Putin announces ban on grain exports

The decision by the Russian government appears to be warranted in light of the massive crop failures in that country. Food prices will surely go up in the short term but how high can they go before people take their anger out on their governments. There are currently record numbers of Americans relying on food stamps to put food on the table. The U.S. Department of Agriculture - which oversees the program and distributes the money to states - projects that 43 million Americans will be using food stamps by next year. The last thing we need right now are higher fuel and food prices with unemployment numbers as high as they are right now. Eventually other countries might decide to stop exporting their own surpluses in efforts to insulate their own populations from these higher prices which could prove disastrous for poorer nations that rely on food aid. But even the larger countries like the U.S., India and China could have problems as these countries rely upon grain imports to meet the needs of their populations.

Putin announces ban on grain exports
By Catherine Belton in Moscow and Jack Farchy and Javier Blas in London

Published: August 5 2010 10:50
Last updated: August 5 2010 10:50

Vladimir Putin, the Russian prime minister, on Thursday announced a temporary export ban on grains after a severe drought decimated the country’s crops.

“I think it would be expedient to introduce a temporary ban on export grains and other agricultural goods,” Mr Putin told a Cabinet meeting. “We cannot allow an increase in domestic prices and we need to maintain the number of cattle.”

The ban will take effect from August 15, a spokesman for Mr Putin said

Wheat prices rallied sharply on the news. In Chicago, wheat jumped by its daily limit of 60 cents to a new peak two-year peak above $7.85 a bushel, up nearly 80 per cent in little a over a month. In Paris, European wheat hit €222.75 a tonne, up 6.6 per cent on the day.

Interfax, the Russian news agency, earlier quoted a source in one of the economic ministries as saying that the export ban could affect wheat, barley, rye, corn and flour. It also quoted Arkady Zlochevsky, president of the Grain Union lobby group, as saying: “The signals that export will close from as soon as August 10 exist.”