Russia’s excess grain headache
Published: 24 October, 2009, 10:12
Edited: 02 November, 2009, 04:51
Russia’s high yield of grain crops this year are giving managers of storage facilities a headache. Low prices are keeping traders from selling grain, meaning there's too much stock.
The Krasnodar grain storage facility is a Fort Knox to the region's agriculture. The country’s south is famous for its good grain crops and the quality of the product – the local grain is dry and rich in protein.
“Therefore it’s suitable for exporting, since these are the qualities preferred by foreign buyers,” says Lyubov Timoshchyuk from the local grain storage lab.
In the Krasnodar Region alone, more than 9.3 million tons of grain have been collected and stored in 2009. The task of keeping 50,000 tons of grain stored for months and even years is not an easy one.
Russia’s agricultural industry suffered a 13 per cent fall in value in August. Countrywide statistics show that, in addition to this year’s crops, more than 8 million tons of grain from 2008 is still waiting to be sold to clients abroad – all without success. Prices are too low, and that's keeping traders from selling.
“Unfortunately, the situation on the world markets has got worse in comparison with last year. So we think that export numbers will be lower – an estimate of 16 to 20 billion tons, depending on various export factors,” says Arkady Zlochevsky, President of the Russian Grain Union. “These numbers are crucial, and we have to sell abroad at no less than these amounts, because otherwise the pressure on the domestic market will be growing over time.”
Russia’s government promised to intervene by purchasing grain for domestic needs at a higher price, thus lifting the burden of overstock off agricultural companies and grain storage facilities.
Exporters are also hopeful of positive change, even if it doesn't come all that soon. Arkady Zlochevsky says he expects prices at the world market to start growing in February or March next year.
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"The US does not grow enough food to feed its own, you are correct." No!!! Are you kidding me? USA exports more grain than any country, 10+% of pork and poultry... maybe more than 10% of the US beef production. Where do you guys get your facts?
In Russia, like any other countries there are people hard up. But there is no systematic failure as there is in Africa. The comparison is totally invalid. The point with the Krasnodar facility is that they are really playing the commodity market, betting on a better futures price, this is exactly what happens in the oil business now with tankers circling in the sea, waiting for a better future price. Now the issue of supply and demand is not strictly true, as the African market has pent up demand, which is a growth opportunity, it however does not have the resources to be part of the market. So basically the systematic failure in Africa is killing people and it is inhibiting market growth. So the question is how do we enable the African market, well dealing with warlords by multinationals hasn't done the trick, neither has trying to impose conditions on Africa done the trick, indeed using Africa has achieved nothing more than using can ever do, we are extracting what we want and dumping the container. Now on a scale of 1-10 is spending all our effort on a political game of chess on a missile defence as productive as enabling a African market. Which will bring more peace and justice to the world in the end? Would it be better not to attach political goals and agendas on Africa and simply get businesses running for the people, with listening instead of telling. Wouldn't it be better to protect the vunerable, by ensuring ownership for them in strategic businesses. Africa is a tale of evil exploitation, it is a testament to fine words and evil deeds. Don't preach values, don't preach rights, don't preach justice, when you have no stomach to help a weaker person, because preaching is tiresome, while straving is fatal! I put the life of anyone above a futures market, shouldn't everyone.
I need a source for the price at the local level (farm, local grainery, feed store, etc) of corn, feed wheat, soybean meal, rye & barley in the Krasnodar and Kastroma areas of Russia. Can any one direct me to source for pricing? Thanks!