Russia chooses farmers over WTO

Russian farmers appear to be the big winners after Russia’s Prime Minister Viktor Zubkov stepped in to a dispute over planned $US 9 BLN a year subsidies and export tariffs. Three government ministers had clashed over the plans, which are blocking Russian

On Tuesday Prime Minister Victor Zubkov called for 70% of Russia’s food to be home-grown within four years, for which the government will provide them $US 45 BLN.

Economic Development Minister Elvira Nabiullina had launched a fresh attack on the Agriculture Ministry, which is lobbying for 40% export tariffs, price caps and import quotas in the face of spiralling costs and foreign competition.

“It’s true that inflation’s hiked fertiliser and other food producer costs by almost 15% over the year. But inflation must be fought by boosting competition and productivity. We must not succumb to the temptation of administrative and regulatory tariffs for short-term gain,” she said.

Farmers blame the Economic Development and Trade Ministry (MERT) for agreeing such generous import quotas with the U.S. and Brazil they now control Russia’s poultry and pork market.

This year the Economy Ministry’s target is to join the World Trade Organization, which would further scrap tariffs protecting Russia’s uncompetitive farmers.

At a congress setting out official targets to 2010, Agriculture Minister Aleksey Gordeev sent this plea over Nabiullina’s head to her superior, First Deputy Prime Minister Aleksey Kudrin.

“Please, defend us from subsidised imports! As for joining the WTO, we’re against double standards, we must get the same protection as European Union farmers,” he said.

Sitting next to Gordeev, Kudrin appeared to swing his support behind the man tipped to be Russia’s next Deputy Premier.

“The current system of subsidies and insurance to farmers doesn’t work. We will develop a more effective support system, including fresh government loans,” he said.

The Deputy Agriculture Minister Andrey Slepnev admitted Russian farmers were incapable of defending themselves.

“The plan I’ve set out today involves greater state backing and blocking any increase in imports. Our agricultural sector is still very conservative, meaning we’re safe in a slowdown, but not so good in these times of economic growth,” he said.