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Russian Agriculture Ministry believes intervention purchases fail to ‘make the grade’

November 28, 2017, 14:22 UTC+3 MOSCOW

The russian agriculture minister says around 4.5 mln tonnes of grain are already stored in the interventional fund, and 85.63 mln will be spent on its maintenance this year

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© Kirill Kukhmar/TASS

MOSCOW, November 28. /TASS/. The Russian Ministry of Agriculture feels that grain interventions are an ineffective mechanism for regulating prices under the current market climate, Agriculture Minister Alexander Tkachev said on Tuesday.

"We believe that at this stage intervention purchases are not very effective," Tkachev explained.

The minister noted that around 4.5 mln tonnes of grain are already stored in the interventional fund, and 5 bln rubles ($85.63 mln) will be spent on its maintenance this year. If grain interventions begin, the fund will increase, leading to a surge in storage costs. In addition, there are problems with storage capacities for such grain volumes, Tkachev added.

Earlier, the Agriculture Ministry did not rule out the possibility of grain interventions in some Russian regions before the end of 2017. At the same time, the key mechanism for stabilizing grain prices this year was subsidizing domestic rail transportation of grain exports. As a result, the ministry has already noted the increases in grain prices.

"This is already occurring; we see a rising trend that started from 3% to 5% as soon as we began to subsidize railway transportation of grain. The market is reacting objectively, and we would very much like to have a price that’s 10 -20% higher in order for it to be fair," he said.

According to the Agriculture Ministry’s forecast, in the 2017-2018 agricultural year, which will end on June 30, Russia will have exported 45 mln tonnes of grain, including 35 mln tonnes of wheat.

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