In 2022, the Ministry of Agriculture plans to resume purchasing grain interventions – within two years, the authorities intend to increase stocks from the current 200 thousand to 3 million tons. This mechanism, designed to balance prices in the market, as practice shows, is very difficult due to the high cost of storing stocks and the unpredictability of their implementation. However, given the rise in sugar and butter prices, the authorities are considering expanding the practice of interventions in the market.
The Ministry of Agriculture plans to resume purchases of grain for the intervention fund from 2022, deputy head of the department Oksana Lut said yesterday. As explained to Kommersant in the Ministry of Agriculture, it is planned to increase the grain reserves in the state fund to 3 million tons (two-three-month needs of the processors). The stock, they add in the department, will be formed within two years – as a result, the size of the fund will be less than 2% of the annual production volume. The reverse mechanism of commodity interventions is supposed to be applied when grain prices rise – to provide millers with affordable raw materials, selling them at a price not lower than the purchase price. The Ministry of Agriculture also notes that the department’s proposals are supported by the government.
Recall that the last time procurement interventions were used in 2016, after that the Ministry of Agriculture only sells grain from the state fund – now its volume is estimated at about 200 thousand tons. The mechanism of grain interventions itself is aimed at stabilizing prices in the market. At the same time, back in 2018, the Ministry of Agriculture abandoned procurement interventions, giving preference to subsidizing the transportation of grain for export and referring to the high cost – now grain storage costs the state about 900 rubles. per year per ton, excluding the cost of inventory insurance.
According to Elena Razumova, adviser to the president of the CSR, the mechanism of intervention “did not lose its relevance – it is impossible to effectively regulate the grain market with any one instrument.” According to her, under extremely favorable conditions on world markets, even high duties may “not work” and grain will be exported, while interventions create physical reserves of grain, and their size, the timing of the start of sales or purchase of grain and the price at auction are instruments of indirect market regulation. …
The effectiveness of this measure, however, is unpredictable. So, the most problematic were the grain interventions of 2008-2009, when a record 8 million tons of grain for 50 billion rubles were purchased by the state fund – due to the fact that grain prices ultimately fell and the state could not sell them without a loss, not risking at the same time causing an imbalance in the entire market, its storage cost the budget another 10 billion rubles. in year. The situation was complicated by the fact that a third of the stocks were not stored in elevators, but in the “floor storage” mode, which significantly accelerates the spoilage of grain. As a result, the authorities were looking for ways to save on storage (for example, through the buyback mechanism and pledge operations). Even at the beginning of this year, the Ministry of Agriculture experienced some difficulties with the sale of grain from the fund – low demand was due to the introduction in February of a tariff quota for grain exports and an increase in supply on the domestic market.
“Initially, there was a different essence of the intervention – we bought what was cheap in order to maintain the profitability of manufacturers. Now the task is different. In fact, the state should also work as a commerce business so that it does not work at a loss, ”Oksana Lut said yesterday. The authorities are discussing the possibility of expanding interventions on sugar, having created a state fund of 500 thousand tons, the issue of purchasing oil for the state fund is being considered. The head of the Ministry of Industry and Trade Denis Manturov also suggested thinking about purchasing other products for the intervention fund and other products yesterday.