Russia might resume grain exports given 85-mln-tonne harvest - ministry
MOSCOW. Feb 1 (Interfax) - With a harvest of 85 tonnes or more, Russia might see fit to lift its ban on grain exports, Deputy Agriculture Minister Sergei Korolev said Tuesday.
"The task for this year is [harvesting] 85 million tonnes of grain," Korolev said at Where the Margin is - the 2nd International Conference for Agricultural Producers and Suppliers of Agricultural Inputs and Services.
"With such a harvest, Russia has the chance to restore its export potential and resume shipments of grain abroad." Weather conditions are key to achieving such a harvest, he added.
Unusually hot weather combined with a lengthy drought took a heavy toll in many of the country's grain-growing regions last year.
Due to the decrease in farmland sown with winter crop, Russia will have to plant thirty million hectares with spring grain, Korolev said. Winter grain has been sown over 15.5 million hectares - 3 million less than planned, he noted. "But that is not a critical decrease. The most pessimistic forecast, which was in the summer, was 12 million hectares," he said.
Winter-crop condition is satisfactory, at a multi-year average level, Korolev reported. About 10% of the planted winter crops are expected to die off, which would also be about average.
Russia's grain stocks this year weigh in at 90 million tonnes, he said. Domestic needs come to an estimated 72-74 million tonnes. The Agriculture Ministry reckons carry-over inventory will be more than 10 million tonnes by July 1 this year.
Russia harvested 60.9 million tonnes of grain last year, 36 million tonnes less than the country averaged for the past five years.
Russia's grain-export ban, which is currently set to expire after July 1, will remain as-is for the time being, Korolev said. "The decisions that were made will remain unchanged," he said.
"Much will be clearer after the harvest begins, seeing as last year, for example, a lot of grain was burned up [by weather conditions] in July," he said.
Dmitry Rylko, general director of the Institute for Agricultural Market Studies, said at the conference that Russia had the potential to export 7 million tonnes of grain in the next marketing year beginning July 1, 2011. He said 6.5 million tonnes of this could be wheat, 500,000 tonnes barley and 100,000 tonnes corn.
Russia exported 4 million tonnes in the current year before the export embargo was imposed on August 15, and 21.5 million tonnes last year.
Rylko said rye would be a problem this year. Most of Russia's rye is winter rye, but this was sown on land that had been parched by the summer drought, so prices can be expected to rise and Russia will import rye.
But the outlook for winter grains in general has improved, and Rylko said his institute was now able to improve its 2011 grain harvest forecast to 82 million-88 million tonnes, from 76 million-87 million tonnes.
If Russia manages to harvest 84 million tonnes, then the government has up to four options, Rylko said.
The first is to lift the grain embargo. "This is unlikely if the gross harvest is below 85 million tonnes," Rylko said.
The second is to slap a prohibitive export duty on grain from July 1 and then lower it gradually, but a measure like that would hurt farmers.
The third option might be to extend the grain export ban until 2012, but that would create an over-saturation in the south. Rylko said the large grain stocks in the south that have built up due to the export ban could complicate matters for farmers as early as this year. "There would simply be nowhere to store the new harvest," he said.
Rylko said export quotas would be the ideal solution, but this would be hard to administer as scandals over the allocation of these quotas cannot be ruled out.