August 30, 2010

Grain price increase unneeded in Russia

Prime Minister Vladimir Putin said Friday (Aug 27) that Russia has no grain shortage and prices have no need for sharp increases.

"First, (Russia) has large stockpiles and reserves of grain that have been accumulated since last year and 2008," Putin said.

He said the state owned a total of 9.5 million tonnes of grain, including three million tonnes of feed grain. Besides, Russia has amassed a so-called carry-over grain of 21 million tonnes, which belonged to economic entities and is being kept in the country, he said.

The prime minister also said that in addition to an expected grain harvest of 60 million tonnes, the total sum would surpass 90 million, while currently domestic grain demand stood at 77-78 million tonnes a year.

"It means that this year everything will be fine...In this context, there are simply no objective prerequisites for a sharp increase in prices," Putin said.

Putin defended the government's decision to temporarily suspend grain exports, citing uncertainties concerning Russia's winter crops this year and the harvest next year.

Regarding the price growth as "artificially" high, Putin also ordered relevant services, in particular the Federal Anti-Monopoly Service, to react strongly.

"I gave this instruction and hope that the Federal Anti-Monopoly Service will work actively in all regions," Putin said.

The Russian government recently imposed a temporary ban on grain exports. That was after summer heat and drought damaged the agricultural sector and lowered harvest forecasts to 60 million tonnes.