Following a severe drought and a series of wildfires devastated crops, Russia has imposed a ban on grain exports. (photo, from bbcimg.co.uk)
On August 5, the country’s prime minister, Vladimir Putin, signed a government decree that said the ban will extend from August 15 up until December 31, although he has indicated it may even extend beyond that date.
The order came into force on Sunday, with the government battling to keep down prices of basic foodstuffs amid a record drought.
Russia was the world’s number three wheat exporter last year. The country has already warned that its grain harvest this year will be just 60-65 million tonnes, compared to 97 million tonnes in 2009.
The drought came amid the worst ever heatwave in Russia’s history. According to Dmitry Medvedev, the Russian president, it has ruined one quarter of the country’s crops.
Compared to Europe, Russia’s food prices are “quite high anyway because they do not have enough domestic production”, Natalia Leschenko, an analyst at Global Insight, told Al Jazeera.
“Any further rise in the prices of most staple commodities will spark a lot of social discontent,” she said.
The aim of the export ban is to keep the Russian domestic market well supplied with grain in order to prevent sharp rises in prices. Wary of social unrest, Russian leaders will be keen to avoid any discontent over food prices.
“We must not allow an increase in domestic prices and must preserve the headcount of our cattle,” Putin said as he announced the ban.
In 2009, Russia exported 21.4 million tonnes of grain. The country had even embarked on a major new campaign to boost its international market share, the ambition must now be set aside for some time.
Domestically, Russia needs 78 million tonnes of grain and can cover the shortfall with 9.5 million tonnes from a state fund and 21 million tonnes left over from last year’s harvest, the government has said.
Last week, president Medvedev acknowledged that both market participants and ordinary people were worried about “how this extraordinarily hard summer would affect the prices of the most basic foodstuffs”.
He vowed the authorities would not allow grain prices to rise and would keep a close watch on costs for food products such as flour, bread, meat and milk.
The export ban from such a key global player will hit world wheat markets, sending prices to two-year highs and sparking worries of a crisis in global food supplies.
“There is no need to count on a quick removal of the export ban,” he said, adding that anyone waiting for December 31 was doing so “in vain”.
People criticised th ban, even within Russia. According to some analysts it will take the country years to regain its international market position and risks driving domestic grain producers out of business.
Unlike his prime minister, Medvedev admitted that producers had been put in a difficult position. He said they should be helped so they can prove they had no option but to comply with the ban, allowing them to claim “force majeure” when they fail to meet contracts.
“We have put producers involved in exports into a difficult position,” he said.
“Having done this, we must help them have the legal proof that [there] was a force majeure and it was not possible to fulfil deliveries.”