December 7, 2010

Russia's grain export ban appears ineffective

The grain export ban imposed by the Russian Federation since August 15 of this year is not efficient, said Zhelko Bogetich, the main economist of the World Bank on Russia.

According to him, it will be difficult for Russia to isolate own domestic market from the foreign one at the price policy point of view. The report of the World Bank concerning Russian economics stated that the grain export ban is directed for isolation of Russia from the world prices, characterised by the high volatility, at the expense of grain export volumes decrease in 2010-2011 until already loaded volumes of three million tonnes, i.e., the export volumes will decrease by 12 million tonnes compared to the first forecast for the current year.

Nevertheless, taking into account the current estimations of grain productions, and also domestic consumption estimation at the level of 78 million tonnes, it is rather possible that Russia may become the netto-importer of grains, depending on the level of own stocks usage.

At the circumstances, the grain export ban will become rather inefficiency measure, directed for the domestic prices decrease, due to the fact, they still be impacted by the world prices level for grains, stated the World Bank.

According to the organisation, the ban may cause undesirable circumstances for Russia, negative impact on Russia in its aim to become one of the main world grain market participants, and also prices falsification and the negative reaction from the investments and production improvement point of view, stimulation of grain holding, while waiting for the ban cancellation.

According to Zh.Bogetich, for example, strategic grains stock usage could become the alternative variant of the problem solving, connected to the domestic inflation pressure and food safety. Besides, the bank recommends using world markets in order to make up the temporary grain deficit, and also to protect underprovided segment of the population at the expense of taxes and tariffs decrease for the main food commodities.