Blog: Dean BestRussia sets out plans to invest in agriculture

Dean Best | 9 September 2014

Medvedev wants Russia to produce more of the food it eats

Medvedev wants Russia to produce more of the food it eats

Dmitry Medvedev has announced Moscow's plans to invest "tens of billions of roubles" into the country's agriculture sector, a move that would appear a way to alleviate the impact within Russia of its food embargo.

The Russian Prime Minister told business daily Vedomosti Moscow had started moves to help build production in a number of areas.

"We have launched a programme to support agriculture sectors that are poorly developed: fish breeding, hothouse vegetable growing, horticulture and some parts of cattle breeding that demand support - beef cattle breeding and dairy cattle husbandry," Medvedev said.

The Russian PM would not disclose how much Moscow was spending on the initiatives but did say the "talk is about tens of billions of roubles".

When he announced the full details of Russia's ban on food imports from markets including the EU and the US last month, Medvedev was keen to point out the move presented an opportunity for the country's agri-food sector.

However, industry watchers warned investment was needed to fill the gaps in supply, or Russian consumers could face empty shelves at times and higher prices. In the month since the embargo was introduced, there have been reports of prices for some products, including meat, rising in parts of Russia.

Three weeks ago, Moscow eased the restrictions, allowing in salmon and trout hatchlings, potato and onion seeds, plus sugar maize hybrid and peas for planting.

However, at the time, Russian Agriculture Minister Nikolai Fyodorov outlined the possible cost to Moscow of the embargo, claiming the ban could cost the Russian government "hundreds of billions of roubles in subsidies".

He said Russia has set aside RUB50bn (US$1.39bn) for this year to keep shelves stocked with "EU-type products".

"We are trying to prove that it [the 50bn rouble subsidy] needs to be somewhat higher," he told the Rossiya 24 TV channel. "The volume of additional support needed to substitute for the embargoed items in full – if we are talking about short-term, through the end of the year – is tens of billions of roubles. Next year and in the subsequent years, you could say that this sum will be measured in the hundreds of billions of roubles."

A fortnight ago, the Russian government ordered the Finance Ministry and the Agriculture Ministry to include developing the country's agriculture sector among the priorities for public investment, the Russian ITAR-TASS news agency has reported.

Medvedev also reiterated to the Vedomosti newspaper Russia's insistence it would be prepared to remove the restrictions if sanctions on the country are lifted.

"If our partners come to senses and this senseless sanctions story ends, we will react accordingly," he said.

The situation there is unclear. The EU has approved a new wave of sanctions but whether they are implemented depends on whether talks over eastern Ukraine show some progress.

However, in his interview with Vedomosti, Medvedev indicated Russia had a longer-term hope that domestic producers would be able to grow their market share, whether the embargo is in place or not.

"We should feed ourselves and others," he insisted. "Why should we constantly eat foreign fruits?"

[The full interview can be found here in Russian].

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