultural producers are slowly adopting a certain financial and insurance culture and starting to insure both their crops and livestock. This is, of course, important because it was not common practice before.
Mr President, there is a slide on support for small businesses. I will be brief. While we allocated 15 percent of state support for farmers to small farms in 2018, the preliminary estimates for 2020 stand at 20 percent of the total volume. At the same time, the share of farms accounts for 14.3 percent of the total volume of agricultural produce.
And, of course, now produce sales remain important for small businesses. The Government has supported the creation of additional opportunities for farmers to sell their produce. Of course, state support for purchasing mobile market stands and transportation required for itinerant trade, which has been available for farmers and cooperatives since the beginning of 2021, will further encourage agricultural sales.
Vladimir Putin: Loans must also be available for them. There is so much bureaucracy that it is difficult to get to them…
Dmitry Patrushev: Mr President, we have created a procedure so that they do not have to collect documents in order to get a subsidised loan; it is easier now. And, of course, now we are going to digitalise this so that they will be able to get it online.
I would like to briefly report on the programme for the comprehensive development of rural areas. The slide shows what we have done. A large number of people can really feel the difference, that they are reaching an entirely new standard of living.
Vladimir Putin: Development of areas?
Dmitry Patrushev: Yes. This is the comprehensive programme for the development of areas. In general, we receive very positive feedback from the regions. We can see that people in small residential localities, such as villages, are getting advanced, comfortable social and utilities infrastructure.
Of course, Mr President, we should thank you for the opportunity to take such a comprehensive approach to implementing infrastructural social projects in rural areas. This is important. Today, six million people have already have a sense of what this state programme means.