Wednesday, June 10, 2009

Russia says they want to become a leader in global food supply

Recently, Russia announced an aggressive plan to boost the amount of food it grows and supplies to the world. Russia plans on spending more money and using more of it's land to grow food and become a leader in global food supply.

In this analysis from Guardian writers Amie Ferris-Rotman and Karl Plume, many say that Russia will need to spend more on infrastructure to follow through with their ambitious plans.

The Kremlin's pledge to ease a world food shortage needs investment in port capacity and farming know-how if Russia and its Black Sea neighbours are to usurp the United States as the world's biggest grain supplier. Russia, with a tenth of the world's arable land, said at the weekend it could double grain exports within 15 years. By becoming a top supplier in a world where every sixth person goes hungry, it aims to carve out a similar key role in food security to the one it holds in energy supply.

But while some in the grain markets believe the Black Sea region can become the bread basket for the entire world, right now it does not have the capacity to do so.
"They are some years away from being considered a massive grain powerhouse," said Gavin Maguire, director at Chicago brokerage EHedger, though he added the region had potential.

"If they did invest significantly in the infrastructure there -- building roads, building rail and port facilities that are capable of moving meaningful amounts of grain -- we could have something interesting emerge over the next decade or so."
Russia plans to add 50 percent to its grain harvests by bringing into use some 20 million hectares of derelict farmland, or an area the size of West African nation Senegal. The target was unveiled by President Dmitry Medvedev at the Kremlin's showcase World Grain Forum in St Petersburg.

This extra grain could meet a chunk of a forecast 50 percent rise in world demand over the next two decades, a result of the more than 60 million people born each year, Asia's rapid growth and the better diet sought by a 2 billion-strong middle class.

Medvedev called the world's fixation with profit "immoral" and backed a proposal to create a global grain reserve to better administer food resources and curb price spikes such as those that led to riots from Haiti to Senegal to Indonesia last year.

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