Kremlin to provide record subsidies to agricultural sector

State aid is set to increase almost threefold by 2025

Kremlin to provide record subsidies to agricultural sector Photo: maxpixel.net

Russian agricultural producers are likely to enjoy a significant increase in state support, as the government is considering a new programme aimed at boosting agricultural exports, especially those of high value-added food products. The new programme may become one of the most expensive in the history of modern Russia.

The Russian government has announced plans to allocate 3,42 trillion rubles ($51 billion) to support the domestic agricultural industry from 2019 to 2025, says GlobalMeatNews. According to a draft decree posted on the official government website, state support is supposed to grow from 242 billion rubles ($3,6 billion) in 2019 to 412 billion rubles ($6,2 billion) in 2024. For comparison, according to Prime Minister Dmitry Medvedev, the Kremlin has spent 1,2 trillion rubles ($18 billion) from the federal budget to help the domestic agricultural sector in the past seven years.

Thus, the government aims to prompt local agricultural producers to establish «an export-oriented commodity weight» and to implement President Putin's task to increase annual agricultural exports to $45 billion from current $20 billion. The programme is yet to be approved by the government, but it is not expected to be modified significantly, says GlobalMeatNews.

According to Prime Minister Dmitry Medvedev, Russia has spent $18 billion from the federal budget to help the domestic agricultural sector from 2012 to 2018. Photo: government.ru

The new subsidies will cover primarily exports of high value-added products such as meat. Although the exact figures are still unclear, the domestic meat industry may receive 30-40% of the money. However, the support is likely to be allocated in new forms, considers Chairman of the Russian National Meat Association Sergey Yushin. Over the past years, the government has been subsidising interest rates on loans taken under new projects in order to attract more investment to the sector. Now there is no need for this type of support given that Russia has already reached self-sufficiency in poultry and is close to self-sufficiency in pork.

''It could be reasonable now to shift to direct grants to meat companies in order to improve their production costs. That kind of support would be beneficial for export projects because when you have lower costs you can be more successful on the global markets,'' Yushin explained. Besides, the state aid could be allocated in the form of reimbursement of the price of livestock feed, said the expert. He added that some money could be given to Federal Service for Veterinary and Phytosanitary Surveillance to intensify negotiations with foreign countries about the withdrawal of trade barriers to promote Russian products overseas.

By Anna Litvina