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Russian Grain Union predicts record-breaking grain harvest this year — expert

August 16, 15:14 UTC+3 MOSCOW
Grain producers might suffer losses if prices continue declining
1 pages in this article
© Viktor Drachyov/TASS

MOSCOW, August 16. /TASS/. Russia may harvest 114-116 mln tonnes of grain this year, which will be challenging in terms of grain depots shortage, head of the Russian Grain Union (RGU) Arkady Zlochevsky said on Tuesday.

"The [harvest] range is from 114 to 116 mln tonnes," the expert said.

This will be a record-breaking figure in post-Soviet Russia.

Wheat harvest is also expected to set a record in 2016. "The Agriculture Ministry gave merely fantastic [forecast] figures - 72 mln tonnes. Our outlook is lower - 69.5 mln tonnes of grain. This is also a record for post-Soviet Russia," Zlochevsky said.

Grain storage capacities in Russia are estimated at 120 mln tonnes, including 38 mln tonnes of elevator capacities, he said.

Grain quality will be lower than last year, Zlochevsky said. However, premium quality grain volume will remain at the last-year level because of higher harvest, he added.

The Russian Ministry of Agriculture keeps its grain harvest outlook at 110 mln tonnes this year.

"The Russian Ministry of Agriculture does not forecast shortage of 2016 year harvested grain storage capacity: local deficit of storage capacities is possible in certain Siberian regions if the gross grain production is 115 mln tonnes. At the same time, the Russian Agriculture Ministry maintains its grain harvest outlook up to 110 mln tonnes," Tkachev said.

Grain producers may suffer losses

According to Arkady Zlochevsky, grain producers might suffer losses if prices continue declining.

"Prices are already rapidly declining. If the situation remains, we will suffer losses," Zlochevsky said.

According to Zlochevsky, price of the class 3 wheat decreased by 2,400 rubles ($37.6), class 4 wheat - by 2,600 rubles ($40.7). Now the selling price of the class 3 wheat totals 9,000 rubles ($141.2), 8,300 rubles ($130.2) in some regions of the country.

According to Zlochevsky, at these prices, there is a risk that farmers will not be able to fulfill their loan obligations. He added that a record harvest of this year, and export duty on wheat affected reduction of prices.

Zlochevsky said earlier that Russian farmers lost about 50 bln rubles ($781 mln) due to introduction of a duty on wheat exports during the last season.

"As a result, during the last season farmers lost 1,000 rubles per tonne. For the last season sales of grain amounted to 52-63 mln tonnes. Respectively farmers lost 50 bln rubles," he said.

Earlier, the Russian Grain Union sent a letter to Prime Minister Dmitry Medvedev with a request to cancel export tax on wheat.

Previously, grain producers said that lost revenues from duties were up to 30-40 bln rubles ($471-628 mln).

Agriculture Minister Alexander Tkachev said that the ministry will "sooner or later" cancel export duties on wheat. But he added that he plans to return to the discussion of this issue not earlier than in autumn.

In June, Deputy Prime Minister Arkady Dvorkovich told TASS that no radical changes should be expected with regard to export duties for wheat. It is more important to preserve the market stability and the rules of the game, he said.

He also noted that the mechanism of export duty for wheat should be maintained, but the government will think about how to remove the uncertainty for exporters.

The duty on wheat exports from Russia was imposed on July 1, 2015.

The Russian government introduced the export duty following the growing activity of exporters who increased sales of grain on foreign markets and sought a way to benefit from a sharp drop in the ruble.

Currently, the export duty on wheat is 50% of the customs value minus 6,500 rubles, but not less than 10 rubles per tonne.

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