Experts comment on correlation between meat and grain production

Participants of the Russian grain market believe that the development ofthe meat sector will promote domestic demand for grain, Alexander Yukish,president of the Russian grain union, declared at a press conference today.According to him, meat producers will be interested in buying domesticgrain, in the event they are given credits and direct subsidies. At thesame time, in accordance with present laws and regulations, the grain unionsuggests that strict control over imports of livestock products should beintroduced, including taxes and restrictions. The union plans to voice itsposition on this question at a government meeting on September 19, 2002.Yukish pointed out that currently, problems of low liquidity (low demandand low prices) of the Russian grain market were solved by encouraginggrain exports and conducting interventions on this market. However,capacities of Russian ports do not exceed 5m tons of grain, while Russiamay export more than 10m tons in the 2002-2003 season, he added. Moreover,market participants believe that the development of export infrastructuremay be risky, as the current volume of grain production is mainly due toweather factors rather than to a general tendency.Andrey Sizov, head of the analytical center SovEcon, says that in the1990s, a demand for forage grain was twice as much as the current demand,74m tons compared to 35m-36m tons in the 2001-2002 season. According tocalculations of the Russian Ministry of Agriculture, a 20 percent increasein meat production and a 10 percent advance in milk production in Russiamay raise the forage grain demand from 36m tons to 44m tons. At the sametime, the center stresses, under conditions of a favorable development ofthe market, the forage grain consumption may grow to 8m tons per year. Inthis event, Russia will have to produce at least 100m tons of grainannually, taking into account 10m tons of grain exports. However,currently, Russia is unable to support this level of production, Sizovconc! luded. .