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Russia to launch purchasing interventions of grain harvested in 2016

August 19, 8:50 UTC+3 MOSCOW
The current factors are pushing grain prices seriously down, which may prevent agricultural companies from fulfilling their debt obligations
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© Yegor Aleyev/TASS

MOSCOW, August 19. /TASS/. Russia’s Agriculture Ministry is launching interventions of grain harvested in 2016 on Friday for regulating the market of agricultural products, commodities and food. First purchases are planned in Crimea. Russia has been staging government grain purchase and sale interventions since 2001 to stabilize domestic grain prices. The state-owned United Grain Company has been acting as the government agent on interventions since 2009. Procurement interventions make it possible to take the surplus from the market and stimulate the price hike. On the contrary, commodity interventions are designed to bring prices down in off years by channeling grain from the government fund to the market.

According to President of the Grain Union Arkady Zlochevsky, this year grain producers are especially waiting edgily for the launch of government interventions in hopes to arrest grain price fall. This year may see a record grain harvest. The Agriculture Ministry expects 110 mln tonnes of grain to be harvested while experts forecast up to 118 moln tonnes to be harvested. Also, the current export wheat duty is putting pressure on the rates of grain supplies to other countries, which is affecting the local market.

The current factors are pushing grain prices seriously down, which may prevent agricultural companies from fulfilling their debt obligations, Zlochevsky says.

Despite the challenging situation with grain prices, Russia’s Agriculture Ministry will be sticking to selective purchases instead of massive purchasing grain interventions in 2016-2017 agricultural year, the ministry’s official Alexander Sirotkin said in June, due to the need to cut federal budget expenses. However, Agriculture Minister Alexander Tkachev said later that the volume of grain to be purchased into the intervention fund of grain harvested in 2016, may total 2 mln tonnes.

Last year first grain intervention sales were held on September 15. According to the ministry, Russia has purchased a total of 1.77 mln of grain harvested in 2015 for 18.34 bln rubles ($280 mln).

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