Translated material
Dogs on bread
The provinces hold grain in their fists
Russia's economic space again does not look very unified. The heads of grain regions, trying to collect debts from “their” farms, began to prohibit the export of grain from the territories entrusted to them. There is no vital need for this - a very good harvest is expected this year. The Ministry of Economic Development estimates it at 70 million tons (compared to last year’s 65.5 million tons); market participants themselves say that they are ready to collect even 72 million tons. However, as the Vremya Novostey newspaper learned, on July 30, Deputy Chairman of the Government of the Saratov Region, Minister of Agriculture and Food Alexander Fogel signed a decree “On limiting the export of grain outside the region.” The document prohibits the export of grain without the approval of a commission specially created for this purpose. It includes almost all heads of departments of the regional Ministry of Agriculture. The validity period of the innovation is not specified.The activity of local authorities in the construction of interregional administrative barriers is an old Russian disease. They tried to treat her at the highest level. Right up to the president. “Territorial authorities often impose bans on the export of grain, restrict trade in alcoholic beverages, prevent the creation of branches of “foreign” banks, and create barriers to the free movement of capital, goods and services,” Vladimir Putin said in his address to the Federal Assembly last year. The matter was not limited to words. In July 2000, a presidential decree was issued that suspended the decree of the Vladimir governor “On licensing activities for the production of flour, cereals and other food products from grain and activities for the production of bread, bakery and pasta products.” However, regional authorities apparently were not too scared. And not only in Saratov. In many regions, according to grain market participants, local authorities do not risk issuing bans with direct acts, but stipulate the export of grain under such conditions and the need to have so many accompanying documents that it is easier not to export.
“There is no grain market in Russia and there will not be as long as governors, contrary to all existing laws, annually prohibit the free sale of grain and other agricultural products,” Viktor Semenov, deputy chairman of the Duma Committee on Economic Policy and chairman of the association of industry unions of the agro-industrial complex, said yesterday.
Market participants negatively assess the decision of the Saratov authorities. “This is a clearly negative measure,” Alexander Yukish, head of the Russian Grain Union, told the Vremya Novostei newspaper yesterday. — We have been fighting against such practices for several years now and believed that a civilized market had begun to form in our country. In other regions, similar orders also appear, but in oral form.”
“The decision of the Saratov authorities even contradicts the Constitution,” says Mr. Yukish. Article 8 of the Constitution guarantees “the unity of the economic space, the free movement of goods, services and financial resources, support for competition, and freedom of economic activity.”
Grain market analysts believe that even if on a nationwide scale the absence of Saratov grain does not affect exchange prices, a dangerous precedent is being created again. “All-Russian and regional interests collided here,” Elena Tyurina, director of the Institute of Agricultural Marketing, told a Vremya Novostei newspaper correspondent. - From the point of view of the region, the budget is forced to collect debts and there is no other mechanism. Now, until the new harvest is sold out, is the only time when debts can be repaid. But from the perspective of the Russian market, the erection of administrative barriers is unacceptable, because there are regions with excess production, and there are regions that consume.”
Bans on grain exports, according to analysts, will force producers to hide their harvests and sell grain to intermediaries. “Such measures destroy the unity of the Russian market,” says Lyudmila Pigina, an expert at the OGO company analytical center. “There is a lot of grain in the Saratov region, so the ban will lead to the resumption of barter; producers will find a lot of workarounds.” In any case, according to Ms. Pigina, the shadow sector of the market will increase sharply, and several more links will emerge between the manufacturer and the end consumer. “As a result, grain prices will begin to rise, and producers’ profits will decline; they will be forced to give grain to intermediaries at lower prices,” Ms. Pigina believes.
The Saratov authorities, however, instead of the prospect of debt repayment, seem to have left their own producers without profit from a considerable harvest. “This will not affect the all-Russian market in any way: the harvest is expected to be high, so simply no one will notice the absence of Saratov grain on the market,” Alexander Kheifets, coordinator of the Grain-On-Line electronic exchange project, told a correspondent of the Vremya Novostei newspaper. - It will only be worse for Saratov himself - they will not be able to sell their grain on time and will sit with it all year. They won't make a profit."