November 28, 2008
Russia to spend US$365.6 million on grain export subsidies
Russia plans to spend US$365.6 million on grain export subsidies to support producers who are incurring losses due to low world prices, First Deputy Prime Minister Viktor Zubkov said on Thursday (Nov 27, 2008).
Zubkov told a government meeting the subsidies were needed to support farmers as the cost of producing grain was in some cases RUB1,400 (USS$51.19) a tonne more expensive than the price at which it can be exported.
Zubkov said the government planned to buy 20 million tonnes of grain from this year's crop, nearly one-fifth of the total harvest. Half of this would be retained as intervention stocks to keep prices stable and the other 10 million tonnes would be exported, he said.
There is a surplus of 20 million tonnes of grain on the market and the government will have to buy this surplus, Zubkov added.
Russia officially estimates to have harvested over 100 million tonnes of grain this year, the biggest crop in the last 15 years. The government has already bought around 2 million tonnes of grain at intervention tenders.
Russian Grain Union President Arkady Zlochevsky told Reuters on Nov 13 his lobby had requested the export subsidies to help the agricultural sector survive the financial crisis.
He said exports in the second half of the current crop year, which ends on June 30, 2009, would depend on support measures taken by the government.
Russia officially expects to export 20-25 million tonnes of grain this season, Agriculture Minister Alexei Gordeyev has said.
US$1 = RUB27.397 (Nov 28)