Ban on grain export a painful step for Russia
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Prime Minister Vladimir Putin announced Thursday that Russia would impose a temporary ban on grain exports due to hot weather and drought, driving the benchmark wheat futures to a 23-month high in global markets.
Russian experts believe the ban is a hard decision for the world's leading grain exporter.
A hard decision
"Due to the abnormally high temperatures and drought, I consider it feasible to impose a temporary ban on exports from Russia of grain and other farm produce made out of Russia's grain," Putin said.
He decided to offer farmers who are suffering in the disaster 35 billion rubles (about 1.17 billion U.S. dollars), ten billion rubles (335 million U.S. dollars) of which they do not need to repay while the rest will be transferred as a three-year privileged credit.
"Of course, we are interested in earning money from grain sales but now the priority task is to support the producers," Putin said.
The government on Wednesday decided to postpone grain interventions on the market previously planned on Aug. 4, before fresh data on the regions' needs came out.
Dmitry Relko, head of Moscow's Institute of Agrarian Markets Conjuncture, told Xinhua the ban was "very hard and painful" for Russia's grain exporters.
"This is unavoidable, though a very painful step for our exporters and agrarian holdings as well as for our buyers, who have already signed contracts with us and who will now have hard times looking for the new sources," Relko said.
He added that finding an adequate replacement for Russian grain would not be a swift matter.
As one of the world's largest grain producers and exporters, Russia exported 20 million tons of grain in 2009.
Earlier this year, experts estimated Russia would be able to export up to 15 million tons of grain, mostly wheat and barley, in 2010. But the perspective worsened as a record-breaking hot summer unexpectedly hit Russia.
According to the latest figures, ongoing wildfires and drought across western and central Russia have destroyed crops on 10 million hectares, or 20 percent of Russia's cultivated land.
The agriculture ministry last week lowered its forecast for the country's grain harvest from 90 million tons to a range of 70 to 75 million tons this year.
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