June 5, 2009

Black Sea countries will discuss creating a regional grain pool during the World Grain Forum in St. Petersburg in early June, and a senior Russia official has laid out some ideas.

Russia's First Deputy Prime Minister, Viktor Zubkov, said the grain pool would increase the Black Sea region's competitiveness due to the strong role that Black Sea countries play on the grain market.

The creation of a single infrastructural platform and a consolidated exchange rate on the market may become the logical steps and resulting in a stronger influence of the region on the world grain trade, Zubkov said.

A grain organisation made up of Russia, Ukraine and Kazakhstan would bear little resemblance to Opec since each of the three countries produce different types of grain which gives them different competitive advantage and their own market niche, said Alexander Korbut, vice president of the Russian Grain Union.

Korbut further explained that while Opec is responsible for setting prices and quota, a Black Sea grain organisation would serve as a way to coordinate infrastructure and safety standards.

Zubkov said Russia will focus more on the Asian market, where grain demand is growing, and may build a new export terminal to meet demand.

An important topic for the conference would be the creation of an international grain reserve to control grain balances and implement policies that encourage further cooperation to ensure that the food price crisis do not repeat, Zubkov said.

However, Zubkov admitted that Russia would have to employ some protectionist measures on food products to protect Russians from unemployment during the recession.