Russia, seeking new ways to export its growing supplies of grain, is considering building new terminals on Ukraine's Black Sea coast and cutting rail tariffs via its ex-Soviet neighbour to become more competitive.

 

United Grain Company, the state-run trader formed last year, is also in talks to sell 100,000 tonnes of wheat and flour to Nicaragua after agreeing on the sale of 300,000 tonnes of wheat to Bangladesh, the company's chief executive said on Monday (Apr 19).

 

Russia's ambitious plan to double its grain exports within 15 years is constrained by a lack of rail and port capacity. Now that relations with Kiev have warmed, Moscow wants to use Ukrainian ports on the Black Sea to ship expanding grain supplies.

 

"We are ready to examine the possibility of jointly building terminals on the Black Sea," Ukrainian Agriculture Minister Mykola Prysyazhnyuk said. "We will also examine the possibility of joint railway tariffs in order to cut the cost of transporting grain, so as to be competitive on external markets."

 

Russia expects another bumper grain crop of 97 million tonnes this year, which its Agriculture Ministry said will yield an exportable surplus of 20 million tonnes. This is in addition to 10 million tonnes of government grain supplies. The Russian ministry said on Friday (Apr 16) that the country was prepared to invest in upgrades to its ex-Soviet neighbour's infrastructure.

 

Prysyazhnyuk said the idea of creating a grain trading bloc among Black Sea exporting countries had not been shelved, though it would require additional examination.

 

"We have agreed to continue studying this initiative," he said. "Some ideas, even good ones, require examination, taking into account the domestic potential and their consequences for the external market."

 

Russian Agriculture Minister Skrynnik last year advanced the idea of creating a Black Sea trade bloc with Ukraine and Kazakhstan, which she said would allow its members to lower the volatility of the world grain market and its dependence on speculative factors.

 

The idea was met immediately with criticism from the West and there has been little progress in implementing it since.