[LINK] "Russia Adds to Decade of Grain-Price Flux With Intervention"

[rfmcdonald]

Rudy Ruitenberg of Bloomberg observes how Russia is trying to limit exports of its wheat in order to avert economic issues. Argentina, as I recall, has imposed similar export taxes on its agriculture in the recent past.

Russia plans to introduce grain export duties, reinforcing a willingness by the fourth-biggest wheat supplier to protect domestic interests that helped bring about a decade of food-cost turmoil.

The government said today it would develop duty proposals within 24 hours as it tries to rein in domestic prices inflated by a rout in the ruble. That follows export duties in 2004 to limit shipments, a jump in the rates in 2008 to brake inflation and an outright ban in 2010, when drought caused crop failure. Chicago wheat prices soared 47 percent that year.

Russia, which accounted for about 1 percent of world wheat exports at the start of the 1990s, was projected to make up 14 percent this season, before export curbs were announced, U.S. Department of Agriculture data show. The country’s share fell to 3 percent after the 2010 ban, from 14 percent a year earlier.

“For some years we were under the impression that they were as reliable as the traditional suppliers,” Abdolreza Abbassian, a senior economist at the United Nations’ Food & Agriculture Organization, said by phone from Rome today. “A good crop is no guarantee that Russia will export either.”

[. . .]

The country’s grain exporters asked the government to withhold export duties until after March 1, Interfax reported today, citing a letter from the National Association of Exporters of Agriculture Products.

“Russia would be losing face as an unreliable supplier,” said Natalya Volchkova, an assistant professor at Moscow’s New Economic School. “It’s one thing to restrict exports because of bad harvest, and another to do it on the account of politics, which is worse.”