30 May 2011, 17:36

Russia to lift grain export embargo

Russia to lift grain export embargo
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As of July 1, Russia will lift from July 1 a grain export embargo it imposed in the wake of last year’s severe drought, Prime Minister Vladimir Putin said. According to the government, the prospects of this year’s harvest are more than optimistic and the surplus will be enough not only to ensure domestic grain demand.

As of July 1, Russia will lift from July 1 a grain export embargo it imposed in the wake of last year’s severe drought, Prime Minister Vladimir Putin said. According to the government, the prospects of this year’s harvest are more than optimistic and the surplus will be enough not only to ensure domestic grain demand.  Experts say that the resumption of grain exports by Russia will stabilize the global food market making grain prices decline by 15%.

The officials of the Economic Development Ministry and the traders agree that it is pointless to prolong the grain export embargo. According to a recent forecast, the wheat harvest will exceed the planned 70 million tons and will fully cover domestic needs, Andrei Sizov head of the Sovecon analytical center says:

"It is logical to resume grain exports. The new harvest is expected at 80-85 million tons and the domestic needs amount to 68 million tons. Besides that Russia has large grain reserves. Considering this, Russia can export about 15 million tons of grain."

The grain export embargo was imposed in the wake of last year’s severe drought which eliminated 1/3 of the harvest. It was decided to stop exporting grain to avoid the deficit and drastic price hikes on the domestic market. But now the prolongation of the embargo may affect domestic producers, the expert stresses:

"Now the domestic grain prices are low and if we don’t resume exports they will drop further and this will have a negative effect on the sowing campaign. I remind you that most of the grain crops we have are winter crops and the decision on their sowing should be taken in the coming months."

The lifting of the embargo will also have a positive effect on the global market where grain prices are too high now. A ton of wheat at the global grain exchange exceeds $330. Experts believe that Russia’s return to the global grain market will lead to stabilization of the global grain prices.

The resumption of grain exports will also restore Russia’s position as one of the world’s leading exporters. But in order to use this potential in full the Russian government should optimize the situation in the domestic agricultural sector, the head of the agricultural department of the Institute of the Economy of the Russian Academy of Sciences Boris Frumkin says:

"Russia’s climate and environment is not the best for agriculture. It is a cold country and soils are nit always rich. But what we have is enough to produce a sustainable amount of grain and even much more. But this requires the assistance of the government at all stages from production to export."

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