Russia To Double Grain Intervention In 2009

The government will double its grain-intervention program next year and buy nearly 20 million tons of grain, said First Deputy Prime Minister Viktor Zubkov, speaking at a meeting on Tuesday in the Moscow region.

Increasing grain purchases will "give us the necessary reserves for a bad harvest in the future," Zubkov said, Interfax reported.

He added that this will allow the country to export grain in more favorable market conditions.

After global and domestic prices plummeted early in the harvest season, the government began buying and storing millions of tons of grain to prop up prices and protect its producers and exporters from further price drops.

Since May, Russian grain prices have fallen more than 50 percent. As of Dec. 8, Russian class-3 wheat stood at 4,344 rubles per ton, down from 9,128 in May.

The government, which has bought wheat at up to a 25 percent premium to market prices, has spent 15.1 billion rubles on 3.2 million tons of grain, and before the end of the year it plans to buy another 1.8 million tons.