Russia is on the threshold of joining the WTO. Implications for national agriculture.

Negotiations on Russia’s joining the WTO have been conducted since 1993. At the moment they are at the final stage of the process. One of the most difficult issues that protracted the negotiating process remained commitments in agriculture.
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* Moscow - Moscow - Russian Federation

Dec. 27, 2011 - PRLog -- According to Natalya Yakovleva, president of AVIS Group Companies, with Russia’s joining the WTO, in the first place, the concept “innovation” to farmers will be not just a buzzword, but a real necessity without which the cost of agricultural output cannot be competitive compared to imported products. Consumers will find themselves in a very favorable situation when both national and import manufactures will fight for them.   People can afford more for the same budget, meat and poultry will be affordable. Before joining the WTO, agricultural prices were artificially constrained by quotas and import duties. These protective measures allowed agricultural producers to have profitability without necessity to implement western technologies; it will be impossible under the WTO conditions. Today if we look at prices (pork, meat) in Europe, America and Russia, we will find that domestic cost price is the same as European prices for meat products.
The necessity to follow requirements of the international market will make us refuse feed-antibiotic and electrical slaughter, automate labor-consuming sectors of production, be more careful in calculating of losses during transportation of live poultry and animals to the killing stand as well as draw attention to the method of gas killing that is getting more popular in the West and in some countries this is the only legal method. For the industry itself it will be a quantum leap and development, for Russia – more qualitative goods and low prices.
Russia does not have ready-made innovative solutions in many industries, including agriculture, but the West does, the expert says. American and European companies are ready (and this is a key word) to help Russia to implement technologies.  The only one way for Russian business in the WTO is to decrease the cost and improve quality.
Analysis of successful experience of the more developed markets has proved the fact that it is necessary to take the best technologies in the world and apply them.  If we look at the Chinese experience we can see a real hunt for the best technologies which are then simply copied.  
According to Natalya Yakovleva, economic safety of Russia is affected by strategic raw materials (that we mostly have) and technologies that allow to be competitive at least in domestic market.
Frequently the issue of implementation of innovative methods is not so much economical   as emotional and depends on internal readiness of agricultural specialists for new methods of work. It is very important to distinguish whether the equipment offered by foreign suppliers is actively bought in Europe. It is very important to keep up with trends, market expectations and consumer preferences. It is important not only to trust active managers of foreign companies but to visit popular expositions of agricultural technologies and equipment abroad. It would be relevant for financial structures to introduce a peer assessment of their projects to determinate competitive advantages (innovativeness or conformity to the level of modernization of western manufactures) of future agricultural manufactures, as the WTO will essentially correct expected return on projects and consequently, possibility of credit calculation.
It is important because very often innovative projects that facilitate progress compete with conservative methods which are kept as «time-proved». To accept something new is extremely difficult, it is a normal psychological process. In sub consciousness new and unknown things are always associated with risks, fear and failure to explore innovations and excessive responsibility for the outcome. Though, prices for «time-proved» technologies and innovations are very often in the same price category.  
According to Ivan Obolentsev, Chairman of the RUIE (the Russian union of industrialists and entrepreneurs) on agrarian issues and head of Optifood group of companies, coordinated terms of Russia’s joining the WTO do not worsen conditions of home producers. «We will not lose anything as long before joining the WTO we have voluntarily started to execute requirements that are stipulated by this organization», - the expert says. Thus he notices that nobody denies that the first stage will be difficult. In the short term, Russian agricultural sector will be affected mainly by lack of finances, low effectiveness of management and production.
«At the same time accession to the WTO will bring its advantages, - Obolentsev says. – It will be the strongest catalyst for improving agricultural competitiveness and allows Russia to become a significant exporter of agricultural goods. It is simply impossible to qualify for a major exporter and being out of the WTO at the same time.
The requirements of the WTO are complex and legally sophisticated, - notices the head of Commission on agricultural issues. On the one hand - they are difficult to master, but on the other – competent mastering, skillful distribution of support tools of the branch between "yellow" and "green" baskets – provides great opportunities. It is necessary to learn to use the WTO rules. We have to learn to use the WTO rules.
The expert notices that farmers should be informed about pros and cons of Russia's accession to the World Trade Organization. Conferences, seminars, information materials, should tell in simple and layman’s language about life in the WTO.  «It is not too late to organize an information campaign» - says Obolentsev.
«I think that most of major producers, except for corn growers, are not satisfied with the state support in respect of promotion of agricultural products to foreign markets and that protection of our home market against defective foreign production, - the expert continues. – In general promotion of production of agrarian and industrial complex in today’s crowded market — is very complicated problem. Customer requirements for quality of goods have changed and constantly changing.  We must not forget that foreign goods appear in our markets not only because it is frequently cheaper or better packed. There are efforts of certain foreign states on advancement of their goods in Russia, and our certain vulnerability from such onslaught. With joing the WTO competition of import products becomes even more rigid. We should be ready to provide necessary competitiveness, first of all, in the ratio «price — quality».
It is commonly known that «Optifood» has been engaged for a long time in manufacturing and sale of poultry meat. Volumes of output allow the company under certain conditions to enter overseas markets and compete successfully.  And support of the federal executive body is very necessary.
There is a whole list of agricultural goods in Russia which, frankly speaking, is afraid of entering foreign markets without powerful state support as with oil and gas. «For settlement of question it is necessary to carry out the following work, - says Obolentsev. – First of all, to choose a country or a region, to estimate what kind of agro production and what quality we can export there. Secondly, to study technical, technological and logistical conditions of supply, local prices and level of competition. Thirdly, the most important thing –by joint efforts the government and business should work out a package of measures, privileges and preferences that allow our production «to win» the country-importer. Such position is chosen by many developed agrarian countries».
Source:Natalya Yakovleva
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