MOSCOW (Reuters) - (For other news from Reuters Russia Investment Summit, click here) Russia's Deputy Prime Minister Arkady Dvorkovich, responsible for the agriculture sector, ruled out export restrictions of any kind and called for an end to speculation on the matter, saying Russia's government had changed since a ban was imposed in 2010.
“You can trust or not trust, you can ask any questions, but we will not impose any export restrictions,” Dvorkovich told the Reuters Russia Investment Summit.
“We are against this and there is no ground to do that,” he added. “All it does is give room for speculation in Chicago and on other exchanges, and that is it.”
Hot and dry weather has burned into Russia’s cereal harvest, slashing yields by more than a quarter just as the United States experienced its worst harvest in more than half a century, sending global prices for wheat and corn into overdrive. <GRA/>
Grain traders’ trust in the Russian government has been shaken since a snap decision in 2010 to ban grain exports, shocking markets and driving up grain prices. Officials denied a ban was planned until the final days before it was imposed.
The impact on consumer countries of that ban does not appear to be lost on the agriculture officials in the government of Prime Minister Dmitry Medvedev, who assumed the premiership when Vladimir Putin was elected president. Putin decided on the ban.
“I want to remind you what happened when Russia closed exports and the events occurred in North Africa,” Deputy Agriculture Minister Ilya Shestakov told an economic conference in Sochi at the weekend. Egypt, the world’s largest wheat importer, is one of Russia’s biggest customers.
“Russia has a serious influence on the whole food market because of its import and export volumes.”
Speculation on a possible repeat of the ban this year has been one factor behind a rally in wheat prices, largely driven by drought in the United States.
“It is the same as saying ‘Are we going to change our roubles into a different currency because we did it in 1991?,” Dvorkovich said.
“Are we going to freeze (state savings bank) Sberbank accounts of households because we did it at some point? Are we going to do that? No, we are not going to do that. We are not going to do that, once again.”
Russian Economy Minister Andrei Belousov appeared to muddy the waters on Friday when he said the government may consider restricting grain exports.
“I spoke with the economy minister and he said all he said was to list the entire menu of measures which can in theory be used by any government depending on the market situation and he did not speak of any concrete plans,” Dvorkovich said.
“Belousov is not in charge of agriculture,” he added. “You can ask someone on the street what he thinks. The agriculture ministry is responsible, I am responsible as deputy prime minister, and so is the prime minister.”
Dvorkovich added that he sees Russia’s 2012/13 grain exportable surplus at 10-12 million tonnes, down from last year’s 27 million tonnes.
Since the start of 2012/13 marketing year, which began on from July 1, Russia, one of the world’s key wheat exporters, has exported 7 million tonnes of grains, including legumes.
Analysts have said if exports continue, regional shortages could be covered with a large increase in imports, mostly to border regions from Kazakhstan but possibly also from the Baltic to northwest Russia, a large consumer of wheat from drought-stricken Siberia.
Dvorkovich said subsidies were a better means of battling the effects of a tight domestic grain market, including domestic food inflation.
Russia would not be insulated from another leg higher in global grain prices, which would be the likely consequence of export restrictions.
“If we went the route of 2010 and did something like that again, prices would be up more,” Dvorkovich said. “We will use the intervention fund we have. We use measures of support for producers, bakers and millers.”
“It is better to subsidise them ...This is more targeted, more efficient support ...which prevents excess price growth if needed,” he said. “We don’t even see this risk now. Prices are tense, but not out of bounds.”
Additional reporting by Melissa Akin; Writing by Polina Devitt and Melissa Akin; Editing by Veronica Brown and Jason Neely