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The agrarian sector has become attractive for investors
"The agrarian sector has become attractive for investors," Alexei Gordeyev, Russian agriculture minister, said Wednesday at a plenary session of the State Duma (lower house). In his words, investment in the fixed capital of agriculture increased 40% in the past five years to 115 billion rubles in 2003. The minister said that the number of loss-making farms had reduced from 88% to 46%. In 2004, cultivated farmlands were increased for the first time, Mr. Gordeyev said. In his opinion, positive changes are in particular due to the effect of the 1998 crisis when inefficient subsidies were abolished at the federal level, thereby raising basic subsidies, in particular, for elite seed farming (over four-fold) and for stockbreeding (more than doubled). On January 1, 2004 the single tax on agricultural enterprises superseded four taxes and improved the situation. Today over 50% of agricultural enterprises have adopted this system, said Mr. Gordeyev. He also noted that the total volume of the gross agricultural produce had increased 1.5% this year. Now agriculture accounts for 8.5% of GDP. "Agriculture will become profitable this year," said Alexei Gordeyev. This year, he continued, we have managed to harvest 76 million metric tons of grain crops, which is nine million metric tons more than in 2003. Mr. Gordeyev also believes that the crop harvest will meet domestic needs and provide livestock farmers with enough forage. "Eight million metric tons of grain will be exported," he added. The minister also noted that meat and poultry production increased 15% this year and 34% in the past two years. The minister also expressed concern over the decreasing number of cattle, above all, cows. In his opinion, this is due to the low purchase prices for milk. However, the minister said, on the whole, the financial position of agricultural enterprises remains unstable. In the past 14 years, the growth of prices for industrial products exceeded that for agricultural products. For example, there were 0.5 metric tons of grain per ton of diesel fuel in 1990, and in 2004, 3.5 metric tons of grain per the same amount of fuel, said Mr. Gordeyev. In addition, agricultural equipment is 65-70% worn out. Alexei Gordeyev noted that rural unemployment amounted to 11%. Forty-five percent of the unemployed are young people, who leave the villages, and therefore, agricultural workers are ageing. Agricultural wages are the lowest as compared to other sectors, said Mr. Gordeyev. They amount to 39% of average wages in the country, added the minister.
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