Moscow, St Pete to get bulk of govt grain tranche
478 words
23 December 2010
10:24
Reuters News
LBA
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© 2010 Reuters Limited
* Sixteen pct of Russian population live in the two cities

* Market sources say distribution should be different

By Aleksandras Budrys

MOSCOW, Dec 23 (Reuters) - Russia's capital and the second largest city of St Petersburg as well as surrounding regions will get the bulk of the first tranche of the government grain aid, the Agriculture minister said on Thursday.

"Nine hundred thousand tonnes of grain will go to Moscow and the Moscow region and to St Petersburg and the Leningrad region," Yelena Skrynnik told a news briefing.

The two cities and the adjacent regions account for 16 percent of the Russian population

On Wednesday, First Deputy Prime Minister Viktor Zubkov, who is in charge of the agriculture, said that according to an order signed by Prime Minister Vladimir Putin, the government is allowed to sell at low, fixed prices the first 1.3 million tonnes of grain out of the 9.64 million it has in its intervention stocks. [ID:nLDE6BL0PW]

Skrynnik said Putin had signed two orders, the first allocating grain to Moscow and St Petersburg and the adjacent regions, and another allocating 211,000 tonnes of grain to 15 regions worst hit by the drought in the centre and in the south of the country.

The government offers both milling and feed grain.

Skrynnik did not explain reasons behind such a distribution, but said she expected the grain to reach its destination next month.

"It is absolutely incredible what is being done," a market source told Reuters on the condition of anonymity.

"Moscow and St Petersburg may get the grain from government-appointed silos in the nearby regions worst hit by the drought. Local governors, who expected to obtain the grain themselves, will be very grateful for that."

Or else, the grain will have to be shipped from the south where there is a surplus. But it would disrupt commercial shipments which are already suffering from underdeveloped infrastructure, the source said.

The regions will get low quality grain from silos, which belong to companies, which went bankrupt, the source added.

"From the point of view of logic, the distribution should have been different," another source said.

"Worst hit were regions on the Volga River and in the central Russia. The province of Tatarstan alone needs six times more grain than St Petersburg."

The most severe drought in over a century cut the grain harvesting area in Russia by a third this summer, and the grain harvest to 60.5 million tonnes from 97 million in 2009, which pushed domestic prices up in spite of an export ban.

The government has decided to sell part of grain from its intervention stocks to regions with grain deficit to curb rising prices. (Reporting by Aleksandras Budrys)