Post by
yogurt on Aug 05, 2010 2:29pm
embargo on russian grain exports
A
AGENCE FRANCE-PRESSE
MOSCOW
Russia third largest exporter of wheat, said Thursday it has applied an embargo on grain exports due to the heat wave that causes the breakdown of their crops and threatens to cause shortages and higher prices on domestic markets.
The announcement of this exception by Prime Minister Vladimir Putin has revived again soaring wheat prices on world markets.
Wheat prices this week hit record highs on world markets, over 200 euros per tonne in Europe, because of concerns about Russian exports.
"Due to unusually high temperatures and drought, I feel justified to establish a temporary embargo on exports of wheat and derived food products," Putin said Thursday, according to images broadcast by Russian television.
Russia is experiencing a heat wave and an unprecedented drought since early July, and huge forest fires.
The embargo on exports will be applied from '15 August to 31 December, "said the spokesman of Mr. Putin, Dmitry Peskov.
Moscow has also offered to Kazakhstan, another major producer of cereals and Belarus also to introduce a moratorium on their exports under the Customs Union between the three countries of former USSR.
Russia, which supplies about 8% of wheat production in the world, announced earlier this week a downward revision of its wheat crop to 70-75 million tonnes this year, against some 90 million tons usually .
In 2009, the country exported 21.4 million tonnes of cereals.
"We must prevent inflation in domestic prices and also save the Russian stock" which might be destroyed in case of lack of food due to high domestic prices for cereals too, "said Putin at a board Ministers.
Domestic consumption of cereals in Russia is around 77 million tonnes on average, and the country's reserves amount to less than 10 million tonnes.
The Prime Minister also announced funding of 35 billion rubles (900 million euros) to grain producers affected by drought.
Ten of the 35 billion will be a "staffing unrequited" and the remaining 25 billion will be provided in the form of "loans at attractive rates," he said.
Because of the severity of the drought, the state of emergency was declared in 27 regions of Russia farm.
Wheat prices, which had already soared by almost 40% in July, rose early in the week to their highest level in almost two years in the financial markets. These prices exceed 200 euros per tonne on the European market.
By last weekend, the International Council of agricultural raw materials (TGI), based in London, had estimated that wheat production in Russia could be limited to 50 million tonnes in 2010.Concerns also relate to the production of Kazakhstan and Ukraine also affected by drought.
The Deputy Minister of Agriculture Russian, Alexander Belyayev, tried Tuesday to calm markets by asserting that "for now" Moscow did not intend to limit its exports.
Russia had expressed the ambition to double its exports to 40-50 million tonnes per year by modernizing its agriculture and increasing its shipments to countries like Egypt.