Russia to retain grain export ban until 2011 harvest: Putin

2nd September 2010, Comments 0 comments

Prime Minister Vladimir Putin said Thursday that Russia, a major world producer, would not lift a ban on grain exports before next year's harvest, extending the embargo until at least mid-2011.

"I believe it's necessary to note that we will only be able to consider lifting the grain export ban after next year's harvest ... and we have clarity on the balances," Putin said.

"We cannot just keep lurching back and forth," he said at a government meeting in televised remarks.

Putin gave no specific timeframe and his spokesman, Dmitry Peskov, only confirmed that the ban would not be lifted on December 31.

A record drought has destroyed a quarter of Russia's harvest and Putin signed a decree early last month banning grain exports from August 15 to December 31.

Putin subsequently said the government might extend the ban into next year.

The export ban is aimed at keeping the domestic market well supplied with grain to prevent sharp rises in food prices with Russia's leaders acutely nervous of social unrest and keen to avoid any discontent.

The export ban from such a key global player stung world markets, sending wheat prices to two-year highs and sparking worries of a crisis in global food supplies.

At the government meeting, Putin said the announcement was made "in order not to generate unnecessary nervousness (and) to secure stability and predictability" for all market participants.

Agriculture experts said Putin's announcement was not a surprise.

"What happened is what everyone expected," Andrei Sizov, managing director of SovEcon, a Moscow-based agriculture consultancy, told AFP.

Sizov said the move meant the grain export ban would not be lifted until at least July 2011 when farmers begin harvesting in the country's south and the government will have an idea of the amount grown.

Russia was the world's number three wheat exporter last year when it sold 21.4 million tonnes of grain and had embarked on a major new campaign to boost its international market share, an ambition that now must be set aside for some time.

At a separate meeting on food security, Agriculture Minister Yelena Skrynnik said Russia's grain crop this year would fall to 60-65 million tonnes because of the country's worst drought in decades.

But with last year's grain reserves of 26 million tonnes, the country will have enough grain to meet this year's demand, she said in Saratov in central Russia in comments released by the government.

But the country would have to produce 85-90 million tonnes of grain next year to "stabilise the situation," Russian news agencies quoted Skrynnik as saying.

"We consider this task to be manageable," she was quoted as saying.

Russia is beginning to tally the damage caused by the drought, with economists saying the disaster could cost the country 7-15 billion dollars, undercutting a modest economic revival.

Russia is heading for presidential elections in 2012 and the ruling duo of Putin and President Dmitry Medvedev are keen to keep a lid on public discontent as Russians stockpile traditional foods like buckwheat amid reports of shortages.

In Saratov, President Medvedev said the country had enough food, blaming speculators for hiking prices.

"Despite the abnormal heat and despite the drought our country has sufficient grain reserves," he said in comments released by the Kremlin.

"We won't have any shortages of meat, milk or sugar," he said, ordering officials to crack down on speculators.

© 2010 AFP

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