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MOSCOW, Sept 6 (Reuters) - Russia’s Agriculture Ministry has proposed imposing state subsidies for grain supplies by rail to the exporting ports of Russia’s southern regions, the minister, Alexander Tkachev, told the RIA news agency on Wednesday.
Russia’s grain storage, railway transport and export infrastructure is working at maximum capacity as the crop, which is widely expected to exceed last year’s record, hits the market.
“There is a need to purchase about 3 million tonnes of grain. It will stabilise the market and will stop the price fall,” Tkachev said in an interview with the agency.
According to Tkachev there are two options; to purchase grain from the domestic market for the state reserves, in which the ministry already holds 4 million tonnes, or to stimulate exports.
“The second idea is in works now. It means 100 percent subsidies for railway tariffs for grain transportation, particularly from the Volga, Urals and Siberian regions to southern ports,” he said.
Russia, shaping up to be the world’s largest wheat exporter in the 2017/18 marketing year that started on July 1, is expected to harvest a grain crop of 128-134 million tonnes, according to unofficial estimates.
Russia’s Agriculture Ministry, however, is keeping its forecast for the 2017 grain crop at the lower level of 110 million tonnes.
Farmers have already harvested 101.5 million tonnes of grain before drying and cleaning from 65.5 percent of the total area. The market expectations of large grain crop have been keeping both domestic and export prices under pressure for several weeks.
According to Tkachev, his project, if accepted by the government, would make it more attractive for traders to export Russian grain from regions which are far from Russia’s southern export ports.
Speaking to another news agency, TASS, Tkachev mentioned the same idea, but also added that it would allow the ministry to refrain from building up the state stocks.
The proposal, in its current form, suggests bringing the tariff of Russian Railways, the state railway monopoly, to zero and includes measures to stimulate Russian rail infrastructure operators to reduce their tariffs for grain supplies, Tkachev added.
Russia may also supply up to 500,000 tonnes of grain to Mongolia, which was hit by drought, Tkachev told TASS. He did not say whether it would be a commercial deal or a humanitarian aid. (Reporting by Polina Devitt; editing by Dmitry Solovyov and Louise Heavens)