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Russian experts say grain export duties will not prevent price increase
On December 9 Russian government made a decision to introduce a high export duty for grain. An unnamed official in the Ministry for Economic Development said there were two reasons behind the decision, newspaper Vedomosti has written. The first one is that this year's crop is much poorer than the year before and the 2004 crop expectations are still worse. The other one is low grain crop forecasts worldwide, which would bring up further increase of prices in the world market, thus luring grain exports out of Russia.
According to government's calculations, the exports of grain over the first half year of 2004 might reach 6,000 tonnes, which would upset the balance in the country's food market. This is to be capped by the fact that bread prices in the country have increased 24 percent in this year, while last year they increased just 4 percent.
Grain market participants, however, consider this measure to be useless and say that grain prices in Russia in 2004 would increase in 2004 at about 20 percent all the same. Though, their attitude towards the government's decision has been calm, as the decision has been long anticipated, they said.
General Director of "Razguliay" Grain Company Aleksey Ivanov considers that the losses, inflicted by the government's decision, will be minimal. He said most of the companies had been ready to introduction of the duties and had done their best to close the current contracts within the last month. "This is also to be relieved by government's having leaving for us barley, and the companies will be able to substitute the contract amounts with it", Ivanov said.
He said that till the time of actual introduction of the duties the traders might succeed to export about another 1 million tonnes of grain, which would bring the possible losses to a minimum.
According to the Analyst with Unidell Group Vladimir Petrichenko, the duty will save Russia about 500,000 tonnes of able, but will be unable to prevent the price growth. Hi thinks that in January average price for milling wheat will increase from current 5,000 to 5,600 or 6,000 roubles per tonne (29.54 roubles = $1), and will halt at that.
Ivanov, on the contrary, is sure that Russian prices will be growing along with the global ones, and might have reached 8,000 roubles per tonne by spring.
The world prices are growing because of China, which is actively importing wheat, maize and soybeans. According to the analysts, the limitations of grain exports from Russia might give another impetus to the growth of world grain prices, and grain export may become profitable again, despite the duty.
"It is unclear what the government was intending at", President of Russian Grain Union Arkady Zlochevsky has said, "The causes of the grain price increase are not so much the exports, but rather the demand in the internal and external markets, which is exceeding the supply."