March 1, 2011

Russian Grain Union proposes scheme to ease export ban

The Russian Grain Union has proposed a mechanism of grain export quota trading, which could ease the country's export ban, stated Grain Union Vice President Alexander Korbut on Monday (Mar 1).

Russia imposed the ban on wheat, barley, rye, corn and flour exports on August 15 following the worst summer drought in decades, which killed a third of its crops. Initially, the ban was in force until December 2010, but it was later extended to June 30, 2011, flour exclusive.

Last week Prime Minister Vladimir Putin discussed the possibility of extending the ban beyond June 2011 and Agriculture Minister Elena Skrynnik then said cancellation of the ban can be discussed in October, when it is clear how much grain Russia had harvested. She said Russia must harvest no less than 85 million tonnes for the ban to be over.

The Russian Grain Union forecasts an 82-86-million-tonne harvest in 2011.

Korbut said the union, whose companies lose money and markets because of the ban, had suggested a mechanism of quotas based on demand and supply, domestic consumption and export opportunities to the Agriculture Ministry.

"If there is grain oversupply, the mechanism will be formal, but if there is a shortage on the market, it may work. In this case exports will not be suspended, but its volumes will be regulated in accordance with domestic demand," said Korbut.

"If the proposal is approved, exports may be opened earlier. Because it is a transparent regulating mechanism for the business and for the state," said Korbut.

The proposal envisages selling quotas at an exchange. "That means any exporter can come and buy a quota without the resale right and export the grain." he said.

Oleg Aksyonov, an official representative of the Agriculture Ministry, said the ministry had not yet approved the proposal.