Source: FT.com
Russia plans to form a state grain trading company to control up to half of the country’s cereal exports, intensifying fears that Moscow wants to use food exports as a diplomatic weapon in the same way as Gazprom has manipulated natural gas sales.
The move by Moscow, the world’s fifth-biggest exporter of cereals, has been sharply criticised by US agriculture diplomats as a “giant step back” to the Soviet era.
The decision to control food exports is the latest sign of how soaring food prices are reshaping the agriculture industry. The recreation of Soviet-style state trading will aggravate anxieties of food-importing countries about their dependence on the international market, which has been severely disrupted this year after exporters, including Russia, imposed prohibitive foreign sales duties or export bans.
Western diplomats and agriculture industry officials said Russia intended to transform its Agency for the Regulation of Food Markets into a state trader, controlling between 40 and 50 per cent of Russia’s cereal exports within the next three years.
The company would take over government interests in 28 important storage depots and export terminals, including the country’s biggest at the Black Sea port of Novorossiysk. The plan, pending governmental approval, could be implemented before the year’s end, diplomats said. An internal report of the US agriculture department said that if the new entity had a dominant hold over the export market, it would jeopardise “a vibrant private grain trading sector”.
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