Russia Could Increase Grain Output 50% - Cargill

Russia has the potential to raise grain output by 30-40 million tonnes per year, a 50 percent increase from current levels, a top official in commodity trading group Cargill was quoted as saying on Thursday.

Greg Page, president and chief executive of leading U.S. trader Cargill, said in an interview with Russian business daily Vedomosti that his company may double investment in Russia to $1 billion in the next 5-6 years.

"I know that Prime Minister (Vladimir) Putin is convinced of the necessity of increasing grain production in Russia by 30-40 million tonnes," Vedomosti quoted Page as saying.

He said the increase could take seven to eight years to achieve, given Russia's size and climate conditions.

"If you look at the number of hectares and the quality of soil, if the soil is ready for production and if sufficient infrastructure and processing capacities are created, I do not see this goal as unrealisable for Russian farmers," he added.

Russia officially expects to harvest at least 85 million tonnes of grains this year, up from 81.8 million tonnes in 2007.

Page said that, according to United Nations' forecasts, global food consumption was expected to rise by 50 percent by 2030 and double by 2050, and Russia would account for a significant part of the increase.

"I am sure that the world needs Russian grain to improve the balance between supply and demand on the grain market," he said.

Russia, one of the world's top grain suppliers, exported around 13 million tonnes of grain in the 2007/08 crop year finished in June. The Russian Grain Union industry lobby has said the country is likely to increase exports to 17 million next season.

Page said Cargill had spent $500 million on Russian projects since it started working in the country in 1991, and could double the investment in the medium-term.

"I will not be surprised if we invest at least the same amount in the next 5-6 years," he said.

Record prices for crops such as wheat and maize this year have sparked a surge of investment interest for farmland in Russia and other countries of the former Soviet Union, which have massive untapped potential.

Troika Dialog, in a report issued last month, estimated the Commonwealth of Independent States had 13 percent of the world's arable land, yet grows only 6 percent of its crops and farms just 3 percent of the world's meat.