In order to stem rising grain prices and stabilise the domestic food market, the Russian government has launched intervention on the grain market.

"I have made a decision to start grain interventions to settle the general balance of grain crops in the market. I am instructing the agriculture minister to prepare proposals on the volume of interventions and the target regions," Prime Minister Dmitry Medvedev said on Thursday (Oct 4).

Russian Grain Union President Arkady Zlochevsky said in August domestic bread prices may rise 5-10% in the fall in the wake of rising grain prices driven by drought in some of Russian regions.

Russia has cut its harvest forecast for this year from 80-85 million tonnes to no more than 75 million tonnes of grain. Russia harvested 94.2 million tonnes of grain in 2011.