RUSSIA : ESTIMATES OF SUPPORT TO AGRICULTURE

 

DEFINITIONS AND SOURCES

GENERAL NOTES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country.

Market Price Support (MPS) and Consumer Support Estimate (CSE) by commodity in Tables 2 are calculated for the following commodities: wheat, maize, other grains (rye, barley, and oats), oilseeds (sunflower), sugar, milk, beef and veal, pigmeat, poultrymeat, and eggs. Definitions are provided only for basic data sets from which all the other data sets in these tables are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Level of production and consumption, producer prices and reference prices for all products, as well as budgetary payments are on a calendar year basis.

All values are expressed in new Russian rubles (RUB).

TOTAL ESTIMATE OF SUPPORT TO RUSSIAN AGRICULTURE (TABLE 1)

Definitions

I.     Total value of production (at farm gate): total agricultural production valued at farm gate prices, i.e., value (at farm gate) of all agricultural commodities produced in the country [1].

       1. Of which share of MPS commodities (%): share of commodities for which MPS is explicitly calculated (in Tables 2) in the total value of agricultural production.

II.   Total value of consumption (at farm gate): consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x 100].

III.1     Producer Support Estimate (PSE): associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

       A. Market Price Support (MPS): on quantities domestically produced (excluding for on-farm feed use -  excess feed cost) of all agricultural commodities, estimated by increasing the MPS estimated for the MPS commodities according to their share in the total value of production [(A.1) / (I.1)].

       1. Of which MPS commodities: sum of the MPS (net of price levies and excess feed cost) for the MPS commodities produced in the country as calculated in Tables 2.

       B. Payments based on output[1]

1. Based on unlimited output

Per tonne payments for marketed livestock products (since 1992) – provided for milk, cattle, pigs, sheep and lamb, poultry, eggs, pond fish, and miscellaneous livestock products; between 1992 and 1995 these payments were financed from the federal budget, and since 1996 – from the regional budgets.

* Per tonne subsidy for marketed wool (since 1992).

* Per tonne subsidy for marketed flax and hemp (since 1993).

Per tonne subsidy for grain delivered to state stocks under the Federal Law On Grain (1993-1994).

Per tonne subsidy for marketed potatoes (1996-2003).

Per tonne subsidy for marketed soybeans (1995-2000).

* Unspecified per tonne subsidies for crop products provided from regional budgets (2005).

* Per tonne compensation for damage from natural disasters (2005).

2. Based on limited output

       C. Payments based on area planted/animal numbers

1. Based on unlimited area planted/animal numbers

2. Based on limited area planted/animal numbers

       D. Payments based on historical entitlements

1. Based on historical plantings/animal numbers or production

2. Based on historical support programmes

       E. Payments based on input use

1. Based on use of variable inputs

Energy and fuel subsidies

* Energy subsidy for greenhouses (since 1992) – partial compensation of cost of natural gas and stove fuel, and electricity used in greenhouses.

Electricity price subsidy (1986-2003) – implicit subsidy arising from electricity price regulation, whereby prices charged to agricultural producers were set below those charged to industrial users. The total amount of subsidy is calculated as the difference between the electricity prices per kilowatt/hour charged to industrial and to agricultural users and multiplied by the amount of kilowatt/hours of electricity consumed by agricultural producers in a given year. Starting from 2003, this subsidy is not calculated, as electricity prices for agricultural producers exceeded the prices for industrial users.

Ad hoc fuel subsidy (1992-1993) – partial compensation of cost of fuel (gasoline and diesel fuel) and motor lubricants.

Fertiliser and chemicals subsidies

* Fertiliser and agricultural chemicals subsidy (since 1993) – partial compensation of cost of mineral fertilisers and agricultural chemicals. Between 1993 and 2001 this compensation applied both to mineral fertilisers and agricultural chemicals; and between 2002 and 2004 – to mineral fertilisers. Since 2005 this subsidy applies only to agricultural chemicals and is provided as part the federal programme “Enhancement of Soil Fertility and Rehabilitation of Agro-landscapes as Russia ’s National Heritage”

* Subsidy for seed treatment chemicals (2005) – partial compensation of cost of chemicals for seed treatment.

Variable input subsidies for crop production

* Elite seed subsidy (since 1993) – partial compensation of cost of purchased elite seeds, such as seeds of hybrid maize, fibre crops, permanent grass, potatoes, oilseeds, sugar beet, flax, vegetables and melons and other crops.

* Maintenance of permanent crop plantings (since 2003) – partial compensation of variable costs incurred in maintenance of permanent crop plantings.

* Soil improvement subsidy (since 1996) – partial compensation of variable costs incurred in soil improvement works; from 2002 iprovided as part the federal programme “Enhancement of Soil Fertility and Rehabilitation of Agro-landscapes as Russia’s National Heritage”.

* Subsidy for sugar beet production (2005) – partial compensation of unspecified variable input costs to sugar beet producers.

* Subsidy for hemp and flax production (2005) – partial compensation of unspecified variable input costs to hemp and flax producers.

* Subsidy for sowing works (2005) – partial compensation of unspecified input costs for spring sowing in 2005.

*Subsidy for returning non-utilised agricultural land into cultivation (2005) – partial compensation of variable costs incurred in soils re-cultivation works.

Seed subsidy (1994-1996) – partial compensation of cost of seeds for sowing.

Variable input subsidies for livestock production

* Mixed feed subsidy (since 1994) – partial compensation of cost of feeds purchased by large feedlots.

* Pedigree subsidy (since 1993) – includes the following components: (i) partial compensation of cost of purchased breeder animals, breeder eggs and chicks; (ii) fixed subsidy per head of high-productive pedigree animal kept on farms; (iii) fixed-rate compensation to breeder farms and artificial insemination stations per dose of semen sold.

* Deer farming subsidy (since 2001) – partial compensation of variable input costs to deer breeding farms in the North region.

* Apiculture, sericulture and fur animal breeding subsidy (2005) – partial compensation of variable input costs in apiculture, sericulture and fur animal breeding.

Unspecified variable input subsidies

* Unspecified variable input subsidies to livestock producers paid from regional budgets.

* Other unspecified variable input subsidies paid from regional budgets.

Ad hoc compensation for input price increase due to overall rise in administered prices (1992).

Short-term credit subsidies

* General interest rate subsidy (since 1992) – partial budgetary compensation of interest rate on short-term agricultural loans to agricultural producers; the compensation is set at two thirds of interest rate charged, but can not exceed two thirds of the Central Bank of Russia refinancing rate; until 2003 this subsidy was financed by the federal government, and starting from 2004 – by the regional governments, which receive federal subventions for that purpose, but are obliged to co-finance this subsidy from their own budgetary funds;

* Regional interest rate subsidies (2001-2004) – interest gain from reduced interest rate on loans provided from regional budgets for sowing, including purchase of fuel, seeds and other inputs; the interest gain is calculated as the difference between the average market interest rate for short-term credit and the preferential rate (equalling two thirds of the Central Bank of Russia refinancing rate), multiplied by the estimated outstanding credit in a given year.

Debt restructuring

Implicit transfer to producers arising from restructuring of overdue debt on state directed agricultural loans issued in 1992-1994 (a restructuring scheme implemented in 1992-2002) – implicit transfer is estimated as the sum of the: (i) reduction in interest rate payments on restructured debt, estimated as the difference between the average market interest rate on short-term credit and the preferential rate set according to the conditions of the restructuring, multiplied by the estimated outstanding debt in a given year; (ii) written off part of the main debt, written off penalties and overdue interest.

Insurance subsidies

* Crop insurance subsidy (since 1993) – 50-% compensation of insurance payments to producers that have concluded crop insurance contracts with government-listed insurance companies.

2. Based on use of on-farm services

* Feed and seed transportation subsidy (since 1993) – partial compensation of costs of transportation of feed and seeds to farms located in areas affected by natural disasters;

* Anti-epizootic services (since 1986) – full or partial compensation of anti-epizootic services on farms, such as examinations, vaccinations and other activities;

* Regional subsidies to agricultural producers for transportation (2005);

* Regional subsidies for artificial insemination (2005);

Land amelioration subsidy (1986-1997) – financing of contract works and services related to amelioration of agricultural land.

Rural aviation subsidy (1993-1994) – compensation of cost of services of rural aviation;

3. Based on use of fixed inputs

* Public capital grants for construction and renovation of production structures in agricultural enterprises (former collective and state farms) (since 1986).

* Machinery leasing subsidy (since 1994) – interest gain from reduced leasing rate for machinery under the “State Machinery Leasing Programme”. This interest gain is estimated as the difference between the average market interest rate and leasing rates charged by the state Rosagroleaseaning company, multiplied by the estimated value of outstanding leasing credit.

* Subsidy for purchase of new machinery, equipment and other components of progressive technologies (2005);

Machinery and equipment subsidy (1992) – ad hoc price subsidy for purchase of new machinery and equipment to agricultural producers who deliver to state purchasing agencies in excess of the obligatory targets.

Preferential investment loans for setting-up private family farms (1991-1995).

Public capital grants for construction and reconstruction of poultry and pig complexes (2003);

       F. Payments based on input constraints

      1.  Based on constraints on variable inputs

      2.  Based on constraints on fixed inputs

      3.  Based on constraints on a set of inputs

       G. Payments based on overall farming income

       1.  Based on farm income level

* Restructuring of overdue debt on federal taxes (since 1992) – implicit transfer to producers arising from restructuring of overdue debt on federal taxes and contributions to State Pension and Social Security Systems carried out in 1998, 2001, 2002 and 2004. The implicit transfer is estimated as the sum of the: (i) interest rate gain on restructured debt, estimated as the difference between the average market interest rate on short-term credit and the preferential interest rate set according to the conditions of the restructuring, multiplied by the estimated outstanding restructured debt in a given year; (ii) written off part of the main debt, written off penalties and overdue interest.

Ad hoc payment to unprofitable farms to compensate for the general increase in administered prices in 1991.

2.  Based on established minimum income

       H. Miscellaneous payments

1.  National payments

* Unspecified budgetary disbursement to agricultural producers.

2.  Sub-national payments

* Unspecified budgetary disbursement to agricultural producers from regional budgets;

* Land re-registration assistance (2005) – partial compensation of costs involved in official re-registration of real estate rights, including land rights, according to the Land Code adopted in 2003; assistance provided by regional administrations.

III.2     Percentage PSE [100*(III.1)/((I)+(B)+(C)+(D)+(E)+(F)+(G)+(H))]

III.3     Producer NPC For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Tables 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4     Producer NAC [1+(III.2)/(100-(III.2))]

IV.  General Services Support Estimate (GSSE): total budgetary expenditure to support general services provided to agriculture [Sum (I to O)].

I.      Research and development

* Public financing of agricultural research institutes and the Russian Agricultural Academy.

       J.   Agricultural schools (including academies, institutes)

* Public financing of agricultural education and training institutions.

       K. Inspection services

* Public financing of the Federal Veterinary and Phytosanitary Inspection Service and affiliated network.

* Public financing of Seed, Plant Protection and Land Inspection.

* Public financing of Grain Inspection (up to 2004); from 2005 the functions of the Grain Inspection are assumed by the Federal Veterinary and Phytosanitary Inspection Service.

       L. Infrastructure

* Public capital grants for agricultural and rural infrastructure (since 1986).

* Land amelioration, reconstruction of irrigation and drainage systems (since 2001).

* Public financing of infrastructure works under the programme “Enhancement of Soil Fertility and Rehabilitation of Agro-landscapes as Russia ’s National Heritage” (since 2002) – investments in construction of irrigation and drainage systems, central rural water supply systems and hydro-control structures.

* Public financing of environmental land conservation works in rural areas (since 2001);

* Creation of agricultural land cadastre (since 1997).

Repair and maintenance of common infrastructure (1986-2000).

Public investments in construction of grain terminals in ports (2003).

       M.       Marketing and promotion

* Organisation of agricultural fairs, exhibitions, conferences and training (2005).

* Improvement of agricultural marketing (2005).

* Promotion of agricultural products, including creation of trade marks, registration and advertising (2005).

* Development of information services (2005).

Support for development of supply and marketing cooperatives for family farmers; publications on agricultural co-operation; and miscellaneous expenditures related to family farming (1991-1997).

Development of information systems under the World bank ARIS and LARIS projects (1994-1999).

       N.  Public stockholding

* Formation and maintenance of Grain Reserve Fund (since 2001) – regional emergency grain reserves.

* Maintenance of state agro-food reserves (2005).

       O.  Miscellaneous

* Formation of Federal Seed Reserve.

* Formation of Federal Reserve of Veterinary Medicines.

* Formation of Federal Reserve of Crop Protection Chemicals.

* Formation of Federal Reserve of Machinery Spare Parts and Other Agricultural Inputs.

* Subsidy to waste disposal plants.

* Unspecified budgetary allocations for general services from federal and regional budgets.

Settlement subsidy for family farms (1992-1997).

       GSSE as a share of TSE

V.1  Consumer Support Estimate (CSE): associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed – excess feed costs [(P) + (Q) + (R) + (S); when negative, the amounts represent an implicit tax on consumer].

       P. Transfers to producers from consumers: associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

       Q. Other transfers from consumers: transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

       R. Transfers to consumers from taxpayers

Price difference compensation to processors (1986-1991) – direct budgetary payments to processors to compensate for the difference between high administered prices paid by processors to agricultural producers and low administered prices received by processors; the compensation was applied to the majority of livestock commodities, grains, sugar beet, oilseeds and potatoes

Food price subsidies (1992-1994) – direct payments to processors and retailers to subsidise consumer food prices; in 1992 applied to meat, milk, bread and bakery products, in 1993-1994 – to milk, bread and bakery products.

       S. Excess Feed Cost: associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Tables 2.

V.2  Percentage CSE (V.1)/[(II)-(R)]

V.3  Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Tables 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4  Consumer NAC 1-XIII.2/(100+XIII.2)

VI.  Total Support Estimate [(T)+(U)+(V)] or [(III.1)+(IV)+(R)]

       T. Transfers from consumers -[(P)+(Q)]

       U. Transfers from taxpayers [(III.1)+(P)+(IV)+(R)]

       V. Budget revenues [(Q)]