September 23 2002, 18:26

Russia: government will make intervention in the grain market… if it gets the money

Russian newspaper Trud contemplates of Russian grain crop, which is becoming government's headache for second year on end. At its last sitting the government was deciding how to deal with grain excesses so that they don't collapse Russian grain market and depreciate labour of farmers.

Russian White House (government's headquarters) has agreed to make an intervention in grain market, for which the Finance Ministry promised to allocate RUR 6 billion ($189 million) - 3 times as much as last year.

Grain interventions are to begin in late October. Agriculture Ministry has just one week left to make schedules of purchasing grain excesses from large agricultural companies. However, the trouble is that this year's budget does not stipulate any money for the purpose. Now the government is to make quick arrangement with State Duma to pass through parliament corresponding amendments to the main financial document of the year. Deputies are not likely to refuse the Cabinet, but Finance Ministry is not sure their colleagues from Agriculture one will be competent enough to manage the money the way one ought to. The financiers are reminding of last year, when the state allocated RUR 2 billion, but Agriculture Ministry was able to use just RUR 800,000. As a result, it never became possible to raise grain prices to a perceptible degree.

The Ministry's crop forecast for this year, made in early summer, has obviously proved to be underrated: instead of 73 million tonnes of grain, forecasted by ministry, harvesting campaign is about to show final result at about 85 to 87 million tonnes. With account of last year's carryover stocks, Russia will store in some 100 million tonnes of grain.

Russia is trying to solve the problem of grain overproduction by expansion of grain exports, which rose more than 20 times over the first half year [compared to the first six months of 2001] and reached 3.5 million tonnes. This year Agriculture Ministry is planning to sell abroad 8 million tonnes of grain. But Trud considers this forecast to be hardly probable, due to small capacities of grain terminals in Russian ports and tough competition in the world grain market.

Under current circumstances government has suggested to use grain excesses to raise meat branch of farming sector, in which connection Russian Agriculture Minister A. Gordeyev voiced a proposition to put barriers to imports of meat and milk. He said that according to State Statistics Committee meat production in Russia in the period January-August rose almost 14 percent [compared to the same period 2001].