Reserve price list – Newspaper Kommersant No. 39 (7484) of 03/07/2023

The Ministry of Agriculture has published a draft of new marginal prices for grain, under which purchasing interventions will be carried out in 2023-2024. Previously, the Chamber of Commerce and Industry (CCI) insisted on the need for additional interventions. So far, the ministry states that there are enough grain reserves, however, they admit that the possibility of additional purchases is being “worked out”. Caution in wording is likely due to uncertainty about export opportunities, which is growing on the eve of the expiration of the grain deal.

Last week, the Ministry of Agriculture proposed to increase the marginal prices for grain, at which purchasing interventions will be carried out in 2023-2024 – the draft decree is posted on regulation.gov.ru. According to the document, purchases to the state fund will be carried out when the price reaches 17.8 thousand rubles. per ton for soft wheat of the third class, 16.8 thousand rubles – the fourth class, 12.65 thousand rubles. for rye not lower than the third class and 4.6 thousand rubles. per ton of barley.

The last purchases to the state fund (3 million tons of grain) were made in 2022. In mid-February, Deputy Head of the Ministry of Agriculture Oksana Lut announced her refusal to purchase interventions in 2023: the decision was explained by the fact that stocks guarantee “food security”, and further purchases are not needed, if only because there is nothing to buy large volumes of products and nowhere to store. The fact that since then the plans of the Ministry of Agriculture have not changed, speaks and its head Dmitry Patrushev.

The Chamber of Commerce and Industry addressed the Ministry of Agriculture with a letter about the need for additional state purchases of 3-5 million tons of grain in order to support farmers at the beginning of the spring sowing season. In response to a letter from the Chamber of Commerce and Industry (Kommersant has it), Ms. Lut still insists that there are enough grain reserves in the state fund – the volume purchased last year is calculated from domestic consumption. At the same time, the deputy minister states that the Ministry of Agriculture does not have complete certainty – the issue of additional purchases is “worked out”. A less categorical position is probably explained by the fact that, given the overstocking of the market with grain, the prospects for exports are unclear: despite their high estimates by the Ministry of Agriculture itself (30-35 million tons), market participants talk about problems associated with logistical difficulties and high export duties. The issue of extending on March 18 the validity of the grain deal concluded in July 2022 between Russia, Ukraine, Turkey and the UN has not been resolved. Recall that the Russian side believes that other participants in the deal do not fulfill their obligations.

However, in the event of difficulties with exports, the expansion of interventions at the current market volumes is unlikely to be able to significantly affect it – this was previously discussed in the Union of Grain Exporters. Its president, Eduard Zernin, emphasized that it is more efficient to remove excess supply through export. However, as Andrei Sizov, director of the Sovecon analytical center, notes, due to weather and infrastructure restrictions, it is impossible to export more grain from the country than it is now. At the same time, it will not be possible to maintain the profitability of the industry in the long term by purchasing interventions, which are possible in the current conditions, although (given the state of the budget) and are difficult, it will not work: the main problem, the expert states, is the export duty, due to the preservation of which the situation will only worsen in the future .

Christina Borovikova