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6 Sep, 2010 12:02

"No catastrophe" despite Russia's ban on wheat exports

The UN's Food and Agriculture Organization has called for an emergency conference to come up with a solution to this year's global grain drain.

This comes after the world market lost one of its largest exporters, Russia, and Moscow says it won't be exporting any grain until the end of next year's harvest.

The combination of scorched earth, wildfires, drought and record temperatures devoured millions of acres in the country over the summer.

One quarter of the nation’s wheat crops fell victim to the driest season in 130 years, and farmers in the world’s third leading wheat exporter have an uncertain future.

“We are facing our problem alone,” said Sergey Rasporozhchenko, director of Sakhnovskaya Collective Farm. “What shall we do? Cut jobs? I jut don’t know.”

Rasporozhchenko couldn’t harvest half as much wheat this season as he did last year. For him, the problem is simple: no rain plus low yields equals smaller profits.

Yet there are those who can always make money out of other people’s misery by speculating on the changing prices, which comes as little consolation for those out in the field.

“They all want to buy on the cheap and sell high,” Rasporozhchenko told RT. “The agricultural producer is the weakest link in this chain. We sustain the main losses, both monetary and productive.”

The cracks in the ground are so dry that you have to dig about a meter to reach any moisture. In fact, this year's drought has threatened next year's harvest. Farmers need to plant by September 10 to reap a good crop, but they can't do it if there is no rain.

Russia’s wheat production will fall short of last year’s by 38%, according to reports.

However, concerns that a global food shortage is imminent is an exaggeration, according to observers.

“The present-day situation with world grain and wheat stocks can hardly be compared to the one that existed several years ago, when wheat was expensive, when many countries banned exports and hungry people revolted,” said agricultural business analyst Andrey Sizov. “Today, the situation is different. The lower forecasts for a new harvest are being compensated for by huge imports of grain, including wheat.”

Worldwide grain reserves and a higher-than-average harvest in the US means Russia’s recent export ban will not affect the market.

Former EU Commissioner for Agriculture Franz Fischler said that Russia has been hit worse than any other country by this summer's drought.

“Russia had a very hot and a very dry summer, which caused a real catastrophe, but the other parts of the world had very high yields and a very good harvest,” he said. “All in all, it is not so bad, but clearly here in Russia this drought created an enormous problem.”

Prime Minister Vladimir Putin extended the temporary freeze until next year. Put in place on August 15, the ban is meant to calm fears that Russia will be left with no grain, which means supplies both at home and abroad will be unaffected for now.

While Russia may be a major global supplier, an export ban is nothing unusual after such a poor harvest, and the world is prepared for such eventualities.

“The world is not suffering from the export ban. The world is suffering and will always be suffering from bad crops somewhere in the world,” pointed out Mikhail Orlov, the president of the Ambika Group. “This year it was Russia, next year it will be Argentina or Brazil – anywhere in the world.”

“It is not the ban on export itself which is bad for the world. The ban of exports from Russia is a normal measure by the government of the Russian people to make sure that they have enough food guaranteed at home,” Orlov explained.