Climbing food prices generate action

Figures from Russia’s Statistics Service show the cost of almost all basic foods in the country jumped in 2010, as the severe drought in the summer and poor harvest pushed prices up.

The prices for buckwheat, cabbage and potato grew the most, skyrocketing 182%, 98% and 97% year on year respectively.However, staples such as bread, butter, and milk grew more slowly, with bread up 6% year on year, milk increasing 19% and butter up 22.7%.

The official figures s show 2010 inflation bearing a remarkable resemblance to 2009 inflation figures, with December year on year food price rise reaching 8.4% from 8.8% last year and a monthly inflation being at 0.7% in 2009, up from 0.4% a year earlier.

The government has released grain reserves and threatened to control prices. On Thursday Elena Skrynnik, Russia`s agricultural minister, called for zero tariffs on grain to boost imports.

"We have submitted a proposal for canceling customs duties on imported grain, most of all barley and fodder wheat."

She said adding that Russia will still import grain, without specifying how much. Russia usually imports from 0.5 to1 million tonnes of grain in the context of its near-border trade, with experts predicting higher imports this year.

Also Skrynnik promised to sell the first grain batch from the Russian Intervention Fund within the coming month. Over this period 211.000 tonnes of grain will be sold in 15 regions from grain elevators that are facing bankruptcy and 900,000 tonnes in four locations, that includeMoscow,St. Petersburg, and its regions, she continued. Further distribution of grain from the Intervention Fund in 2011 will depend on the market situation, Skrynnik concluded, noting the speculative nature of the food price rise in 2010.

“The main reason for such a dramatic increase in prices is the drought. We see a massive jump in prices for potatoes and buckwheat. We're taking all possible measures to control the situation and the recent price rises are just speculative growth. The financial backing we've given farmers has stabilized the market. But yes, it's a difficult situation.”