26.02.09

Russia's agro-industrial sector is living through a deep crisis of overproduction and can pull through it only if it increases its liquidity and the government offers an export-oriented policy, the president of the Russian Grain Union, Arkady Zlochevsky, said.

He believes that agrarian countries have "a certain buffer that softens the effects of the global financial and economic crisis", but agrarian Russia has its own crisis of overproduction on top of its all.

"It can pull through it by increasing export. The government has so far not used even one tool to support export operations. As a result, our main tool on the world food markets is dumping prices, which adversely affects the industry," Zlochevsky the Winter Grain Conference 2009, held in Belokurikha, Altai Territory, on Saturday.

In his opinion, it is necessary to boost the liquidity of the agricultural business by raising prices, increasing governmental grain purchases, moving lost-making grain from the Black-Earth Zone to consuming areas, encouraging consumer demand, and developing existing infrastructure.

"If we do not focus on infrastructure now, there will be a collapse. Grain elevators are filled, but there no proper aspiration system virtually anywhere. It seems that we have forgotten that the explosive force of grain dust is time and a half times bigger than that of gunpowder. Of all the risks, the agricultural business provides only for the growing tariffs for the services of natural monopolies. But it can't go on like this forever," the expert said.

Meanwhile, the government plans to reduce budget financing of agricultural programmes in 2009 because of the economic crisis, a high-ranking official said.

The director of the Agriculture Ministry's Department of Agricultural and Food Market Regulation, Sergei Sukhov, said the exact amounts to be reduced were not known yet, but "it is absolutely clear that it is inevitable".

He advised agricultural producers to reduce their own costs and calculate investment projects better. "We are taking measures to regulate the agricultural market, mainly through price decisions on the domestic market. This reflects on ordinary customers. This is why even obvious measures have to be considered thoroughly," he said.

As an example of governmental support to agriculture, Sukhov named the reduction of food imports and grain interventions. "We have preserved high customs duties for butter this year. We are now working to raise import duties for firm cheeses," the official said.

As a result of grain interventions, the government has bought over seven million tonnes of grain from agricultural producers. "We can bring that amount to 12 million tonnes, and we will do that by continuing to buy, thus curbing prices on the domestic market," Sukhov said.

The Winter Grain Conference 2009 the biggest international agricultural forum beyond the Urals, opened in Belokurikha on Friday and will work till February 23. It is unofficially referred to as Grain Davos and brings together over 30 companies from Moscow, Perm, Kurgan, Omsk, Novosibirsk, Krasnoyarsk, Tomsk, Kemerovo, Yekaterinburg, and Barnaul.

Its has been organised by the administration of Altai Territory, the Altai Union of Grain Processing Enterprises, the company Altaiskaya Yarmarka, and the SovEkon Centre.

One of the key issues on the forum agenda is the work of the agro-industrial sector during the global financial and economic crisis.

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Source: Itar-Tass