Russia to import just one million tonnes of grain this year

Russia could import just 1 million tonnes of grain this year, a third of what the government predicted, mostly to stave off a feed crisis in the livestock industry, a top analyst and lobbyist said on Friday. Russia's government said the country was likely to import around 3 million tonnes of grain after a catastrophic drought that destroyed huge swathes of crop, making it a net importer for the first time since the economy collapsed in 1998.
"The maximum is 1 million tonnes and it could be less because we don't really see the sources of imports," Dmitry Rylko, director of the Institute for Agricultural Market Research, told an industry conference in a resort town in the Altai mountains. "Some miserly volumes are coming into Russia from Ukraine but we don't really see them."
Alexander Korbut, deputy head of Russia's grains lobby, said imports would be "less than a million, maybe significantly less." Russia's barley harvest halved last year, leaving Russia short of malting barley and feed. The government also said it expected to import maize from Ukraine.
Soaring prices for feed grain have caused farmers in some Russian regions to slaughter much of their herds, casting doubt on Russia's ambitions to move toward self-sufficiency in meat. A US Department of Agriculture attache report said earlier in February that Russia would have a feed grain shortage of 2.5 million to 3 million tonnes by April-May, which could stimulate imports.
"The sooner the better," said Sergei Yushin, head of the National Meat Association's executive committee. "But let's wait to see what happens on the interventions." Russia sold 496,000 tonnes of grain at intervention tenders in February, closely in line with planned sales of 500,000 per month, the SovEcon think tank said on Friday.
But while the sales were initially planned to cool prices on milling grain to restrain consumer price inflation, more than half of February sales were made up of feed grain, reflecting concern about inflationary pressures from meat caused by soaring feed grain prices. Overall, intervention prices steadily climbed through the month until they neared market prices, SovEcon added.
Russia's government announced last week it would increase the volume of intervention sales to 3 million tonnes from 2.5 million and continue the controversial practice of low cost direct sales of feed grain out of government stocks. Yushin said some producers were delaying feed purchases in hopes of acquiring cheap grain, but said they could be caught out if those stocks ran out more quickly than expected.
If Russia lifts a ban on grain exports imposed in the wake of the drought last year, demand could still outstrip overall farm production, requiring continued imports. "There is room for imports," Deputy Economy Minister Andrei Klepach told the conference. Russia is dependent on meat imports, and also buys dairy produce on international markets.
Klepach said the ministry expected Russian farm production would increase by 8 to 8.5 percent this year, provided the grain harvest hits its target of 80 million to 85 million tonnes, Klepach said. Thereafter it would grow at 3 to 3.5 percent a year. The Agriculture Ministry forecasts a 2011 grain harvest of 85 million tonnes, which would be a 39 percent increase on last year's drought-ravaged crop and leave a small exportable surplus after domestic consumption and restocking. An 85 million-tonne harvest would leave Russia with a surplus of 15 million tonnes, but exports would likely be less, at 7 million to 8 million tonnes, as Russia will need to rebuild stocks.