30th Aug 2012, by Agrimoney
Russia, where food officials are meeting on Friday to discuss dwindling wheat supplies, will not impose any restrictions on grain exports, the head of one of the country's top farm companies said, cautioning of a backlash if it does.
Maxim Basov, chief executive of Ros Agro - the listed holding company of the Rusagro group which has a landbank of 450,000 hectares - termed "economically incorrect" the idea that Russia would ban grain exports, or even impose levies on shipments, to protect domestic supplies after a drought-hit harvest.
The grain export ban imposed amid a drought in 2010 had "only benefited agricultural [grain] producers in other countries", by pushing up world prices while denying Russian growers access to them.
Repeat restrictions would present a fillip the state, through potential export taxes, and, in depressing grain prices, help meat producers "who are already doing very well", said Mr Basov, whose group is expanding in pork output as well as in grains and sugar beet.
'Losses and big problems'
However, they would present a threat to Russian grain growers for whom higher prices represented a means of making up a near-halving in yields in some areas.
"If Russia does not allow them to sell their grain for export, they will have losses and big problems," Mr Basov told Agrimoney.com.
"Russia does not want to have problems among producers in the southern region," a big source of grain exports, where dryness has hit crops particularly hard.
"Taking away from agricultural producers makes no economic sense."
'Will not go unnoticed'
A move to restrict exports, which many have speculated may result from Friday's agriculture ministry meeting, may also prompt a political backlash, he signalled.
The group, also a large beet producer with a 16.0% share of Russian sugar output, had joined with other producers and representatives of related industries such as ports to lobby the government to keep trade lines open.
A decision to impose restrictions "will not go unnoticed", Mr Basov said, adding that the anti-curbs movement was not "going to go away".
Another harvest downgrade
Ros Agro said that its own harvest had been hit by the dry weather, which it said had cut Russia's grains harvest to "about 70m tonnes".
Separately, SovEcon, the Moscow-based consultancy, on Thursday to cut its forecast for the Russian grains harvest to 70.5m tonnes from 71m-72.5m tonnes, and its estimate for wheat crop by 1m tonnes to a nine-year low of 38m tonnes.
Sovecon said that the Siberian wheat crop may fall by 4m tonnes to a 32-year low of 6m tonnes.
However, Mr Basov said that Ros Agro's yield losses had been offset by larger sowings, leaving the group with a harvest of some 500,000 tonnes, of which 200,000 tonnes were surplus to the group's own needs.
'Deficit situation'
Of this total, the group planned to sell all but 20,000 "closer to the end of the year", to exploit prices expected to rise as Russia's supplies dwindle.
The current pace of exports suggested that Russia "probably in November will already have a deficit situation", likely spurring imports from Kazakhstan, Mr Basov said.
Such a situation meant the prices in areas around Rus Agro's farms were likely to increase "by at least the transportation cost" of bringing in supplies.
Russia, where food officials are meeting on Friday to discuss dwindling wheat supplies, will not impose any restrictions on grain exports, the head of one of the country's top farm companies said, cautioning of a backlash if it does.
Maxim Basov, chief executive of Ros Agro - the listed holding company of the Rusagro group which has a landbank of 450,000 hectares - termed "economically incorrect" the idea that Russia would ban grain exports, or even impose levies on shipments, to protect domestic supplies after a drought-hit harvest.
The grain export ban imposed amid a drought in 2010 had "only benefited agricultural [grain] producers in other countries", by pushing up world prices while denying Russian growers access to them.
Repeat restrictions would present a fillip the state, through potential export taxes, and, in depressing grain prices, help meat producers "who are already doing very well", said Mr Basov, whose group is expanding in pork output as well as in grains and sugar beet.
'Losses and big problems'
However, they would present a threat to Russian grain growers for whom higher prices represented a means of making up a near-halving in yields in some areas.
"If Russia does not allow them to sell their grain for export, they will have losses and big problems," Mr Basov told Agrimoney.com.
"Russia does not want to have problems among producers in the southern region," a big source of grain exports, where dryness has hit crops particularly hard.
"Taking away from agricultural producers makes no economic sense."
'Will not go unnoticed'
A move to restrict exports, which many have speculated may result from Friday's agriculture ministry meeting, may also prompt a political backlash, he signalled.
The group, also a large beet producer with a 16.0% share of Russian sugar output, had joined with other producers and representatives of related industries such as ports to lobby the government to keep trade lines open.
A decision to impose restrictions "will not go unnoticed", Mr Basov said, adding that the anti-curbs movement was not "going to go away".
Another harvest downgrade
Ros Agro said that its own harvest had been hit by the dry weather, which it said had cut Russia's grains harvest to "about 70m tonnes".
Separately, SovEcon, the Moscow-based consultancy, on Thursday to cut its forecast for the Russian grains harvest to 70.5m tonnes from 71m-72.5m tonnes, and its estimate for wheat crop by 1m tonnes to a nine-year low of 38m tonnes.
Sovecon said that the Siberian wheat crop may fall by 4m tonnes to a 32-year low of 6m tonnes.
However, Mr Basov said that Ros Agro's yield losses had been offset by larger sowings, leaving the group with a harvest of some 500,000 tonnes, of which 200,000 tonnes were surplus to the group's own needs.
'Deficit situation'
Of this total, the group planned to sell all but 20,000 "closer to the end of the year", to exploit prices expected to rise as Russia's supplies dwindle.
The current pace of exports suggested that Russia "probably in November will already have a deficit situation", likely spurring imports from Kazakhstan, Mr Basov said.
Such a situation meant the prices in areas around Rus Agro's farms were likely to increase "by at least the transportation cost" of bringing in supplies.
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