December 4, 2012

Russia reveals commodity exchange for meat and dairy trade

Russia's Ministry of Agriculture has revealed the development of a commodity exchange for the trading of the country's key agricultural products like meat, milk and sugar.

"The financial instruments [of the commodity exchange] could help us to reduce the volatility of prices and would create transparent pricing on the market. In the first stage - during the first two-three years - we are planning to introduce tools such as double warehouse receipts and deliverable contracts. The use of futures and options on our stock exchange will also appear more," said acting director of the Department of Economics and Analysis of the Ministry of Agriculture, Victoria Vlasova.

However, she added that producers would not be forced to go to the commodity exchange. "We intend to implement these mechanisms without any revolutions, gradually, without any force," she said.

Russia's Anti-Monopoly Service has already supported the project and announced that it is preparing proposals for the implementation of exchange mechanisms in the market. Sugar producers have already spoken out against the measure, but milk and meat manufacturers have in general agreed that the commodity exchanges would be useful, noting that they would reduce prices and improve the quality control of meat and mild products.