IKAR in Mass and Industry Media

Russia needs grain for emergency exports-think tank

Reuters

MOSCOW, Jan 11 (Reuters) - Russia should create a special export grain reserve of 3-5 million tonnes for emergency shipments to top clients, mainly in north Africa and the Middle East, a leading agricultural analyst said on Friday.

Countries in the Middle East and north Africa have stepped up grain purchases anxious to reassure populations eyeing political turmoil, partly prompted by food inflation, which has toppled Tunisia's president and seen huge protests in Egypt.

"Current developments in Tunisia and Egypt have been provoked, in particular, by a drought in Russia," Dmitry Rylko, general director of the Institute for Agricultural Market Studies (IKAR) said in a statement made available to Reuters.

"Because of the drought our country has quit the markets of the Middle East and northern African countries, where it had rapidly won a unique position as a supplier of cheap ordinary food wheat."

Russia, hit by a severe drought unrivalled in more than a century, lost over a third of its grain crop and had to ban exports.

Powerful grain lobby, the Russian Grain Union, has said the ban had originally undermined confidence in Russia as a supplier, but traders still fulfilled existing contracts, buying supplies from other countries such as Kazakhstan at a loss if necessary.

Analysts and producers believe that Russia is able to regain its place among the world's top three wheat importers in the coming years if it avoids catastrophes like last year's drought.

Rylko suggests that the reserve stocks should guarantee annual supplies of a certain volume of food wheat to north Africa and the Middle East regardless of the weather conditions in Russia or elsewhere in the world.

The stocks, to be released only under a force majeure resulting in abrupt price increases, could be held in silos in Russia's south, where the main export ports are located, or at port elevators of the recipient countries.

Rylko suggests the involvement of governments in the main importing countries in financing the project.

"Russia may guarantee uninterrupted exports of relatively cheap milling wheat to the markets of a large and strategically important region, which in the last few years became accustomed to voluminous exports of Russian grain," Rylko said.

He said that the share of Russian exports in the world wheat trade in 2009/10 crop year before the drought was 14 percent.

16.03.11

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