By Dmitry Zaks (AFP) – May 28, 2011
MOSCOW — Russia on Saturday said it would soon lift a ban on grain exports that was imposed in August 2010 in the middle of an unprecedented drought that wiped out harvests.
"We are lifting the grain export ban on July 1," Prime Minister Vladimir Putin announced in televised remarks.
The ban by the world's third-largest wheat exporting country had originally been due to expire at the end of December but was renewed amid fears of another grain shortfall this year.
A top minister had earlier suggested that the ban may be extended through the summer.
Analysts said Russia's export ban helped contribute to a sharp rise in food prices last year that was one of the factors behind the wave of Arab uprisings.
Russia's decision comes three days after Ukraine -- often referred to as the breadbasket of Europe -- said it too was lifting all export limits after seeing a rise in stockpiles.
Putin instructed his first deputy in charge of agriculture to make sure that Russian farmers had access to the loans required to seed and harvest enough land this year.
"We are closely following the progress of this vital part of the economy and using all mechanisms at our disposal to support it," he said.
Russia's decision to extend the ban was caused in part by complaints from farmers that the after-effects of the global economic crisis were tightening their access to the necessary bank loans.
But First Deputy Prime Minister Viktor Zubkov said Russia had some of the world's cheapest grain and that lifting their export restrictions could only benefit farmers.
"Our current grain prices ... are almost half those on the world market," Zubkov told Putin.
"So, considering that we really do have grain now and the state of winter grain crops is good ... I think that we can lift the export restrictions on July 1."
Last year's devastating drought and accompanying fires destroyed harvests in 28 Russian regions and prompted a series of price hikes that caused the cost of some staples to rise exponentially at the start of the year.
The International Monetary Fund reported in April that Russia's headline inflation -- a figure that includes the price of food -- would likely reach 9.3 percent this year.
The government had set a 2011 inflation target of 6.5-7.5 percent.
But recent monthly inflation figures have remained relatively stable and Zubkov said farmers had seeded 10 percent more land this year than in 2010.
"We are confident that this year's grain harvest will be pretty good," Putin's deputy said.
Some analysts said the government was keen to lift the ban sooner rather than later because Russia was being squeezed out of traditional markets such as Egypt that it has controlled since Soviet times.
"We have to win our market back and strengthen our position on new ones," former economy minister Yevgeny Yasin told Moscow Echo radio.
"This is a part of a long-term strategy aimed at making Russia into one of the world's largest grain exporters," he said.
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