Russian grain traders were racing to move supplies out of the Black Sea port of Novorossiysk on Friday to beat an export embargo that starts this weekend.
Moscow announced a ban on grain exports after a severe heatwave and drought destroyed at least one fifth of Russia’s grain crop and wildfires swept across the European part of the country.
The ban, from midnight on Saturday and running at least until the end of the year, has caused world wheat prices to surge, stirring fears of a repeat of the 2008 food crisis.
While welcomed by domestic consumers, the embargo is a setback for grain traders who have flourished amid a revival in the agricultural sector and bumper harvests in the past two years.
“Traders believed that they had a guaranteed source of quick cash. And then it was stopped in one minute by a decree,” said Dmitry Rylko, the director of the Institute for Agricultural Market Studies, a Moscow-based consultancy.
Kirill Podolsky, the director general of Valars, one of Russia’s biggest agricultural groups, said: “The ban is very harmful. Everyone is unhappy about it.”
But Michael Petrenko, general director of the Novorossiysk Grain Terminal, one of three large outlets at the port which is the main gateway for Russian grain exports, said the embargo would not alter the company’s plans to expand. “The measure is unavoidable, but it is temporary. Russian grain has a bright future,” he said.
Russia’s Grain Union urged the government to delay the embargo, saying ports would be unable to load all contracted exports before the restrictions came into force, and that failure to fulfil contracts would damage Russia’s reputation as a reliable supplier.
Viktor Zubkov, Russia’s deputy prime minister, said on Friday that there would be no reprieve: the embargo would begin as planned and continue until December 31.
Vladimir Putin, Russia’s prime minister, has given warning that if the grain harvest is even worse than expected, the ban might be extended into 2011.
Before the drought struck, the Kremlin was carving a role for Russia as a global grain power – aiming to challenge US supremacy in international wheat markets.