The course for the future: why Russia is selling grain from state Fund

MOSCOW, October 9 — RIA Novosti, Natalia Dembinski. The Ministry of agriculture in this and next year sell a half million tons of grain — wheat, rye and feed barley from the state intervention Fund

The course for the future: why Russia is selling grain from state Fund

MOSCOW, October 9 — RIA Novosti, Natalia Dembinski. The Ministry of agriculture in this and next year sell a half million tons of grain — wheat, rye and feed barley from the state intervention Fund. The grain purchased in the previous years, and now will be sent to the domestic market or for export. The proceeds will be transferred to the Federal budget. Why you need a grain interventions why the market is waiting for price hike and how it will affect ordinary consumers — in the material RIA Novosti.

A bad harvest

The mechanism of procurement and commodity (sales) of intervention grain operates in Russia since 2001. Public intervention is used to stabilize grain prices and support farmers.

Last year harvested a record grain crop in the history of the country — 135,4 million tons, including 85.9 million tons of wheat. Figure 2016 — of 120.7 million tons. This year the situation is different: due to adverse weather conditions, analysts predict that the grain harvest at 110 million tons, the Ministry of agriculture talking about 100 million tons. According to the Ministry, the loss can reach 30 million tons.

The reserve Fund exists to regulate prices, when they grow too much.

The sale of grain from reserves analysts attribute to a combination of two factors. First, the state monthly spends huge money in order to compensate for the elevators the cost of storage at a predetermined rate. The sale will allow to balance the cost of maintenance of the Fund.

Secondly, this year the domestic prices may move up due to poor harvest and low rate of the ruble.

To insure against price hike

According to Dmitry Rylko, the General Director of Institute of agrarian marketing, in the course of the season and third class wheat in Central Russia to rise to 15 thousand rubles per ton.

«Due to the fact that now there are many proinflationary factors (this and the forthcoming VAT increase, and an increase in the cost of fuel), there is a reason to put a little pressure on prices. Derivatives of corn — bread and flour — are very responsive to inflationary expectations of the population», — said Timur Nigmatullin, a financial analyst «Discovery broker». So, if inflation gets out of control, it is a good way to slow down.

Thus, the government wants to insure in advance against accelerating inflation and high prices in the grain market.

Now, in October, to engage in price regulation is not necessary, said Vladimir Petrichenko, but in the case of a sharp price hike the Ministry of agriculture will be able to quickly go to market with commodity interventions. Therefore, the current decision about the impending sale is the course for the future.

Analysts, however, point out that the scale of the market projected sales quite a bit more than per cent, and therefore the impact on prices will be minimal. «The main goal is more of updating inventory, because grain cannot be stored forever,» — said Nigmatullin.

What will happen to the price of bread

Whether the public to expect rise in price of bread during the jump in grain prices? Experts explain: the price of bread is only weakly dependent on the price of wheat, and even flour, because the bread the wheat is not so high. Grain prices will almost never affect the cost of bread. The main factor of annual inflation.

«The price of a loaf of bread, which the buyer picks store, grain accounts for only 20-25 percent. The rest is the cost of processing grain into flour, the wages of bakers, electricity, transport costs, mark-up the retail network and so forth,» — says Pavel Skurikhin, President of the National Union of grain producers.

Buyer pays for cost components that vary within the country in line with inflation. And there are components in this simple product quite a lot, and they are all increasing in price. This, in particular, expenditure on water, electricity, gas, spare parts, payroll, sewage water, modernization of production.

That is the main factor affecting the price of bread, ' inflation processes. Experts suggest that the bread in the coming months even surpass inflation. The main reasons for the rise of the dollar, the cost of petrol and the VAT increase.

https://ria.ru/economy/20181009/1530225251.html


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