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8 Jun, 2009 06:43

Grain tie up to focus on quality not prices

Washington has warned Moscow against creating a 'Grain Opec' after Russia confirmed plans to pool resources with other producers. The country's Agriculture Minister claims the group will raise quality but not prices.

Grain giants Ukraine, Kazakhstan and Russia will join forces to create the world's largest producer. First Deputy Prime Minister Viktor Zubkov laid out the framework for a deal.

“We have agreed in principle to pool our grain resources. The details will be worked out at top-level talks in autumn.”

Russia's Agriculture Minister, Elena Skrynnik denied claims they would hike prices.

“We can control the grain market in terms of price and quality, but grain's purchased by governments in open tenders, so we can't affect what it sells for.”

Grain's been dubbed the 'white gold' as its develops new uses. Demand for grain's soaring, but most of that's not for food but as ethanol to fuel cars. And more demand means higher prices. Since March the grain market rate is up 29%.

But the U.S., the world's largest grain consumer, is up in arms. Senior agriculture official Michael Michener calls the idea a 'cartel', and says it will hurt Russia's bid to join the World Trade Organisation.