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31 Mar, 2009 05:53

Russian agriculture looks for more state support

Russia's farming has seen a decade of strong growth, despite subsidy levels that are far below most Eastern European competitors. Now the agricultural sector is hoping for greater state support.

Record high harvests of wheat and rice. Last year agricultural production grew at a rate of 10%. Still it represents only 4 % of Russia's GDP – compared with up to 14% in developed countries. One reason is subsidies according to First Deputy Prime Minister Viktor Zubkov.

“Everybody just says give us more, more money, but then we count and see – the number of cattle livestock has shrunk. This year for agriculture we allocated $2.5 billion from our budget. Plus over $26 billion worth of loans. All together it’s almost $30 billion- enough to achieve great results!”

The government says, this year it will subsidize up to 100% of interest on loans to meat producers. Still, Sergey Lisovsky, from the Agroindustrial complex Mosselprom says – Russia’s state funding of the sector is one of the smallest in the world.

“A Russian Village gets just 1% from the budget for agricultural support. While EU direct investment into the sector amounts to 40% of budget spending, plus each country adds their own 20-30%. We get just the bare minimum and we even manage to compete.”

Producers say, to support the sector the country’s government should copy measures taken by the European Union. Some of them – like supplying fuel to the sector at discounted prices – will be implemented this year.