September 16, 2016 / 2:36 PM / a year ago

Russia's Rusagro may drop greenhouse project if subsidies cut

MOSCOW (Reuters) - Russian farming conglomerate Rusagro could drop plans to launch a $300 million greenhouse business if the government shrinks subsidies, the firm’s chief executive told Reuters on Friday.

Maxim Basov, Rusagro Chief Executive Officer, attends an interview at the Reuters Russia Investment summit in Moscow, Russia, September 16, 2016. REUTERS/Maxim Zmeyev

Rusagro, a major pork, fats and sugar producer, this year unveiled plans for a greenhouse project in the central Tambov region, with the aim of producing vegetables even during Russia’s harsh winters, so reducing dependence on imported food.

Vegetable production has drawn more attention from agricultural producers in Russia after Moscow banned Western imports in 2014 in retaliation for international sanctions over its role in the Ukraine crisis.

“There are projects which we will implement in any case - with or without state support. But not greenhouses,” Rusagro Chief Executive Maxim Basov said in an interview at the Reuters Russia Investment Summit.

The government, struggling to bridge budget gaps due to weak oil prices, has yet to determine how much cash it will make available for subsidizing greenhouse projects.

Maxim Basov, Rusagro Chief Executive Officer, attends an interview at the Reuters Russia Investment summit in Moscow, Russia, September 16, 2016. REUTERS/Maxim Zmeyev

Amid the uncertainty, which Basov said could last through spring next year, Rusagro has delayed greenhouse construction, having previously planned to invest several billion rubles in 2016, including some of the proceeds from its April share sale.

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“We need to understand that there is this money in the budget and that we will get it. We won’t start this project before we get a decision from an Agriculture Ministry commission about subsidies,” he said.

“We first have to see how much money is allotted to agriculture and how much of this to new investment projects. The situation is difficult, there is a tussle going on there.”

Rusagro said earlier it could invest $1 billion in vegetable production over the next five to six years.

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Reporting by Olga Popova, Maria Kiselyova, Polina Devitt, Christian Lowe and Olga Sichkar; Editing by Dale Hudson

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