Russia's agriculture on the verge of collapse as state support falters

General Director of Rusagro agricultural holding Maxim Basov says that the Russian agricultural sector has not received state subsidies regularly since Q3, 2015, which results in about RUB 1 billion in debt being accumulated, Vedomosti wrote.

First delays in the disbursement of the subsidies were reported in autumn 2015.

The main problem is related to the compensation of interest rates on short-term loans, according to Basov and a representative of Cherkizovo company.

A representative from the Russian Agriculture Ministry declined to comment on the amount and types of the subsidies that had not been paid to domestic agricultural producers in 2015.

"Demand is higher than the amount of the funds allocated by the state for these purposes," the representative said.

Delays in the disbursement of loans in 2016 are attributed to setting the limits of funding by the Finance Ministry. As of today, the Agriculture Ministry has distributed RUB 93 billion among the regions, according to the representative, with the ministry's annual budget totaling RUB 237 billion, which exists only "on paper" so far.

The official also declined to elaborate on how much money had actually been provided to the regions. In his words, the amount stood at RUB 15 billion.

The Finance Ministry did not respond to Vedomosti's request.

Irina Kharlamov, the CFO of the Russian leading agricultural holdings EkoNiva-APK, noted that the spring sowing campaign was in full swing in the country. The sooner agricultural producers receive funds, the easier they will buy seeds and chemical fertilizers, she says.

In view of increasing costs and unclear grain prices due to the duty on grain exports, the delays in the payment of subsidies considerably discourage producers, Director of SovEkon Andrey Sizov said, noting that as late as in April 2015, Russian President Vladimir Putin assured that "agriculture was a priority."