October 13, 2008


World financial crisis hits Russia's farm sector

Russia's farm sector is starting to feel the effects of the financial crisis, which may jeopardise the development of the country's agricultural industry, according to Agriculture Minister Alexei Gordeyev.


The most vulnerable to the effects of the financial crisis are producers of grain, meat and dairy and products from them, said Gordeyev.


Russia currently has over 3,000 livestock facilities that are either under construction or being reconstructed, and it is vital that the projects are completed, Gordeyev stressed.


A host of banks are also modifying the terms of existing loan agreements, reviewing the rates and collateral with a view to increase them, Gordeyev said, adding that loan committees have stopped examining projects, including those that comprise the basis for modernising the farm sector.


There are also problems in receiving loans to replenish working capital, he said.


As for non-payment problems, Gordeyev said they start in the major, middle and small trading networks before traveling to the processors and food producers. Payment grace periods have been extended to 60-90 days.


Rosselkhozbank, the main lender for the agricultural sector, is operating normally but it is not enough as the bank accounts for 60 percent of loans provided under the national projects in agriculture, Gordeyev said.


Gordeyev plans to gather testimony from agricultural associations within the week and present it to the government.


"Agriculture has been called a 'black hole' for too long. Today it is absolutely clear that the financial market is the 'black hole," Gordeyev said.

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