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12 May, 2009 16:14

Bumper crop underlines Russia’s global grain leadership role

Ahead of hosting a summit of key grain exporters and importers next month, Russia has unveiled forecasts of a record grain harvest and exports, amidst talks over shipments to Brazil.

Russia's booming cereals production means it is now one of the key players on the world grain market, with the only impediment to greater export volumes being storage bottlenecks and problems getting bumper harvests to Russia’s ports.

To overcome these issues the State is stepping in, overhauling infrastructure inherited from the Soviet past according to Arkady Zlochevsky, President of the Russian Grain Union.

"Russia's President has signed a decree under which a united grain company will be set up. It will be a partnership of state companies and private businesses not a governmental monopoly. It's to deal with the problem of outdated infrastructure as well as building new facilities."

Moscow's plans to set up a national state grain trading company were initially seen by some in the west as a possible political tool, but Andrey Syzov, Director of Sovecon says grain is not a market that can be controlled easily like oil.

"The world trade volumes of grain are about 300 million tonnes. Russia's record export volume will be slightly above 20 million tonnes. If the united grain company manages to take off in the next three years its sales volumes will make up just 1 per cent of the world's grain trade. So any talks of using grain export as a political tool are simply unfounded."

But the chaos on the world markets last year and fears of food riots in some countries have emphasised the need for cooperation with other key players.

Russia is hosting the World Grain Forum in Saint Petersburg in June to discuss the big issues facing both exporters and importers. The forum will address the long term prospects for the world grain trade, and the creation of world emergency grain reserves to prevent hunger.