It might take a while but the Russian Federation ­ the central bit of the former Soviet Union ­ could emerge as a serious player on international grain markets, and a serious competitor for Australian exports.

Particularly in the Middle East, where the stirring Federation has a freight advantage.

In a study supported by the Grains Research and Development Corporation (GRDC), the Australian Bureau of Agricultural and Resource Economics (ABARE) points out that, before its dissolution in December 1991, the Soviet Union was a major player in world grain markets (see www.seedquest.com/News/releases/2004/june/9090.htm )

The largest grain producing and consuming countries in the then Soviet Union were the Russian Federation and the Ukraine, but production and trade both declined after 1991, as economies moved from central planning towards a market oriented system.

ABARE says the adjustment process has taken took some time, but by 2001-02 the Russian Federation had become a net exporter of grain. In 2002-03 its exports totalled 16 million tonnes, nearly 13 million tonnes of wheat and around 3 million of barley.

Major markets for wheat were the southern European feed wheat markets of Italy, Greece and Spain, and the north African countries of Algeria, Morocco and Egypt.

"Even in 2003-04, when grain production fell by 20 million tonnes, exports are estimated to have been around 6 million tonnes," the ABARE report says.

"With early season forecasts putting Russian grain production up by at least 11 million tonnes in 2004-05, the Federation is expected to be active on world markets this financial year."

ABARE says the Russian government is committed to increasing grain production, and provides a range of support measures which help keep production costs relatively low.

The Organisation for Economic Cooperation and Development (OECD) assumes Russian crop yields will increase by 0.5 per cent a year from 2002-03, with little improvement in productivity or investment.

However, the bureau says, if productivity improves, and investment in grain increases, a "not unreasonable" 2.5 per cent a year improvement in yield between 2004-05 and 2008-09 would result in an additional 4.5 million tonnes of wheat and 4 million tonnes of coarse grain becoming available.

Such an increase in yield was "not unreasonable" because the yields projected for 2008-09 are around those that were achieved in Russia in some years before the dissolution of the Soviet Union.

"We estimate that increased export availabilities from the Russian Federation would lead to world grain prices falling by up to 2.8 per cent for wheat and 2.6 per cent for coarse grains," the ABARE report says.

"That would be equivalent to almost half the potential gains envisaged in the Cairns Group/Doha round of reforms to agricultural tariffs and quotas."

Copies of the ABARE report are available from Ground Cover Direct on free phone 1800 11 00 44 or email: ground-cover-direct@canprint.com.au. The 10-page report is free but a postage and handling charge applies. The report can also be found on the GRDC¹s website: www.grdc.com.au in PDF format.

The Crop Doctor, Peter Reading, is managing director of the Grains Research and Development Corporation (GRDC), Canberra