Russia could become top grain exporter, says Minister

By Annie Launois

- Last updated on GMT

Related tags: Grain, International trade, Agriculture, Russia

Russia could become one of the world's top three grain exporters
within five years, Russia's Agricultural Minister Alexei Gordeyev
has been reported as saying.

The announcement, reported in Interfax wire service news, came as the Moscow Stock Exchange began regular trading of agricultural products on 7 April. Although rises of grain prices are slowing down, they are still at record levels due to volatility on international financial stock exchanges and because demand still exceeds supplies. The announcement could change this situation as Russia's policy could influence international grain prices. Gordeyev told reporters that, "the country's objective is not only to meetRussia's internal needs but also to become a key exporter of grains".​ At a meeting with representatives of 19 foreign embassies in Moscow in December 2007, Gordeyev had announced that Russia was likely to impose additional restrictions on grain exports if Russia's exports exceeded 13 million tonnes by February, Russia Today reported. This policy was aimed at stabilising the cost of bread on the domestic market. However, the Agriculture minister had promised to lift export restrictions as soon as the situation on the domestic market was stable again. According to Russian Today, grain export tariffs rises from 10 to 40 per cent in January 2008. Russian agriculture ​ Russia's agriculture industry is thought to be one of the most heavily state-regulated in Europe, giving the government the ability to influence the sector. The government can use this power to block the free market with tariffs, as the January restrictions demonstrated or, on the contrary, boost exports and innovation. Gordeyev commented: "The problem of supplying the planet's population with food significantly increases the role of the agri-business sector, and Russia could position itself in a completely different way in this situation, as both its agricultural and bio-climatic potential are underused." ​ The move does not seem to include Belarus and Kazakhstan. Although both countries are part of a Customs Union with Russia, the Russian government has extended export duties on barley and wheat at 30 per cent and 40 per cent until July. If Kazakhstan bans grain exports to protect the domestic market, this could lead to a rise in grain prices on global market. To achieve its export goals, Russia would need to increase production. Arable land that was left unused in the course of Russia's economic reforms could be used again, Gordeyev explained. This land amounts to some 20m-25m hectares, and farming it will enable Russia to increase output of agricultural products, primarily grain, by 30m tonnes, he said. Under the state agricultural development program for 2008-2012, Russian grain production is expected to reach at least 100m tonnes in the next five years. The country harvested 81.8m tonnes of grain in 2007, and is expected to produce about 85m tonnes this year. Russia exported 16.7m tonnes of grain in 2007, 49.5 per cent more than in the previous year, according to the Federal Statistics Service. Grain exports totalled about 12m tonnes in the 2006-2007 agricultural year (July to June), and the country has exported over 13m tonnes of grain since July 2007. Traded commodities on the Moscow Exchange include soft wheat and barley, rye and sunflower seeds. It may later include meat and dairy products.

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