At the Sochi International Investment Forum 2016 Ivan Belozercev told the “Interfaks” about the new development ways of traditionally strong agriculture in the Penza Region, about the examples of import phase-out in the production sector and about the budget planning.

- Ivan Aleksandrovich, what do you think about the Forum in general and how useful is it for the Penza Region?

-  Any Forum is always useful for any region and any governor, because it gives you an opportunity to see new investment projects and decisions, implemented in other subjects of the Russian Federation. There is a possibility to exchange positive experiences and share successful examples with each other. Certainly, the speech of the chairmen of the Government of the Russian Federation is important, where he draws attention to the regional development and to the decisions the Government is taking and planning in this area. 

I’ve already said, that our regional problems are enwrapping, because they need to be solved every day, this includes roads construction and repair, public services, central heating, providing available health system – everything that’s important for people. However, it’s also important for the Region to have a developing strategy for industrial and agricultural businesses, because this means creating new jobs and products. Bottom-line is: regional development is the development of Russia in general. 

- How is 2016 treating the Penza Region so far, on the investment side?

- In general 2016 hasn’t been bad. We are very active in the agricultural sector, including working with such big investors as “DAMATE” and “Rusmolco”. For example, last Friday Legislative Assembly of the Penza Region approved the investment agreement with “DAMATE” on expanding turkey farms to 100 thousand tons a year. The first line of this project with the capacity of 60 thousand tons a year has already been started, and the products are exported to the other regions of Russia. I would like to point out that on this project the Penza Region provides the investor with the tax benefit, implementing the rate of 1,1% on the property tax. Of cause, the money from the Penza Region’s budget is also spent on developing the utility infrastructure: roads, gas, and energy.  We are covering these expenses, because we understand, that this is where new workplaces are created. Besides, it is big production volumes, food supply security and authority of the Penza Region.

The company “Mayak” (paper producer) signed an investment agreement with Technocell Dekor Gmbh (Germany). It has to do with an installation of an additional machine for producing nonwoven tape used in the furniture trade. The investment in the project is 62 million dollars.  LLc “Shemysheysky production plant” together with the Chinese investor are building a plant for growing mushrooms. We are already mounting the plant and plan to start production by the end of the year. The investment in the project is 180 million rubles.

There is a young company In the Penza Region called “Stankmashstroy”, which at the moment negotiating further development of the machine tool industry, involving foreign investor to organize co-production of high class accuracy machine tools. In prospect, it is planned to sell the machine tools not only on the domestic market but also abroad.

- So it is the topic of import phase-out?

- Yes. And production localization has already been achieved on the Russian Federation territory at 55% on the cost and 42% on the list of used parts and units, including that machine beds are casted in Penza.

Or, for example, “Precision instruments plant” producing resistors and other components for nuclear ice-breakers. Together with a German company the business, which was literally “lying on its side”, has been rebuilt. In two years they have created a joint venture that works for the railroad industry and for the nuclear shipbuilding. Now this plant makes products, which before were produced only abroad. This is also big investments, the company is developing.

So, if you don’t sit on your hands, if you look for an investor and use the support, which the Government of the Russian Federation gives you, then you get the results. If we look at the Penza Region in general, we can follow this development trend in both – agricultural and industrial sectors.

- What is your prognosis on the volume of the industrial production this year?

- We’re going with a plus. If in 2015 comparing to 2014 industrial production in the Penza Region came to 106,3%, then in 8 months of the current year this number has already reached 116,4%. This allows us to expect 14-16% growth by the end of 2016. This is a significant growth.

The tax revenue received in the last 8 months is 3 billion rubles more than the previous year, and for 9 months it’s approximately 3,3 billion rubles more. This is a great help, considering that the Penza Region is a beneficiary region. Besides, additional revenue shows that the companies included in the State Corporation "RosTech" and the companies of MIC are working very efficient, increasing the amount of workplaces and taking part in import substitution. For example, companies such as “Start” (a member of Rosatom), “Tyazhpromarmatura”, “Rubin”, “Radiozavod” and many others are working with a plus.

The absolute majority of the processing businesses in the agricultural sector are also working with a plus. Moreover, industrial production growth is at 10% or higher. Now local agricultural manufacturers have joined the federal commercial network; they increase production rate and expend their line of goods.  Today there is such a good business competition inside Russia.

- You’ve mentioned major projects of agroholdings. How is the projects execution of cherkizivo group and Rusmolco going? Are there any changes in terms or parameters of the projects?

-  Since 2012 and up until today “Rusmolco” has invested more than 10 billion rubles in the development of the Penza Region. The Agroholding has built a dairy farm for 4.6 thousand heads and the production capacity of 120 ton of milk a day or 46 thousand ton of milk a year. It is a big volume, the investments in this project came up to 2.8 billion rubles. The second step of the “calves village” construction in the Kuznetsk and Nizhniy Lomov Regions is almost finished - this is young stock reproduction. If previously we bought calves in Europe and paid in dollars, today herd reproduction is happening here. The calves’ facilities for 2.4 thousand heads were already built, and this year the second line of the project for 2.5 thousand heads will be finished as well. It will be 5.2 heads every year total. This is a major project with 700 million rubles of investments; this is high technology and new workplaces. 

Also the company is building a seed processing plant in the Bashmakovo Region with the capacity of 10 ton an hour. We will be able to cover the farm needs not only in the Penza Region, but in the other regions as well; the volume of imported seeds will decrease significantly.  Moreover, Rusmolco is finishing the construction of an elevator with the capacity of 100 thousand ton of grain. The project cost - 1.6 billion rubles.

This year a serious groundwork has been done in a number of investment projects. In particular, “cherkisovo” group is executing a project in the Penza Region on building seven fattening farms with the capacity of 280 thousand pigs a year; the investments volume is 2.58 billion rubles.  Today they have already finished tying sights to the land, and the project works are being held. At the end of the year the company plans to apply for signing an investment agreement with the Penza Region government, and in April of 2017 begin the construction works.

Traditionally 80% of all investments in the regional agroindustrial complex go to the animal husbandry; however the Region has taken the leading position in the Volga Federal District on growth rate in both - husbandry and agriculture. If last year we harvested 1.75 million tons of grain, this year we are already going for 2 million tons. Such a serious growth. But we have been working on it: seeds, technology and collaboration with the farm managers. Farmers support is held from the federal and regional budgets. And we have had a very good result. This year the grains yield is 29 centers per hectare.  After we harvest corn it will be even more. For the Penza Region it’s a great yield, and probably we’ve never had such a yield in time of the Region existence. Why it went up so much? Even though due to the rains the sowing period was extended by 60 days, we still fulfilled the task, because we used modern technologies. Today you need technologies, modern approach, and financial support - and in this case you can reach a good result.

Those who work in the agricultural business understand that you can make good money if you invest in the development, and now there is a big demand for the land in the Region. Last year additional 112 thousand hectares of land were brought into cultivation. We still have 341 thousand hectares of uncultivated land in the Penza Region, but clearing it out is very costly. Pines and fir trees have already grown in the former fields. This year’s goal was to bring 80 thousand hectares into use, 67 are already done, by the end of the year we will complete all of what’s been planned. In the next two years we plan to bring back more than 160 thousand hectares into cultivation.

- And how much land is in use right now? 

- 1.23 million hectares of land is in cultivation. 720 thousand hectares are used for grains, the rest for beets, potatoes, cabbage, sunflower and other crops.

- So in the next 2 years more than 10% of the farm fields are to be added?

- Yes, yes. There is a possibility to do it. We are asking and imposing the responsibility for it upon big holdings involved in the agriculture and animal husbandry. They need to invest in that land, to free it for plowing. They are doing it. Surely, ideal is when land is clear. Just go in and work. We are working on it and we have the results. Today we are the first in the Volga Federal District on grains and pulse crops. 

- How is progress in the budget formation for next year? Are you planning to keep the development budget?

- We are glad that the industrial manufacturers became more active and that the taxable base is growing. This gives us an understanding that agriculture is capable of serious growth, which also means higher tax revenue. We are forming next year’s budget considering the expenses of agricultural development. This year our agricultural producers have received 3.5 billion rubles out of the budget resources including federal, comparing to last year’s 3.2 billion rubles.

We are planning to create a development fund for industrial companies – for next year 150 million rubles will be budgeted for this purpose. This year we’ve increased a small business’s fund, next year we planning to reserve it at least at the same amount of money, maybe even more.

This year we’ve reconstructed 400 km of the roads in the Penza Region, and budgeted 3.8 billion rubles for this purpose. Almost 95% of that money has already been spent. We are planning to keep the same budgetary funding of this sphere next year.

In addition all of the social laws and programs existing in the previous years will be kept this year as well. We understand, it’s important for people, and we can’t be without it so far. Although last night one of the experts said that we need to decide either we solve social issues or we invest in the development. It’s a question up for discussion – it has been coming up long since. But today we need to support people in a difficult life situation, we need to support young people in the matter of house-buying, we need to support multiple children families. Such programs need to work. Everything is balanced and correlated.