Russia bans wheat exports

Russia is banning grain exports
until the end of the year because a drought has destroyed 20 per cent of its
wheat crop.

Prime Minister Vladimir Putin said
the ban was needed to prevent a rise in domestic food prices, feed Russia’s
cattle and build up grain reserves.

The country is one of the world’s
top wheat exporters and was earlier this week forced to slash its grain harvest

European wheat prices soared on
news of the export ban, which comes into force on 15 August.

Martin Deboo, a consumer goods
analyst at investment bank Investec, said UK consumers could feel the knock-on
effects within a few months.

Bread, pasta and biscuits would be
directly affected by the price rises, he said, but meat prices would also be
indirectly affected.

“Our sense in the bread
industry is that the processors aren’t holding too much wheat and flour,”
Mr Deboo commented.

“We would perhaps expect to
see these wheat prices influencing consumer prices in the autumn.

“I think at current wheat
prices you’re probably talking about something of the order of 10-15p going on
to a loaf of bread – roughly a 10-15 per cent  price increase.”

Mr Putin told a government meeting
in Russia that the heat wave and worst drought in decades had made it necessary
to take the drastic step.

“In connection with the
unusually high temperatures and the drought, I consider it right to impose a
temporary ban on the export from Russia of grain and other products produced
from grain,” he said.

He added that grain from the
government’s intervention fund would be handed out to the regions most in need
and financial aid would be offered to farmers.