This year?€™s harvest will exceed 65 million metric tons and will relieve the Agriculture Ministry of having to seek food aid other than for "softer conditions" on import prices of fodder grains, Agriculture Minister Alexei Gordeyev said Thursday.
Gordeyev, who is also a deputy prime minister, said at a news briefing that by Thursday agriculture producers had harvested 25.3 million tons of grain.
That is 1.2 million tons more than at the same time last year, despite only 11.3 million hectares ?€” 1.3 million hectares less than in 1999 ?€” being harvested. The total included 15.9 million tons of wheat, of which 56 percent was fit for human consumption.
The average grain yield is 2.29 tons per hectare, up from 1.91 tons in 1999, Interfax reported.
"We planned to produce around 65 million tons, but data collected by [Wednesday] at the ministry showed that the harvest will be somewhat higher," Gordeyev said at the news briefing.
Lyudmila Pigina, grain analyst with Ogo-Agroprom, said that between 65 million and 71 million tons may be collected during this harvest, which will be enough for internal consumption of between 68.5 million and 72.2 million tons, taking into consideration roughly 4 million tons of imports, about 750,000 tons that will be exported and 6.7 million tons or so of grain remaining from the last harvest.
Gordeyev said no humanitarian aid will be asked for this year and that "no centralized purchases of grains" will be made. But he admitted negotiations are under way with several countries on purchasing fodder grains, including soya meal and corn.
Among the problems that agriculture producers are facing this summer, Gordeyev named "terrible trouble" with locusts.
He said locusts had not been a problem for 30 years and "we no longer have the resources to fight them." The equipment is either absent or "worn out" and fuel and cash are short, he added.
He also named as big problems the low returns for agricultural products relative to the high cost of agricultural supplies and the shrinking number of hectares being farmed.
According to the State Statistics Committee, farmland has shrunk from 73 million hectares 20 years ago to a mere 46.6 million hectares last year.
Gordeyev said that to cope with the lack of cash, 1.1 billion rubles ($39.7 million) has been allocated in August from the federal budget to regions as a loan to cover cash gaps in local budgets and buy fuel and spare parts for agriculture machinery. Oil companies have been given export quotas so that enough fuel will remain on the domestic market, he added.
But most of the measures won?€™t take effect immediately.
Export tariffs will be raised for petroleum products only in September, Gordeyev said.
Also, in the fall, 500 million rubles will be transferred to commercial banks to allow them to reduce by 20 percent the interest rate on loans to agricultural producers that qualify.
He said that this money would be used to support up to 5.5 billion rubles worth of loans that could be provided via commercial banks.
Gordeyev said that also in the fall about 5 million tons of grain will be purchased from the agricultural producers to form a reserve that can be used to bolster grain prices against sudden changes.
He said grain for the reserve will be bought from agricultural producers "at the minimum possible price.
"Any producer will be able to get a loan that will be transferred to a special account if the producer agrees to sell us grains at those prices. It will be possible to use that account as a current one, so that the producer could take cash and buy fuel or whatever he needs."
He did not specify how much money will be allocated for the reserve project or which banks will be involved.
Ogo-Agroprom?€™s Pigina said there is no need for reserves of 5 million tons of grain ?€” 1.2 million to 1.5 million tons are enough to prop up prices.
"And we don?€™t have the money to buy those grains. Look, in Krasnodar grain costs 3,400 rubles [$123] per ton for third-class food grain and 2,900 rubles per ton for fodder grain.
"That means about 17 billion rubles must be prepared to finance this fund ?€” this is not realistic."
But to make the great leap into a better market future, Gordeyev is relying on the concept for the development of the agricultural industry between 2001 and 2010 that was approved by the government two weeks ago.
The main economic target of the concept is "the formation of an effective, competitive agro-industrial production, which will make the country?€™s food supply secure and will increase the exports of several kinds of agricultural output."
The concept also demands allowing sales of agriculture land. The constitution permits sales of farmland, but there is no law to govern sales.
Renata Yanbykh, deputy director of the Foundation for Support of Agrarian Reform and Rural Development with the Russian Institute of Agrarian Problems, said it is not the concept that matters. "We see a good new concept with each new prime minister, but does anything change?"
Gordeyev, who is also a deputy prime minister, said at a news briefing that by Thursday agriculture producers had harvested 25.3 million tons of grain.
That is 1.2 million tons more than at the same time last year, despite only 11.3 million hectares ?€” 1.3 million hectares less than in 1999 ?€” being harvested. The total included 15.9 million tons of wheat, of which 56 percent was fit for human consumption.
The average grain yield is 2.29 tons per hectare, up from 1.91 tons in 1999, Interfax reported.
"We planned to produce around 65 million tons, but data collected by [Wednesday] at the ministry showed that the harvest will be somewhat higher," Gordeyev said at the news briefing.
Lyudmila Pigina, grain analyst with Ogo-Agroprom, said that between 65 million and 71 million tons may be collected during this harvest, which will be enough for internal consumption of between 68.5 million and 72.2 million tons, taking into consideration roughly 4 million tons of imports, about 750,000 tons that will be exported and 6.7 million tons or so of grain remaining from the last harvest.
Gordeyev said no humanitarian aid will be asked for this year and that "no centralized purchases of grains" will be made. But he admitted negotiations are under way with several countries on purchasing fodder grains, including soya meal and corn.
Among the problems that agriculture producers are facing this summer, Gordeyev named "terrible trouble" with locusts.
He said locusts had not been a problem for 30 years and "we no longer have the resources to fight them." The equipment is either absent or "worn out" and fuel and cash are short, he added.
He also named as big problems the low returns for agricultural products relative to the high cost of agricultural supplies and the shrinking number of hectares being farmed.
According to the State Statistics Committee, farmland has shrunk from 73 million hectares 20 years ago to a mere 46.6 million hectares last year.
Gordeyev said that to cope with the lack of cash, 1.1 billion rubles ($39.7 million) has been allocated in August from the federal budget to regions as a loan to cover cash gaps in local budgets and buy fuel and spare parts for agriculture machinery. Oil companies have been given export quotas so that enough fuel will remain on the domestic market, he added.
But most of the measures won?€™t take effect immediately.
Export tariffs will be raised for petroleum products only in September, Gordeyev said.
Also, in the fall, 500 million rubles will be transferred to commercial banks to allow them to reduce by 20 percent the interest rate on loans to agricultural producers that qualify.
He said that this money would be used to support up to 5.5 billion rubles worth of loans that could be provided via commercial banks.
Gordeyev said that also in the fall about 5 million tons of grain will be purchased from the agricultural producers to form a reserve that can be used to bolster grain prices against sudden changes.
He said grain for the reserve will be bought from agricultural producers "at the minimum possible price.
"Any producer will be able to get a loan that will be transferred to a special account if the producer agrees to sell us grains at those prices. It will be possible to use that account as a current one, so that the producer could take cash and buy fuel or whatever he needs."
He did not specify how much money will be allocated for the reserve project or which banks will be involved.
Ogo-Agroprom?€™s Pigina said there is no need for reserves of 5 million tons of grain ?€” 1.2 million to 1.5 million tons are enough to prop up prices.
"And we don?€™t have the money to buy those grains. Look, in Krasnodar grain costs 3,400 rubles [$123] per ton for third-class food grain and 2,900 rubles per ton for fodder grain.
"That means about 17 billion rubles must be prepared to finance this fund ?€” this is not realistic."
But to make the great leap into a better market future, Gordeyev is relying on the concept for the development of the agricultural industry between 2001 and 2010 that was approved by the government two weeks ago.
The main economic target of the concept is "the formation of an effective, competitive agro-industrial production, which will make the country?€™s food supply secure and will increase the exports of several kinds of agricultural output."
The concept also demands allowing sales of agriculture land. The constitution permits sales of farmland, but there is no law to govern sales.
Renata Yanbykh, deputy director of the Foundation for Support of Agrarian Reform and Rural Development with the Russian Institute of Agrarian Problems, said it is not the concept that matters. "We see a good new concept with each new prime minister, but does anything change?"