Meeting with Government members 2021-11-10 15:45:00 Novo-Ogaryovo, Moscow Region The President held a meeting, via videoconference, with members of the Government of the Russian Federation. Taking part in the meeting were Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, deputy prime ministers Viktoria Abramchenko, Yury Borisov, Tatyana Golikova, Alexander Novak, Marat Khusnullin and Dmitry Chernyshenko, Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov and Minister of Finance Anton Siluanov. A number of other ministers, and heads of the Central Bank, the Federal Service for the Oversight of Consumer Protection and Welfare (Rospotrebnadzor), the Federal State Statistics Service, and the Moscow Mayor were also invited to attend the meeting. * * * President of Russia Vladimir Putin: Colleagues, good afternoon. Yesterday we discussed the spread of the coronavirus at a Security Council meeting. Today, I am asking Ms Golikova to begin with this topic and to update her colleagues on the situation after the non-working days that were announced by the Government. Go ahead, please. Deputy Prime Minister Tatyana Golikova: Good afternoon, Mr President. Good afternoon, colleagues. Over the past three weeks the weekly incidence growth has been slowing down. After the 44th week of the year, which coincided with the non-working days, the incidence rate increased by 2.1 percent compared to the previous week, down from an 8.7 percent increase a week earlier. Major regions, including Moscow, Moscow Region and St Petersburg still account for 30 percent of all cases, while the remaining 70 percent are in other regions of the country. As of the end of the 44th week, 61 regions reported an increase in the incidence rate, down from 78 regions after the 43rd week and 83 after the 42nd week. (Tatyana Golikova proceeded to review in detail the spread of coronavirus cases in different regions, spoke about increased coronavirus testing numbers, and the allocation of funds from the federal budget to buy 14 million express tests to cover the next three months.) Today, 594,600 medical workers, more than 1,000 medical students and 19,800 volunteer students are providing medical assistance to COVID patients. Of course, we are particularly concerned about the continuing rise in the mortality rate. According to the most recent data, unfortunately, a little over 1,000 of our citizens are dying every day, mostly, people over 60, patients with chronic diseases and unvaccinated people. To date, 301,500 COVID hospital beds have been deployed in Russia, of which 201,000 beds are outfitted with oxygen supply equipment. As of yesterday morning, 82.8 percent of hospital beds were occupied nationwide. (The Deputy Prime Minister reported that herd immunity in the country averages 48.4 percent and the number of vaccinated people over 60 stands at 44.7 percent. She also informed the participants about the implementation of a number of presidential instructions, including the daily monitoring of the availability of medicines and oxygen in the regions, engaging the Defence Ministry and the Emergencies Ministry to help the struggling regions, toughening restrictive measures, such as mandated days off and a ban on entertainment events and night hours at cafes and restaurants, as well as mandatory QR codes to prove vaccination when visiting selected sites and events.) Mr President, let me close with this: despite the fact that we are seeing a certain stabilisation in the situation and a decrease in the number of cases in six regions, we cannot yet safely assume that the situation has stabilised and the spread of the infection has been capped. Therefore, oversight and appropriate actions should continue. In this regard, we need your support, and we need you to issue additional instructions to the regions regarding the need to act on the measures that you laid out at the previous meeting with the Government. (At the request of the President, Ms Golikova reported on steps to overcome emergency situations, in particular, with oxygen supplies, and to ensure the uninterrupted operation of medical organisations. The Deputy Prime Minister also said that the minimum level for herd immunity is 80 percent. She pointed out that all four vaccines registered in Russia are safe and effective, which has been confirmed elsewhere around the world in the countries that are using the Sputnik V and Sputnik Light vaccines.) I would also like to say that our experts and foreign experts with whom we work as a team are saying that 80 percent is not enough to ensure proper protection but that 90–95 percent is the desirable target. For now, we are keeping the bar at no less than 80 percent. So, once again, we strongly encourage our colleagues from the regions and the specialists who engage in this work on a daily basis to conduct the necessary awareness campaigns and, of course, to vaccinate the people in order to protect them and, most importantly, to save their lives. There is nothing more valuable than this, Mr President. (After that, Minister of Science and Higher Education Valery Falkov and Minister of Education Sergei Kravtsov spoke of the organisation of teaching at universities and schools during the pandemic.) Vladimir Putin: Mr Savelyev, what can you say about our container traffic in the Far East? What is going on there? The region is facing problems. Minister of Transport Vitaly Savelyev: Yes, there are problems, and I will now report on them. The international logistics crisis is adversely affecting freight deliveries from Far Eastern seaports. First, the protracted pandemic wrecked long-standing supply chains, we faced this problem, and then deferred freight traffic demand arose later on. Routes passing through Russia, a party to the global logistic market, were also affected by these developments. The most popular container traffic routes proved more vulnerable than the rest, and the whole world is facing this problem. The situation is aggravated by high demand for container carriers on the international freight market. This concerns vessels of the same type that are used on shipping lanes of the Far Eastern Federal District. We are facing an increase in freight costs due to skyrocketing demand; they are 2.5 times higher than before. As a result, coastal shipping companies are no longer able to quickly deploy additional vessels in order to eliminate peak loads on specific routes. We have found that the main problem today is a shortage of vessels. Another negative factor is the low-quality work of private forwarding companies while planning and organising deliveries in the Russian Federation’s regions. We are dissatisfied with stevedore companies at ports accepting consignments from the Far Eastern Federal District’s regions. They do not handle incoming consignments promptly. <…> Unfortunately, forwarding and stevedoring services is a market that is outside the area of control and responsibility of Russian maritime authorities. However, Rosmorport is the party that enters into agreements with stevedoring companies on our behalf. While these agreements used to cover only the leasing of hydraulic structures, we proposed, unofficially for now, adding provisions on prioritising socially important cargo during loading and port handling. If stevedoring companies do not agree to that, we have a counter proposal: amending the law on Russian sea ports. But we will get back to that following talks with them. In the meantime, the Federal Agency for Sea and Inland Water Transport is currently organising the monitoring of cargo in sea ports, after Rosmorport reported a slowdown in cabotage traffic in view of a potential increase in construction materials shipments to the Russian Far East. (The minister also spoke about measures to address a number of issues – specifically, the daily electronic monitoring of the dispatch and accumulation of cargo at sea ports, arranging delivery of socially important and breakbulk cargo, building an additional fleet of five vessels to relieve peak loads and additional icebreaker support to prevent shipment delays.) We estimate that, unless there is a force majeure situation, all socially important freight will be shipped by the end of November. By mid-December, we plan to reduce the amount of stored cargo at sea terminals to a standard shipload of around 2,200 containers. Currently, we are storing three times more. But we will bring it back to normal and the situation in Far Eastern ports will improve. Mr President, we will try to resolve this issue by using private companies. However, if the cabotage traffic continues to grow (and the signs are all there), we may eventually propose establishing a specialised public shipping company reporting to the Federal Agency for Sea and Inland Water Transport. This company could take charge of some socially important freight under cabotage because currently, it is the prerogative of private companies and, considering the surge in freight charges, they are looking for more affordable vessels while cabotage shipments in the Far East are stalled. We could eliminate this dependence by having a cabotage company in the Far East and meeting the local demand. That is if we cannot find a solution with the private companies. For the time being, we are working on it and I hope we will be out of the woods soon. Vladimir Putin: Mr Savelyev, stevedores, private companies – I do hope you will work with them properly. But is it only about them? The volume of container traffic from China has increased, and you are well aware of this. Container shipments from China are premium traffic, they fetch more profit for Russian Railways, we all know this too, and miners constantly complain about this. You said we need to define priorities, so define them. You cannot leave a whole region without cement or other building materials. And what next? One never knows, there might be some other shortage. Be sure to do things properly here, and as soon as possible, and report to the Prime Minister. Vitaly Savelyev: Accepted. Vladimir Putin: How long will it take to streamline things? Vitaly Savelyev: Mr President, I have already reported. We hope to bring the situation back to normal by the end of November. We will resolve the freight problem that we have, but for this, we need four more vessels. Give us two weeks, and we will just decide on a solution. One option, as I said, is to set up a shipping company. It is not that much money, but we could handle peak loads. Vladimir Putin: Suit yourself. But how long will it take to create a company? And we need to work with Mr Belozerov [General Director – Chairman of the Board of Russian Railways]. Do I need to talk to him or will you? Vitaly Savelyev: No need, we are in touch with him. Mr President, you are right: we have export traffic from China, South Korea and Japan. This is a lot. These containers travel along the Trans-Siberian Railway towards Europe, but we are talking about the cargo that the railway delivers to the Far Eastern ports, and then we have to take care of coastal shipping from the port of Vladivostok, this is the problem. For that, the existing companies, SASCO and FESCO, had to charter more vessels during peak periods. We will resolve this issue. I hope we will find a solution ourselves. Vladimir Putin: Is there enough rolling stock – locomotives, rolling stock? Do you have everything? Vitaly Savelyev: There are no problems with the railway. Everything is working smoothly, and the port has enough capacity. Vladimir Putin: Good. I have heard you. Thank you. (Further on, Head of the Federal Service for State Statistics Pavel Malkov gave a report on the ongoing National Census, carried out between October 15 and November 14 but lasting until early December in certain hard-to-access territories. Over this period, 133.5 million people have been counted, or 91.6 percent of the estimated population number. Mr Malkov said that 314,000 census takers were being employed, or half as many as 10 years ago, when digitalisation was not there to help. Apart from the official census takers, his service was using 25,000 volunteers, who were lending a hand at permanent stations. In the pandemic environment, they sought to provide the census takers with maximum protection, including face masks, gloves, rules of conduct, and regular testing. Thanks to the Sber and VTB, the census takers have insurance, including cover for COVID-19. The President wished the entire census team well with the successful completion of their work, stressing its great importance for the country and its economy and social sphere.) <…> Minister of Agriculture Dmitry Patrushev: In 2021, we have increased areas under the main crops, but adverse weather has led to a certain lag in harvesting rates and a drop in some crop yields. As far as grain is concerned, we hope to harvest127 million tonnes in bunker weight, or 123 million tonnes in terms of net weight. This figure is lower than last year’s but it is higher than the average for many years. We are forecasting that the oil-bearing crops will yield 23 million tonnes, a significant increase on 2020, something which was achieved, among other things, through the expansion of areas under oil crops in 2021. We have harvested 38 million tonnes of sugar beet and expect to reach the 40-million mark, or almost six million tonnes more than last year. The organised sector is planning to harvest about seven million tonnes of vegetables, or slightly more than a year before. As of now, we have harvested 6.5 million tonnes of potatoes. I would like to stress that this concerns only the organised sector and harvesting continues. In terms of potatoes, we hope to approach the 2020 figure. At the same time, the weather conditions in 2021 have proved most unfavourable for open-air potato and vegetable growing. I would like to say a few words about the autumn sowing. We have sown 18.6 million hectares and expect to harvest 19.5 million tonnes. Currently we see no problems with seeds, equipment or fuel and lubricants in the farm sector. To keep the mineral fertiliser market stable, the Government is introducing a separate set of measures. We hope that it will result in farmers purchasing the needed amounts of fertiliser at reasonable prices. We expect that the harvest, in combination with the regulatory measures, will make it possible to stabilise prices of socially important food products. This year, the Government introduced a floating export duty on grains. It is currently set at $69.9 per tonne of wheat, which keeps the domestic prices significantly below the world prices. Next, in order to meet the domestic market needs, a tariff quota for grain exports, which provides for a separate quota for wheat, will be introduced in the first half of 2022. The size of the quota will be determined later in the year when we know the final wheat production figures and the export rate in the first half of the current agricultural season. In the event of a significant increase in world prices, say, up to $400 per tonne or more, the formula for calculating the floating export duty will be revised upwards. With regard to other categories, in 2021, the Government introduced restraining export duties on sunflower, rapeseed and soybeans, as well as a damper duty on sunflower oil exports. These measures make it possible to maintain stable prices in this segment. In the event sunflower prices rise sharply in the country or the world prices of sunflower oil go up, the damper duty will be swiftly revised upwards. With regard to potatoes and open-ground vegetables, in addition to the weather, which had a negative effect on the harvest this year, there has been a trend towards a system-wide cut in production on personal subsidiary plots. Notably, traditionally most fruit and vegetables, as well as potatoes, are grown on private plots. <…> In order to increase the production of vegetables and potatoes, it is proposed to launch a separate federal project in 2022, which, among other things, will provide for the following state support measures. First, deploying reclamation efforts in order to involve agricultural land in the production of vegetables and potatoes. Second, increasing the amount of reimbursement for a portion of the direct costs incurred during building or upgrading vegetable and potato storage facilities. Third, taking direct support measures for vegetable and potato producers in order to increase production, meaning that support will be provided depending on the output numbers. Fourth, plans are in place to provide subsidies to the owners of subsidiary plots who engage in the production of potatoes and fruits and vegetables. This is something we did not do before, but we will start supporting vegetable growers starting in 2022. We hope that these measures will have a positive effect on the production volumes. On a separate note, the current harvest of sugar beets will make it possible to produce about 5.5 million tonnes of sugar. A tariff quota for refined and raw sugar imports may be introduced next year to meet the domestic demand. However, importantly, if we continue to contain prices that way, there are risks of the sugar beet producers reorienting their efforts to more lucrative crops, including grains and oilseeds. We cannot afford to have the developments go down that path. We believe that further decisions in the sugar industry should be aimed at maintaining the economic incentive for the stable production of sugar beets and our own sugar. As for livestock produce, pork production growth has been slowing down due to outbreaks of the African swine fever in several regions. We expect production to be restored in the first half of 2022. In the poultry sector, the poultry population declined against the backdrop of a challenging epizootic situation and disruptions in the supplies of imported hatching eggs, which led to a decrease in poultry production. We expect to reach 2020 production levels by the end of this year. For beef, we forecast a production increase of about 1.5 percent in 2021. At the same time, to support the processing sector and stabilise meat prices, the Agriculture Ministry proposed setting the preferential tariff on frozen pork imports up to 100,000 tonnes and up to 200,000 tonnes for frozen beef. Mr President, we hope that these measures will help stabilise prices. That concludes my report. Thank you for your attention. Vladimir Putin: Thank you very much. Indeed, much has been done. We discussed this with Mr Mishustin, and he has already briefed me on these proposals. Still, I would like to draw your attention to what has just been said. Prices of nitrogen-based mineral fertilisers, of chemical fertilisers on Russia’s domestic market are three or four times lower compared to the European market. Of course, this makes it very tempting for producers to prefer premium markets. We must take this into consideration and prevent any disruptions in the agricultural sector. We are also aware of the second factor: with the rising prices of fuel and gas, which is used for making fertilisers, major European producers have cut their output by almost one half –by more than 40 percent. According to international data, another major exporter, China, is also moving towards limiting exports. With all these factors in mind, we have to seriously think about what will be happening to crop land around the world, in Europe, and more specifically with food products, with crop lands used to grow cattle feed, and how this will impact meat products. We must take all this into consideration and take the relevant decisions in a timely manner. As for advance declarations, all this has to be taken into consideration and the corresponding decisions made as soon as possible. Overall, there is no doubt that this package of measures is adequate and well-balanced. Of course, you have to find a way to make sure that it is carried out, and prevent any decline in the production of the goods and fertilisers we need for delivering on our agriculture development plans. Overall, thank you. You and I will keep a close eye on these developments. Thank you. All the best.