This is obviously a very serious move by Russia, and clearly not a decision that Vladimir Putin made lightly.

I have added some personal comments to the following article in brackets.


Russia, Crippled by Drought, Bans Grain Exports

By ANDREW E. KRAMER

August 5, 2010


MOSCOW -- Prime Minister Vladimir V. Putin on Thursday banned all exports of grain after millions of acres of Russian wheat withered in a severe drought, driving up prices around the world and pushing them to their highest level
in two years in the United States.

[This is one of the negative results of the move towards globalization. When one country suffers, they all suffer.]

The move was the latest of several abrupt interventions in the Russian
economy by Mr. Putin, who called the ban necessary to curb rising food
prices in the country. Russia is suffering from the worst heat wave since record-keeping began here more than 130 years ago.

[And according to the Book of Revelation, there are more heat waves to
come.]

"We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for next year," Mr. Putin said in a meeting broadcast on television. "As the saying goes, reserves don't make
your pocket heavy."

During his years as president and prime minister, Mr. Putin has never
hesitated to marshal the power of the state to protect Russian economic interests, and this decision showed that this has remained his prerogative
even after he stepped down as president.

[He may no longer be the Russian president, but as I've said before, Putin
is STILL the man behind the power.]

Mr. Putin has also proved adept at deflecting criticism of the government
with grand gestures, and the export ban was widely seen as one of a series
of populist moves by Mr. Putin to address rising resentment over the
calamitous heat wave and the fires it has spawned.

Pressure was also brought to bear by multinational grain trading companies, which have been lobbying for the ban as a way to escape futures contracts
drawn up before the drought, when prices were far lower. A Russian
subsidiary of Glencore, the Swiss-based commodities trading company that has close ties to the Russian government, pressed hard as the scope of the drought's devastation became clear.

Wheat prices have soared by about 90 percent since June because of the
drought in Russia and parts of the European Union, as well as floods in
Canada, and the ban pushed prices even higher. Exports from Ukraine, another major exporter, are down sharply this year.

[I am reminded of these verses from the Book of Revelation:

"And when he had opened the third seal, I heard the third beast say, Come
and see. And I beheld, and lo a black horse; and he that sat on him had a
pair of balances in his hand. And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for
a penny; and see thou hurt not the oil and the wine." Revelation 6:5-6, KJV

That is prophesied inflation, folks!]

Russia, the largest grain-exporting nation before World War I, has largely recovered from failed Soviet agricultural policies, lifted by rising global food prices and economic reforms that encouraged private farmers and
companies to once again till the country's expansive and fertile croplands. Before this year's drought, yields had risen steadily, and Russian grain exports totaled 21.4 million metric tons last year, about 17 percent of the global grain trade.

But on Thursday, rail cars heaped with fresh grain came to a halt around Russia, stopped in midjourney from the country's fields to the main
exporting ports on the Black Sea. The order covered a variety of grains, including barley and corn, but will have its greatest impact on wheat
exports.

Mr. Putin said that the government might extend the ban if the harvest
yields even less than the current grim forecasts. The projected yield is
about 70 million metric tons of grain, according to the Russian Grain Union,
a lobbying group for farmers, about equal to domestic needs and down sharply from last year's total of 97 million metric tons.

The group was sharply critical of Mr. Putin's decision. "First of all, you
can congratulate American farmers, who are going to take the niche that
Russian farmers are leaving" in global markets because of the ban, said
Anton V. Shaparin, a spokesman for the group. He added that Russia's
reserves could cover the shortages from this year.

Owing to last year's bumper crop, Russia currently holds about 24 million metric tons in grain elevators, the group said.

In Egypt, the world's largest wheat importer and a major customer of Russia, officials said only that they hoped current contracts would be honored.

The abrupt ban -- just this week, a deputy agricultural minister had said no such measure would be taken -- recalled other decisive actions by Mr. Putin. Last summer, he canceled Russia's bid to join the World Trade Organization, saying the country would apply only as a customs union with Belarus and Kazakhstan. Mr. Putin twice ordered natural gas shutoffs to Europe amid disputes with Ukraine ostensibly over pricing.

The Russian agro-business sector, which has just been emerging here from the ashes of the failed Soviet collective farm system, was also left pondering
its future.

Russia, blessed with the greatest reserve of fertile but fallow land in the world, is thought by many experts to have the greatest potential of any
country to meet mounting demand for food from a growing global population.

[Just imagine what a political tool all of those fertile fields could become
in a future world where the global population has increased, and global food supplies have diminished.]

Michel Orloff, the founder of Black Earth Farming, one of the new corporate farming operations that have raised yields by consolidating and reforming collective farms, said Mr. Putin's ban made sense from the perspective of curbing domestic food prices but would cost companies like his.

"We are on the verge of national need," Mr. Orloff said. "Of course, the
freer the market, the better. But his job is not only to take care of the farmers of this country, but the citizens of this country."

Kingsmill Bond, chief analyst at Troika investment bank in Moscow, which has studied the revolution in Russian farming, said the ban would damage shares
in corporate farming operations like Black Earth, Razgulay and Cherkizov.

Still, he said, "grain is an emotive issue; you want to make sure you have sufficient supplies."



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