Russia farm ministry wants grains body to be strong, include foreigners

MOSCOW: Russia's Agriculture Ministry expects a new association of grain exporters to become a strong union and has no plan to exclude foreign trade houses, a ministry official and a source said, responding to concerns the new body could lack independence.

The ministry said earlier this month that it wants the association to be created by April, when it intends to start discussing with traders the top global wheat supplier's export plans for the marketing season starting on July 1.

Membership of the new association will be important for traders who want to attend the ministry's regular meetings with exporters, where it updates them on its view of Russian grain supplies.

"We expect the grain market will soon see the establishment of a strong association that consolidates key exporters so as not only to respect the interests of market participants, but also to organise joint, constructive work with the Agriculture Ministry on dealing with priorities for export development," deputy agriculture minister Oksana Lut told Reuters.

Speculation that Russia could limit exports has supported global wheat prices in recent months, as Russian officials have been using the meetings with traders to monitor how big exporters are faring given a smaller 2018 crop.

The ministry does not plan to set up the association itself, a source close to high-ranking ministry officials told Reuters. It wants industry players to propose options for its creation.

The decision to initiate the formation of the union raised concerns about the new body's independence from Russian officials. Major exporters of Russian grain already have a lobby group that represents mainly large, foreign trade houses.

The new body is needed because the ministry's relations with existing associations "are not working out", the source said.

The ministry has no plan to exclude foreign traders from the new association because "we need a working body," the source said.

"It would be impossible to meet the targets set for us without foreign market players," the source said.

The targets refer to a major project announced by Russian President Vladimir Putin in May, under which the country must boost its exports of agricultural products to $45 billion by 2024. The Agriculture Ministry is in charge of the initiative.

The task could be challenging. Such exports, which include grains, sunflower oil and meat, amounted to only $26 billion in 2018. About $10 billion of the total came from grain exports.

The acting chief of Russian state-controlled trader UGC, Sergey Korolev, may become the head of the new association, two industry sources said.

However, the source close to high-ranking ministry officials said the head had yet to be selected and there were several potential candidates.