June 6 2003, 11:44

Russia: commodity interventions on grain market are questioned

Till the end of this week Russian government is to decide whether to sell grain from the state fund to decrease market prices, newspaper Finansovye Izvestia writes. There is a high probability that no commodity interventions will be made.

The decision on the issue was to be made as early as June 4, but was delayed because of a dispute between the ministries involved.

The Ministry for Economic Development considers it inexpedient to perform interventions now. "The prices for grain and flour are growing within the inflation", a source in the ministry has told the newspaper.

Grain analysts are of the same opinion. Vladimir Petrichenko of Unidell company says the price growth will stop towards mid-July, irrespective of the government's actions.

"First, activity of exporters will subside, second, sowing campaign will have been completed and it will be clear what the grain remains are", Petrichenko said. "It's a silly idea to make interventions before new crop. Once the farmers start getting money for their product, the state wants to knock down the prices".

According to Director of Agrarian Market Institute Dmitry Rylko, the prices till July will drop 25 percent even without state regulation (the average price for milling wheat Class 3 is now 3,750 roubles ($122.7) per tonne).

However, agriculture ministry and its state purchasing agent think the interventions are necessary. "We reached our aim in autumn - raised the prices - and will be able to put them down through commodity interventions", a representative of state grain purchasing fund told the newspaper.