Perilous Times and Climate Change
Shortages: Food prices soar in Russia after drought
by Staff Writers
Moscow (AFP) Aug 25, 2010
Prices of basic foodstuffs like buckwheat and flour have soared in
Russia over the past month as the effects of its worst ever drought hit
supplies, statistics showed Wednesday.
Inflation in Russia was 0.2 percent for the week 17-23 August,
considerably higher than the figure before the drought and the third
week in a row that prices have risen by this amount, the state
statistics office said.
Most alarmingly, the price of Russian staple buckwheat -- enjoyed by
generations for breakfast or as an accompaniment to meat -- rose a very
sharp 8.6 percent in the space of the week.
Flour prices rose 3.3 percent, while milk was up 1.3 percent. The price
of bread, a crucial component of the Russian diet which is consumed
with almost every meal, increased 0.9 percent.
The drought, caused by the hottest summer in Russia on record,
destroyed one quarter of the country's crops and prompted the
government to slap a highly controversial ban on grain exports to
protect domestic supplies.
But consumers have already seen buckwheat and other goods disappearing
from the shelves as demand outstrips supply, stoking inflation.
The government, nervous of the price rises causing social discontent,
has already warned that it will clamp down on any merchants seeking to
profit from the situation unfairly.
The federal anti-monopoly service said it has strengthened its controls
on food markets and opened 25 probes into suspected cases of price
abuse in August alone.
It said bread prices could rise by up to 15 percent by the beginning of
September while milk in some regions had already gone up by 18 percent.
Before the drought, Russia was the world's number three exporter of
wheat and its ban on grain exports drove global wheat prices to two
year highs.
The government said Tuesday that inflation this year would now be
higher than the previous estimate of 6.0-7.0 percent due to the drought.
"Inflation risks as a result of the drought have grown considerably,"
said Deputy Economic Development Minister Andrei Klepach.
Inflation in Russia, which reached levels that caused panic in the
1990s, has been on a steady decline in the last years, allowing the
central bank to cut interest rates during the global economic crisis.
The agriculture ministry Wednesday confirmed that the harvest so far
this year at around the halfway point was a third lower than levels a
year earlier.
Farmers had harvested 41.5 million tonnes of grain, compared with 60.5
million tonnes, it said.
Russia has warned that its grain harvest this year will be just 60-65
million tonnes, compared to 97 million tonnes in 2009. Last year,
Russia exported 21.4 million tonnes of grain abroad.
"The most acute problem is with buckwheat because last year's stock is
not big and the forecasts are bad," said Mikhail Susov, corporate
relations director of the X-5 Retail Group which owns the large
Perekrestok supermarket chain.
"We have seen the wholesale price for buckwheat rise 40-60 percent. For
milk there is a shortage of 25 percent. Suppliers have warned that this
risks lasting until the end of the year," he said, according to Russian
news agencies.