Russia intervenes to stabilize food prices

MOSCOW - Russia decided to take intervention measures in the domestic grain market to stabilize surging food prices, Deputy Prime Minister Arkady Dvorkovich said Monday.

During a government meeting with Prime Minister Dmitry Medvedev, Dvorkovich said 110,000 tons of grain would be sold weekly in a number of Russian regions.

The first batch of grain would be sold on Oct 23 in Siberia, the Urals and the Far East region, with the price 10-15 percent lower than market prices, Dvorkovich said.

The fourth grade grain would be sold at 7,200 rubles ($232) per ton and the third grade at 7,600 rubles ($245), he added.

The government vowed to reach two goals with intervention measures: to prevent a sharp price rise for domestic consumers, to weaken export incentives so as to regain balance of supply and demand in the grain market, Dvorkovich said.

Medvedev announced the decision on commodity intervention last week and urged the government to sell grain from the pervious harvest reserves intervention fund, the Kremlin press service reported.

Admitting Russian farmers failed to reach the estimated harvest this year due to drought in summer, Medvedev said "additional supply of grain" was needed to balance the situation in several regions.

Local experts estimate the drought would cost Russia's agricultural business some 33 billion rubles ($1 billion) this year.

Though the government previously lowered its grain export forecast, experts said the bad weather was unlikely to trigger an export embargo similar to that of 2010, as grain output and reserves were enough to offset the damage.

Russian Grain Union President Arkady Zlochevsky said in August that food prices in the country might rise 5 percent to 10 percent this autumn due to surging grain prices.

Russia lowered its harvest forecast this year from 80-85 million tons to no more than 75 million tons. The harvest could exceed 70 million tons this year, as a total of 68 million tons have already been secured, Dvorkovich said.