President of Russia Vladimir Putin: Mr Fedorov, I want to discuss the spring sowing campaign. I know the Government is paying much attention to this issue and the [Agriculture] Ministry and the Government as a whole are examining and generally resolving these matters. This notwithstanding, we know that the spring sowing campaign is important not just for the agriculture sector, but also for the entire country. This is why I want to hear your assessment of how the work is going.
Agriculture Minister Nikolay Fedorov: If we compare objectively this year’s situation to last year, the sowing campaign is already going full steam ahead because spring has arrived earlier this year than it did in 2014. As for the budget financing timetables, financing is also proceeding faster than it did last year, though the gap is lesser here and we have seen some volatility and zigzags in loans and financing from the regional and federal budgets.
This is because the early spring means that the situation changes very fast. From one region to another we can have higher financing volumes than last year’s figures one week, and lower than last year’s figures the next week.
Overall though, budget support is very timely and the numbers are ahead of last year’s results by a several-fold figure. This year, we have transferred around 105 billion rubles to the regions to date, while last year the figure was 32 billion. More noteworthy and significant is that double the amount has been transferred to concrete agriculture sector businesses, concrete recipients, compared to last year. We see the same situation with regional budget financing in all the different areas.
Supplies of seeds are higher than they were last year. Particularly important is that the seed conditioning is nearly five percent higher than it was last year. This is extremely relevant and important because better conditioned seeds mean bigger harvests.
There are some risks this year. Failure of winter crops is higher than it was last year. In the Southern Federal District, fortunately, the winter crops have suffered less failure than was forecast, by nearly 500,000 hectares, which represents more than 8 percent. Compared to our worst forecasts, this represents approximately an additional 2 million tonnes of grain crops.
Another important point is that the farmers are adapting to the new conditions and learning how to make use of the anti-crisis measures. Last year, as you recall, we provided [interest rate] subsidies for loans for seasonal work in the fields to a value of 5.7 percent from the federal budget. This year, the Government made the decision in January to raise the federal budget compensation for agriculture sector businesses to 14.7 percent. The regional budgets add another 2–3 percent in compensation, and this means that the real interest rate for bank loans to the agriculture sector is from 3 percent to 6–7 percent.
Modernisation of agricultural equipment is another important area. Following your instruction, [agricultural equipment leasing company] Rosagroleasing’s capital was topped up by 2 billion rubles, which means the company can purchase and transfer on good terms around 4,000 items of agricultural equipment this year, for the most part tractors and combine harvesters. Also, an additional 1.9 billion rubles from the anti-crisis fund is being added to the money already allocated for bringing down the cost of agricultural equipment for farmers. This is an indirect form of support for our agricultural machinery manufacturing sector.
Vladimir Putin: What is the situation with fertilisers?
Nikolay Fedorov: The situation with fertilisers is good because the fertiliser producers’ association and the plants have all met us halfway here. We held many talks with them and they have agreed to offer a 30–33 percent discount on the most in-demand fertilisers. This is serious support.
I travel a lot around the regions. The governors and, most importantly, the farmers themselves, are happy with this decision. The fertiliser producers are respecting what you could call this ‘gentlemen’s agreement’.
The situation with petrol is also good. The price is around 3.6 percent lower than it was last year. But the situation with diesel fuel is not so good and the price has gone up. We are working with the Energy Ministry on this.
It seems to me that oil refineries are taking the logic that the farmers have no choice and will buy diesel whatever the price. I get this impression at times. There are some regions and companies that sometimes push the price up by 8–10 or even 20 percent.
We are in daily contact with the Energy Ministry on these matters.
Vladimir Putin: You started off with the financing situation and said that loans are being accorded at even better rates than last year. Unfortunately though, the information I have is different. I have figures that say that, on the contrary, the loan volume is down by nearly 25 percent on last year, and specific financial institutions are cutting back their loans: Rosselkhozbank by 30 percent, Sberbank by 6–8 percent, I think, and so on.
Nikolay Fedorov: These figures change every day, Mr President. The results change from one day to the next. The loan volumes we are talking about here are large and compensation is immediate, even ahead of last year’s results. At the moment, we are 1.2 percent ahead compared to last year’s level. Sberbank is ahead by 8 percent, and Rosselkhozbank is at the same level as last year.
We are monitoring the situation and working in daily contact with the banks, the regional governors and the farmers to make sure that there are no problems with loans. The loan terms are really very favourable. I can tell you that the agribusiness people at our meetings in the regions say that they did not expect such a level of budget compensation: 17.4 percent of the interest rate is subsidised by the budget in the case.
Vladimir Putin: But how much have interest rates risen on average?
Nikolay Fedorov: Sberbank’s declared offer is for loans at interest rates of 19–22 percent, and Rosselkhozbank offers loans at 22–23.5 percent. We are checking this information and the reality corresponds more or less to the declared rates and to what is actually happening in the countries’ regions. But the real interest rate actually works out at from 3 to 6–7 percent.
Vladimir Putin: That’s taking into account the 17-percent subsidy.
Nikolay Fedorov: Yes, which is not less than it was last year, and in some cases is even better.