On March 23, Russia faced a nationwide concern over an excessive grain stock resulting from a period of over-harvesting and export disruptions. Authorities announced a bold expansion of tools to regulate the grain market. The Cabinet of Ministers concluded that new purchases of grain up to 7 million tons, representing as much as 5 percent of the crop, into the state fund would be inevitable. This summary reflects coverage from Kommersant. Source attribution: Kommersant.
In the short term, such a move is expected to stabilize prices and provide relief to agricultural producers. Yet there is a potential drawback for the government if the state fund must eventually sell the procured grain back into the market. Officials have also indicated an aim to transfer a substantial portion of the surplus out of the country in the near term. A grain decree was described as potentially analogous to prior strategic moves and, as officials anticipate, could lift exports from sanctions restrictions. Source attribution: Kommersant.
During the same period, Prime Minister Mikhail Mishustin reported to the State Duma a record grain harvest of 157 million tons. He stated that this level would meet 177.8 percent of domestic demand for grain, with a notable emphasis on ensuring food security. The Prime Minister underscored that the dominant goal of the current policy is to preserve stable supplies and affordable prices for the population, while maintaining strategic flexibility for the agro-industrial sector. Source attribution: Kommersant.
One of the persistent instruments to counter a sharp decline in prices and profitability within the agro-industrial complex is the state procurement mechanism. Under this approach, the government withdraws excess products from the market and purchases them for the state fund. The last major use of this mechanism occurred in 2022 when around 3 million tons of grain, valued at 47.1 billion rubles, were bought for the fund. In 2023, authorities did not plan new purchases, despite objections from market participants. Source attribution: Kommersant.
However, by Thursday, Deputy Prime Minister Victoria Abramchenko, who oversees the agricultural sector, stated that the government is evaluating the possibility of purchasing up to 7 million tonnes of grain in addition to the existing state funding. The plan would require an additional financing of about 11 billion rubles in 2023 and more than 20 billion rubles over the following two years. The reference point to past budgets shows the scale of the State Fund, which reached a 10 million-ton ceiling back in 2010. Source attribution: Kommersant.