Agri-industrial complex of Krasnodar region: successful experience in supporting investors Evgeny Gromyko Vice-Governor Krasnodar region Evgeny Gromyko Vice-Governor Krasnodar region

1. Main aspects of development of agri-industrial complex in Krasnodar region  Characteristics of the region;  Structure of agricultural land;  Main economic indicators;  Labor efficiency.

Krasnodar region– the largest agri- industrial region of Russia  The southernmost region of Russia;  Region with the most favorable weather conditions for agriculture in Russia;  3,8 mln. ha of plough land, 70% of which is black soil (rus. - chernozem);  The opportunity to grow more than 100 agronomic crops;  More than ha of pasture land for farm animals;  45% borders, going on the sea, and 9 non-freezing sea ports provide all year round external trade.

Structure of agricultural land of Krasnodar region  Total area of agricultural land of the region exceeds 4,2 mln. ha;  More than 88% is plough land, 10% of which is irrigated; gardens vineyardshay-fieldspasture land plough land In Thousand Ha

Main economic results of agricultural enterprises’ activity in the region  Gross revenue exceeds $3,5 billion per year;  Volume of net profit for the last 4 years has grown up on 26%;  Agri-industrial complex of the region has overcome the consequences of the crisis of 2009 year. In 2011 profitability will amount to more than 20% Profitability,%

Labor efficiency in agri-industrial complex of Krasnodar region  Labor efficiency in agricultural sector of Krasnodar region exceeds average Russian indicators 4 times.  Krasnodar region takes the 17th place in Europe for labor productivity in agricultural sector (Russia – 26 place). Labor efficiency in agricultural sector, thousand $/1 worker

2. Sector structure of agri-industrial complex of Krasnodar region  Horticulture;  Livestock breeding;  Food and processing industry;  Technical support of the sector.

2.1 Horticulture  Horticulture sector of the region on a national scale;  Structure of cultivated areas;  Volume and structure of horticulture products.

Horticulture sector of Krasnodar region on a national scale  100% tea and subtropical cultures ;  78% rice;  55% grape;  45% corn;  32% sugar beet;  18% sunflower;  16% grain.

Structure of cultivated areas, mln. ha  Total crop areas in Krasnodar region amount to more than 3,6 mln. ha;  40% - fall planting; 60% - spring planting.

Volume of production and structure of horticulture products  61% of production of agri-industrial complex of the region;  More than 15 mln. tonnes of products (without sugar beet);  51,5 billion roubles Gross Regional Product;

2.2 Livestock breeding  Total number and structure of livestock complex;  Structure of cattle stock;  Volume of production and structure of products of livestock sector.

Structure of total number of animals heads In 1990 – heads 1 mln. heads In 1990 – 2,9 mln. heads heads In 1990 – heads 22 mln. heads In 1990 – 32 mln. heads

Structure of cattle stock, %  Number of head of cattle stock exceeds heads;  Main share– dairy breeding;  More than heads – imported;  heads of pedigree bred heifers of dairy breed were imported from the USA for the last 4 years

Volume and structure of products of livestock sector  31% of products of agri-industrial complex;  More than 32,7 billion roubles Gross Regional Product;  More than 1,2 mln. tonnes of products.

2.3 Food and processing industry  Share of the sector on a national scale;  Main indicators of the sector.

Share of the sector on a national scale  Canned food on meat basis for babies – 85%  Rice cereal– 78%  Natural coffee- 61%  Sugar from sugar beet– 35%  Vegetable oil– 22%  Fruit and vegetable juice– 11,5%

Main indicators of the sector  Total volume of investment into the sector for the last 4 years – 1,25 bln. USD;  The volume of the shipped products has increased from 3 bln. USD to 5,4 bln. USD since 2007;  Large enterprises in the region: -14 meat processing factories -20 milk processing factories -16 sugar plants

2.4 Technical support of the sector  Quantity and structure of agricultural machinery;  Main countries – exporters of agricultural machinery to Krasnodar region;  Main companies-exporters from the USA.

Structure of agricultural machinery of Krasnodar region In the beginning of 2011 there were more than units of agricultural machinery in the organizations of the region Structure of agricultural machinery Share of machinery of import manufacture About 2,2 thousand of units - machinery of import manufacture

Structure of main exporters of agricultural machinery to Krasnodar region The USA– leader in export– more than 62%

Main companies-exporters from the USA

Agricultural machinery from the USA in Krasnodar region Другой текст (см русскую)

3. Investment into agri-industrial complex  Sources of financing of agri-industrial complex;  Main risks for investors;  Risk minimization in agri-undustrial complex.

Main sources of financing of agri-industrial complex Agri-industrial complex Bank loans Subsidies Tax concessions Own resourcesOutward investment Providing of food supply security Decrease in share of import on the market Quality products at available prices Leasing

Объём накопленных инвестиций в АПК Краснодарского края, млрд. долл.

Main risks for investors into agri-industrial complex Undeveloped social infrastructure of a village; Low level of awareness of workers in agri-industrial complex about advanced technologies of management Weak logistics in agricultural sector Change of tax legislation; Change of conditions and volumes of state support; Drawbacks of integration into the global economy (including entrance of the Russian Federation into the WTO) Decrease (loss) or increase (excess production) of harvest in connection with natural anomaly Change of market prices for the products; Increase of prime cost in connection with a rise in energy resources cost; Change of interest rates in financial institutions. Macro economic Climatic Social Political

Risk minimization in agri-industrial complex Effective agricultural sector Close cooperation with the regional authorities(ответственность властей) Usage of insurance instruments and participation in the programs of state support Usage of advanced high- efficiency technologies of management Development of informative- consulting services in agri- industrial complex of the region and service «one window» An application of modern technologies and observation of scientifically proven time periods of planting and crop rotation, diversification of cultures

4. State support of agri-industrial complex  Sources of state support of agri-industrial complex;  Main types and directions of providing state support;  Volume of financing activity-specific.

Sources of financing of state support measures in agri- industrial complex of Krasnodar region Resources of the Federal Budget Resources of the Regional Budget Resources for providing state support in agri-indutrial complex  State programme «Development of agri- industrial complex» till 2020 year;  Regional programme «Development of agricultural markets of raw material and food» till 2020 year;  Regional economically significant programmes;  Departmental regional programmes.

Main directions of state support and distribution of resources, % Compensation of a part of interest rates for short-termed loans; Compensation of a part of expenditures on interest payment for investment loans; Compensation of a part of expenditures on interest payment for the loans on development of small businesses Compensations for a purchase of mineral fertilizers and chemical products; Subsidies for fuel for agricultural works; Subsidies for the support of livestock ; Subsidies for a purchase of elite seeds. Federal target programme «Social development of a rural area»; Regional target programme «Development of dairy cattle»; Regional target programme «Development of meat cattle». Support during investment and loan Support of ongoing activities Support within the frames of target programmes

Volume of state support in the field of investment and loan granting, years, mln. $

Volume of state support of agri-industrial complex in the field of ongoing activities, years, mln. $

Volume of state support on target programmes, years, mln.$

5. Cooperation of Krasnodar region and the USA  Main ways of cooperation of Krasnodar region and the USA;  Future-oriented ways of cooperation

Main ways of cooperation of Krasnodar region and the USA  Purchase of agricultural machinery and equipment;  Purchase of pedigree cattle stock and poultry;  Purchase of components for feed manufacturing;  Organization of processing and other types of manufactures.

Future-oriented ways of cooperation today ?

Future-oriented ways of cooperation tomorrow 1. Using of financial institutions and instruments of the USA; 2. Creation of joint manufactures in agriculture sector, food and processing industries; 3. Increase in the volumes of purchase of pedigree animals and poultry; 4. Implementation of American experience and technologies in irrigation sector; 5. Technical support in certification and standartization of products and manufactures, energy-saving technologies and equipment. ! ! ! ! !

An investor for the construction of a sugar plant is demanded  Productivity of the plant – 16,6 thousand tonnes/24-hour period;  Volume of investment– 300 mln. USD;  Payback period– 4,5 years;  The area of a land plot– 97,7 ha;  Direct investment.

Thank you for your attention! Welcome to Krasnodar region!