Fighting to save the harvest

Evgeny Nikolaichuk, exclusively for VK

The Russian Federal State Statistics Service has once again registered an increase in consumer prices for basic food staples. By the end of August flour alone grew in price over the month by 5.5%, while bread and pasta - by 2-3%. Siberia appears to have the biggest growth in prices since in the last month and a half grain and flour prices there  increased by 70 %. What is the reason behind the galloping food prices? The global drought always takes the blame. Due to the global draught that affected everyone the grain harvest in Russia this year will be 17-19 million tons, that is 20% less than last year.

However, there is another major reason for the growing food prices. On July 1, tariffs on services of natural monopolies increased, which affected the fuel prices. These new rates and prices immediately affected ordinary peasants and farmers. The food prices grew due to the growth of expenses on fuel needed to collect, transport and store the harvest. The result is a paradoxical situation, in which one of the leading exporters of grain raised the price of bread by 6%, while the EU, which mainly imports grain - raised prices by only 1.6%.

But officials remain optimistic: according to the recent data of the Ministry of Economic Development and its head, Deputy Prime Minister Arkady Dvorkovich, an embargo on the export of Russian grain is not expected. However, only 12 million tons of grains will be exported this year as opposed to 27 million tons last year. In order to stabilize the domestic market, the government will introduce trade interventions in the grain market from the stock of the federal intervention fund (currently there are about 5 million tons of grain). The first intervention will take place already in September in regions with grain deficit, but the largest grain interventions will take place in February and March, when a new wave of price increases is expected. Does this mean that a major crisis is yet to come?

A state of emergency has already been declared in 19 Russian regions, about 5.7 million hectares of harvest has perished. An embargo on grain exports could avoid a second wave of price increases, but the officials of the Ministry of Agriculture are not looking for easy solutions, still trying to make money on exports. Moreover, they forecast stabilization and even a decrease in bread prices, referring to the new harvest of grain related to the improving weather. They even claim that prices for bread have started to fall in the Southern and North Caucasus Federal Districts. However, it is important to stress that prices for bread in the North Caucasus region did not stabilize on their own, but thanks to the special attention to the problem of the governor by the Krasnodar Territory Alexander Tkachev, who has recently held a conference in Krasnodar dedicated to  the issue with the participation of scientists, heads of districts, heads of departments of agriculture and agricultural enterprises. Tkachev said that one of the main reasons behind the grain crisis was that in many areas winter corps were planted too late, past the optimal time. According to him, as a result of this policy, the region has lost a third of its crops.

The situation in the agricultural sector in Chechnya is under the personal supervision of the head of Chechnya, Ramzan Kadyrov. At a meeting between Kadyrov and the Minister of Agriculture of  Chechnya, Musa Dadayev, heavy rains were the main reason for the lack of harvested crops. Dudayev said that instead of the required 25 thousand  tons phaonly 7 thousand tons were harvested. However, 40 thousand hectares of arable land for winter crops have been prepared, and in the next three years the Ministry of Agriculture expects to fully support the needs of the population, Dadayev added. Chechnya also relies on experimental seeds that are expected to yield good harvest results next year.

It is estimated that by 2020 the country will annually produce 120-125 million tons of grain. And it will increase its export capacity by  about 30-35, maybe 40 million tons," Putin said, speaking at the APEC summit. If Russia realizes its full potential it could regain the status of the world's breadbasket."