Intervention sales may decrease domestic grain prices, but are unlikely to impact exports, which have slowed considerably since January.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: RS1224
Russian Government Begins Selling Intervention Grain
Grain and Feed
The Russian government has begun selling grain from the intervention fund, and plans to sell up to 2
million metric tons (MMT) in those regions where prices are relatively high and grain stocks are low.
Intervention sales may decrease domestic grain prices, but are unlikely to impact exports, which have
slowed considerably since January.
On April 4, 2012, the Russian government began selling grain from the State Intervention Fund to grain
processors and other consumers. This selling is called ?commodity interventions?. In accordance with
the Russian legislation, the Ministry of Agriculture officially opened these interventions through an
Order of April 3, 2012 and a letter of March 12, 2012. In February 2012 the Ministry of Agriculture
determined the maximum level of market prices (so called maximum prices) when the government
would begin selling grain (Order #121 of February 20, 2012, published March 16, 2012). These
maximum prices differ by crops by federal districts and even by provinces (Table 1). The Ministry of
Agriculture?s Order on prices came to force on March 27, 2012 and will cease to be in force on
December 31, 2012.
By the beginning of April the Intervention Fund had almost 6.92 million metric tons of grain worth over
32 billion rubles ($1.1 billion). According to recent government information, the structure of this grain
was the following: 67,000 MT of grain purchased in 2005, 4.81 MMT purchased in 2008, 1.64 MMT
purchased in 2009, and over 0.4 MMT purchased in 2011. The Ministry of Agriculture is going to sell
up to 2 MMT of grain of grain from 2005, 2008 and 2009 harvests to consumers in those regions where
grain prices exceeded the determined maximum levels, and where stocks are low. These are the North-
Western, Central, Southern and North-Caucasian Federal Districts.
According to media reports, the government began selling grain from the intervention fund with the
following purposes: to free up and clean storage facilities before the 2012 crop, to curb grain price
increases in European Russia, and to support exports. Russian State Statistical Service (Rosstat)
reported that by beginning of March 2012, Russia?s grain stocks at farms (except small private farms
and households, so called small forms of agricultural enterprises) and storing and processing enterprises
were 29 MMT, which is only 3 percent higher than in March 2011, when the crop had been very poor
and the grain export ban was in force. This March 2012 level is also 20 percent lower than on March
2010. Moreover, stocks in the main grain exporting (Southern, North Caucasian) and grain consuming
(Central and North-Western) federal districts were below March 2011 levels. Of all grain, wheat stocks
have decreased faster than other grains due to the very strong export pace in late 2011, and by March 1,
2012 the country?s stocks of wheat were 12 percent (or 2.5 MMT) smaller than March 2011.
During the first four days of commodity interventions (April 4, 5, 11 and 12) the government,
represented by the United Grain Company (UGC), sold 427,384 MT of grain for 2.2 billion rubles ($74
- 13,590 MT of soft milling quality wheat, Class 3, harvests 2005, 2008 and 2009;
- 171,705 MT of soft milling quality wheat, Class 4, harvests 2005, 2008, and 2009;
- 169,343 MT of soft wheat of feed quality, Class 5, harvest 2008;
- 24,710 MT of food quality rye, harvests 2008 and 2009;
- 48,036 MT of feed quality barley, harvest 2008.
Market prices of wheat stopped rising on the eve of interventions. Industry analysts expect that
interventions sales of up to 2 MMT of grain may decrease Russia?s domestic grain prices, but cannot
forecast the speed and scope of this decrease, or its possible effect on export sales. Wheat prices in
world markets have been decreasing, and Russian wheat has lost its competitive price advantages in
February ? March 2012. Meanwhile, domestic demand in wheat remains strong. Thus, intervention sales
are likely to fill domestic demand rather than stimulate export sales.
Annex 1. Maximum [Market] Price Levels for Beginning of Commodity Interventions, Prices include
VAT [i] , Rubles per MT [ii] .
Wheat, Wheat, Wheat, Rye, Barley,
milling, milling, fodder Food fodder
quality, quality, soft, quality, soft, Quality quality
soft, Class Class 4 Class 5
Harvest 2005 5,000 4,500
- Southern, North- 6,050 5,400 4,550 4,300 4,450
Caucasian, part of Central (Ural Federal
and Volga Valley federal District
- Part of Central Federal 7,550 7,150 6,000
District, Volga Valley
Federal District, and part
of the North-Western
- Central, North-Western, 6,050 5,400 NO 4,300 NO
Volga Valley (except (Orenburg
Orenburg oblast), oblast
Southern and North included)
Caucasus federal districts.
- Ural, Siberian, Far 6,600 5,300
Eastern federal districts, (Orenburg
Orenburg oblast oblast
Note: detailed list of provinces by maximum price levels is in the text of the Ministry of Agriculture?s
Order #121 of February 20, 2012, published March 16, 2012: http://www.rg.ru/2012/03/16/minselkhoz-
?Maximum price? means that the government will begin selling grain from the intervention fund when market prices in the
region exceed the ?maximum?. However, grain sales do not begin automatically, and special orders and letters of the
Ministry of Agriculture are required.
[ii] The exchange rate in 2012 may be close to 30 rubles per $1.