The state will only purchase grain if needed.
Originally grain interventions for this agricultural year (the year started on July 1, 2009) were to begin on August 1. However, with grain prices stable, the Government has postponed purchases. Grain intervention will begin if necessary, Prime Minister Vladimir Putin said yesterday. In the opinion of grain market analysts, only the Central Black Soil Region may need Government help this year. Russia started buying grain from farmers for the intervention fund in 2002 and has increased purchases every year since. In the 2007/08 farming season it bought 1.45 million tons worth 7 billion roubles, and in 2008/09, 9.6 million tons worth 46 billion roubles.
At a meeting held in Krasnodar Territory in early July Agriculture Minister Yelena Skrynnik said the grain intervention program would start August 1. However, during a meeting with farm managers in Orenburg Region yesterday Vladimir Putin said the Government would purchase grain in 2009/10 only if necessary and that in the meantime it was counting on stable prices. "Prices continue to be stable, but we will make interventions if necessary," the Prime Minister said. Last year the harvest was 108 million tons prompting farmers to suspend sales to keep prices from falling, the Prime Minister said. There will be no such thing this year, he added. The harvest in 2009 is expected to be 85 million tons. Officially, intervening purchases begin if grain prices drop below certain levels, says Andrei Sizov Jr, managing director of the Analytical Centre Sovekon. The current price situation in the grain market is fairly uneven and on the whole shows a downward trend, the expert notes. However, prices in the southern region have been going up since early July and are still growing due to increasing world market prices. In other regions prices for recently harvested grain are dropping.
Analysts and investors have concluded that grain interventions this year should be made judiciously. "Perhaps it makes sense to conduct interventions in the Central Black Soil Region of Russia," says Dmitry Rylko, Director-General of the Agrarian Market Studies Institute.
However, that would be difficult to accomplish technically and would require massive financial outlay, market participants say.
Yesterday, Yelena Skrynnik offered a forecast regarding a possible grain intervention: it may start between August 25 and September 1, but the exact time will be determined by the state of the market and the rate of harvest, she said. Procurement prices for this year were announced back in late March. The prices for Class 3 wheat are set at 5500-6000 roubles per ton depending on the region, for Class 4 wheat at 4800-4900 roubles and for Class A rye at 3900 roubles. The Government has earmarked 20 billion roubles to procure this year's grain.
Nadezhda Ageyeva