National grain reserves to stay at home

The head of the Joint Grain Company, Sergey Levin, says grain from Russia's national reserves will not be used for export.

Speaking exclusively with Business RT, Levin rebuffed speculation the government would use its own reserves to fulfill some foreign contracts, after introducing a temporary export ban in the wake of Russia’s crippling drought.

Levin began by noting that the situation in Russia this year is ‘drastically’ different to past interventions.

SL: “At this point the intervention stock has 9 million 940 thousand tons of grain. The intervention stock could be used differently depending on the situation. Last year, and in the beginning of this year, the country had excessive amounts of grain. The intervention stock put pressure on the internal market. That's why it was necessary to export this grain. But the situation has changed drastically. We cannot talk about excessive amounts of grain on the internal market. Now we are saying that we have a necessary safety net. So we are not talking about exporting the intervention stock any more. What we are talking about is the need to decide which of the internal consumers it should best be given to, in other words – to which of the affected regions it should go in the first place and in what scope. This decision must be made by the government. I think it will happen as Mr. Zubkov said within the next two weeks.”

RT: What is Russia’s current storage capacity?

SL: “If we look at the statistics, the Federal Service of State Statistics reports that we have the total storage capacity of about 118 million tons, but that includes all types of grain storages, both the modern ones equipped with climate control systems and the old granaries and barns dating back to pre-war times. Honestly, I think that only about one third of the storages are up to modern requirements.”

RT: How has the drought this summer affected your strategy until 2015?

SL: “The strategy of the United Grain Company includes large-scale investments into grain market infrastructure, construction of new storages and transhipment elevators, as well as an upgrade of the existing facilities going forward to 2015.

There will be significant changes in the grain distribution patterns inside the country, because over the last few years there were was quite a distinct distribution – the Southern region produced grain for export, while the Central region and Siberia produced grain for internal consumption. This is going to change now, and the grain from the South is going to be consumed internally as well, and we'll certainly have to re-think our strategy.”