July 16, 2010

Russia's grain prices may escalate this year

Grain prices in Russia may rise 50% or even double on-year because of the smaller harvest amid the ongoing drought, according to Pavel Skurikhin, president of Russia's National Grain Producer Union.

It would not be profitable to sell third-class grain at a price lower than RUB5,500 (US$180) per tonne this year, he said. Last year, prices of grain varied from RUB2,400 (US$78) per tonne in Siberia to RUB3,300 (US$108) per tonne in southern Russia.

A state of emergency has been declared in 17 Russian regions because of drought, according to the Agriculture Ministry. However, the drought is not expected to cause an increase in bread prices, Skurikhin said.

Speaking about the ongoing drought in Russian regions, Agriculture Minister Yelena Skrynnik said at a meeting on Thursday (Jul 15) that providing financial support to agricultural producers in the form of loan restructuring was a priority in the current conditions. She also said 6,700 agricultural producers were participating in the government's financial bailout programme at the moment.

The government may provide loans worth about RUB40 billion (US$1.3 billion) to the regions affected by the ongoing drought, Skrynnik said.