Medvedev calls for grain summit

At the G8 meeting in Japan, Russia's president Dmitry Medvedev has called for a grain summit, in response to soaring world food prices. He said leaders have agreed to create special funds to provide aid to States suffering from food shortages. To tackle

G8 leaders are sure -  growing consumption and the drive for biofuels is behind the current food crisis.

Russia’s President Dmitry Medvedev said its time to find a way out and came up with his own initiative.

WE agreed on creation special funds and carry out targeted assistance to the countries that suffered most. We also suggest create the so-called grain summit on which we will discuss problems of growing grain prices and the measures needed to stabilize the situation.

In a recent report by the World bank, biofuel production was singled out as causing 75 percent of the growth in food prices. Medvedev urged production of second generation biofuels, which will not occupy arable land and thus won’t drive up grain prices.

This year Russia will export around 15 million tones of grain to the global market.

The government wants to consolidate its shares in 28 grain processing companies to create russia’s largest grain trader. The new company may start operating this year and will account for half of Russian grain exports. But some traders are worried the new structure may monopolize the market.

Mikhail Orlov, President of Agroinvest outlines the concern.

This market needs to be regulated, firstly so as not to have a time-bomb building up here. But on the other hand I would hope that the state is not going to transform this into a monopoly, as that would reduce the capacity of Russian producers to become fair, solid long term partners.

Market players are urging the government to invest in agriculture. They say Russia has  49 million hectars of arable land,  twice as much as Argentina. And if the sector gets enough investment, Russia could become a global supplier of food as well as hydrocarbons.