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Agriculture Ministry may abandon grain interventions in favor of encouraging exports

Russian Deputy Prime Minister Arkady Dvorkovich earlier said that the Agriculture Ministry is considering two scenarios for stabilizing falling grain prices

VLADIVOSTOK, September 6. /TASS/. Russia’s Agriculture Ministry may abandon grain interventions in favor of promotion of exports, Russian Agriculture Minister Alexander Tkachev said in an interview with TASS at the Eastern Economic Forum.

"This is the first time, when we may come out with this proposal and I hope the government will support us. Arkady Dvorkovich instructed us to work on this approach more carefully, and I think this will be a more adequate and requited market-based step," he said.

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Russian ministries agree on new grain market intervention rules — source

The minister added that it would be possible to boost exports thanks to an almost zero rate of transportation offered by Russian Railways.

"We want to ensure that the tariff is almost zero, but this is true for Russian Railways. Other carriers may keep their tariffs, of course, but we will also encourage them to reduce them," Tkachev said.

According to the minister, if the railway tariff is cut or zeroed, first of all, it will become profitable to buy grain in the regions of Central District, Volga region, Siberia.

"Thus, exporting grain is profitable, this will create a good price," he concluded.

Earlier, Russian Deputy Prime Minister Arkady Dvorkovich said that the Agriculture Ministry is considering two scenarios for stabilizing falling grain prices: procurement interventions and stimulating exports.

Russia has been staging the government grain purchase and sale interventions since 2001 to stabilize the domestic grain prices. 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. Russia’s United Grain Company is acting as the government agent on interventions.

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