Rules Set for Grain Intervention
( Kommersant ) - The Ministry of Agriculture and Ministry of Economic Development and Trade have set the rules for the grain market. Grain intervention will begin when the price of third-class wheat exceeds 5500 rubles per ton. At that time, a 10-percent protective export duty on wheat will be imposed. World wheat prices are now 50-60 percent higher than those in Russia, however, so that duty would have little effect on exporters.
Agriculture Minister Alexey Gordeev noted that the new duty would be imposed on wheat and barley exports before market intervention was carried out. He said that an export duty on barley would be imposed in November. The proposed barley duty, Gordeev noted, is "30 percent of the contract price, and no less than €70 per ton." The minister noted that Russia's barley harvest this year was 16 million tons, as opposed to 18 million tons last year. Export restrictions are intended to prevent a rise in the cost of meat, since barley is an important ingredient in livestock feed.
Grain prices rose by more than 10 percent in July of this year, when the harvest prognosis was made, sparking talk of market intervention. Ukraine, one of the world's largest grain exporters, has placed a full ban on grain exports this year.
The Russian government has reserves of about 1.5 million tons of grain that could be used for market intervention. Of that amount, 1 ton is third-class grain. Analysts say that the conditions set will be met no sooner than in December. The method used to determine the base price will also affect the timing of the intervention, since wheat prices differ in the central regions of the country and in Siberia.