Translated material
They wanted to peck
The government may introduce protective duties on grain exports to combat inflation
The Russian government continues to consider restrictive measures on grain exports, primarily wheat, as one of the main measures to combat inflation , which threatens to go beyond the 8% per annum level outlined by the Cabinet of Ministers. Yesterday, at the traditional Monday meeting with the president, Minister of Economic Development German Gref said that “it is important to take measures to control the food market, especially the grain market.” Perhaps the decision to limit grain exports from Russia will be made as early as September 13.“The government is ready for grain intervention. We will monitor the situation,” the Minister of Economic Development assured President Putin yesterday. Such statements could add nervousness to world markets, where grain prices have already reached a ten-year high even without new Russian restrictions.
However, the Russian government has a headache about rising prices within the country, and not outside its borders. Grain interventions, that is, the sale of grain from state reserves, should stop the rise in bread prices. Their implementation is included in the government package of anti-inflationary measures. The accumulated inflation since the beginning of the year by August is already 6.6%, and at the end of the year it should be no more than 8%. Moreover, the government does not intend to revise the inflation forecast, German Gref confirmed the day before.
However, carrying out interventions automatically means introducing an export duty so that grain does not leave the country in current volumes. Which in turn could lead to higher prices on world markets, given Russia’s significant share in global grain exports. Already, grain prices have broken all possible records. On the Paris Exchange, a ton of wheat costs 272 euros, and in Chicago - more than 293 dollars. On the London International Financial Futures Exchange, wheat grown in the European Union is traded at a price of 319 dollars per ton.
Experts attribute this unprecedented rise in prices to low harvests in Europe, Canada and Australia. These countries are the largest grain exporters. In addition, in June, the authorities of Ukraine, the sixth largest grain exporter in the world, introduced a prohibitive duty on the export of wheat. Thus, if Russia, the world's fifth-largest exporter, restricts grain supplies, wheat prices could set new records.
Yesterday, the influential British newspaper Financial Times reported that Moscow could introduce a partial ban on grain exports or set high, prohibitive export duties. The decision, according to the newspaper, will be made during the first two weeks of September.
“There is a possibility of limiting exports. A special working group has been created under the Ministry of Agriculture, which is conducting consultations in this direction,” President of the Russian Grain Union Arkady Zlochevsky confirmed to Interfax. However, he believes that no concrete decisions will be made until the harvest is completed.
Analysts fear that the introduction of export duties may have a positive effect on the dynamics of price growth, but there will be many more disadvantages. “We risk missing out on the world market, where prices are now high and attractive for our manufacturer. In addition, if all the grain remains within the country, we will collapse our own market,” Igor Pavensky, leading expert at the Institute of Agricultural Market Studies, told Vremya Novostey.
Exporters, fearing losses, are already concluding contracts only for September-October. The introduction of duties is not a force majeure circumstance, and you will still have to fulfill contracts, even at a loss. The decision to introduce protective duties on grain exports may be made on September 13, when a meeting of the interdepartmental commission on the agro-industrial market will be held. “As long as there are rumors, the market will remain nervous,” Mr. Pavensky believes.