Russia Poised To Sell Grain For First Time In 50 Years

Russia is likely to export part of this years grain harvest after importing wheat for 50 years. Boris Yeltsin, president, trumpeting the countrys return to the glory of a great grain power", said he expected a harvest of 80m tonnes and predicted that Russia could sell up to 10m tonnes. Grain traders, however, were sceptical about how much would be exported, although the markets had come to expect a large harvest in Russia in recent weeks in line with much of eastern Europe. Wheat prices are already at low levels because of good harvests around the world and traders said the Russian exports were unlikely to have much impact.

This years predicted harvest is nearly a third greater than the dismal yields in 1995 when Russia produced just 63.4 m tonnes of grain. Last years harvest was only marginally better at 69.3m tonnes.

Yeltsin said the robust harvest was a sign that reforms were beginning to work even in the agricultural sector, which has long lagged behind in the countrys market transformation. It showed that agricultural production is by no means doomed to be a lossmaking," the president added.The Russian leader credited the agricultural revival to reforms which had given farmers greater independence from the Soviet-era bureaucracy, allowing them more freedom to chose suppliers of fuel, fertiliser and so on. He continued his crusade on behalf of private farmers, saying they represented Russias future and should be allowed freely to buy and sell land.

Mr Yeltsin also praised a new system, pioneered this year, of channeling credits to the agricultural sector through commercial banks. He said the mechanism had provided a way to continue offering farmers subsidised credits while cutting down on the loan defaults which have been a burden on the Russian budget.

Chrystia Freeland in Moscow

Additional reporting by Maggie Urry and John Authers n

Mikhail Friedman, chairman of the Alfa Group, one of two banks through which agricultural credits are being channelled, praised the new system and said rural Russia was on the brink of revival. Traditionally, at least over the last 50 years, we have bought at least 20, tonnes of grain from the US and Canada,." he added. It was a very big business."

In London, Richard Mayhew, grain futures broker at commodities group GNI said: I would be surprised if they exported 10m tonnes, but they will export something." Russia was likely to export lower quality feed wheat and barely and would need to import milling wheat, a higher quality grain used for bread.

Reaction in Chicago was that the news would be a psychological negative" for the market, as Russia would no longer be a buyer of wheat.

Chrystia Freeland in Moscow

Additional reporting by Maggie Urry and John Authers