E-Malt.com News article: Russia: Putin cuts Russia harvest forecast and predicts price rises in bread and beer

Russian Prime Minister Vladimir Putin cut on August 9th the leading wheat producer's grain harvest forecast due to a record drought, saying it would produce 10 million tonnes less grain than planned, AFP posted on .

According to Russian news agencies, Russia's grain harvest for 2010 will be 60-65 million tonnes, Putin said at a meeting with Agriculture Minister Elena Skrynnik.

Only last week, Skrynnik's deputy had given a forecast of 70-75 million tonnes.

Russia has seen 10 million hectares (25 million acres) of land destroyed in the drought and the new figure represents a massive fall compared with its 2009 harvest of 97 million tonnes.

Putin last week shocked international markets by announcing that from August 15 Russia would ban exports to keep prices down at home and ensure there was enough feed grain for its cattle herd.

The ban is to run until December 31, when it will be reviewed, the government said then.

Putin indicated Monday he would be in no hurry to lift the ban.

"There is no need to count on a quick removal of the export ban," Putin said. Last year, Russia exported 21.4 million tonnes of grain and was one of the world's leading wheat exporters.

He said Russia required 78 million tonnes of grain for its domestic needs and would be able to cover the shortfall with 9.5 million tonnes from a state fund and 21 million tonnes left over from last year's harvest.

"If someone is waiting for December 21 or December 31 of this year then it is in vain because we are going to have to look at removing the export ban only according to the results of the harvest of the current year," he said.

The powerful premier said the situation was further complicated by the fact the extreme weather meant the sowing of winter crops had not even started in many regions.

The severity of the drought has seen states of emergency declared in 27 regions and dealt a major blow to Russia's ambitions of ramping up its global market share over the next years.

Putin's decree imposing the export ban said that Russia would ask fellow members of a regional customs union -- Belarus and Kazhakhstan -- to make a similar move.

The Kazakhstan Agriculture Ministry's Secretary Yevgeny Aman said Monday that even under the most pessimistic harvest scenario "we will still be able to export grain in sufficient quantities."

"This is why the government is not taking any restrictive measures so far," he told journalists in Astana, the Interfax news agency reported.

But he emphasised that Russia would now be a prime destination for Kazakh grain exporters.

Putin's shock export announcement last week catapulted global wheat prices to two year highs and sparked worries that consumers could see price rises in the most basic food items such as bread and beer.

It was criticised by some Russian observers who said it would take Russia years to regain its export market position.


11 August, 2010