Correction to This Article
The article about Russia banning grain exports because of a severe drought and wildfires gave an incorrect acreage equivalent for 196,000 hectares, the area engulfed at that time by wildfires. The equivalent is 484,120 acres.

Russia bans grain exports because of fire and drought, sending prices soaring

As a heat wave pushes temperatures to unbearable levels, Russia struggles to deal with hundreds of devastating forest fires.
Line chart shows the price of wheat
By Ariana Eunjung Cha and Janine Zacharia
Washington Post Foreign Service
Friday, August 6, 2010

Russia announced Thursday that it will ban all grain exports for the rest of the year, sending wheat prices soaring to a two-year high and raising the possibility of inflated food prices that could throw an already fitful global economy recovery off track.

A severe drought and wildfires have destroyed one-fifth of Russia's crop and forced the country to draw from emergency reserves.

In announcing the ban at a cabinet meeting in Moscow, Prime Minister Vladimir Putin said that Russia, one of the world's largest wheat exporters, needs to "prevent a rise in domestic food prices." He said he would decide after this year's harvest whether to extend the ban, which covers exports from Aug. 15 to Dec. 31.

Internationally, wheat prices have increased nearly 50 percent since June, fueling worries about a repeat of the food crisis in 2008 that triggered riots from Bangladesh to Haiti to Mozambique. Wheat prices in the United States are less likely to remain high, experts said, and a bumper crop could put American farmers in a position to benefit from the low supplies elsewhere.

Prices of other crops, including barley, rice and corn, also rose sharply after Russia's announcement.

In an era of free trade, export bans by countries are usually considered a last-resort measure to protect national interests. Indonesia, where whole forests have been leveled by wood processors, banned the export of raw logs. India is considering a ban on exports of iron ore to secure its mineral wealth for its fast-growing economy.

In 2007 and 2008, a number of countries, including Russia, restricted the export of grain as prices began to skyrocket.

While commodities analysts emphasized that there is no reason to fear another global wheat shortage, governments and companies worldwide are preparing for the worst.

In Egypt -- one of the biggest importers of wheat and a nation that experienced deadly violence in bread lines two years ago -- the government assured the public that it has a four-month supply of wheat and urged Russia to honor contracts it signed before the ban. In Europe, the United Kingdom's Premier Foods and Switzerland's two largest food retailers warned consumers that they may increase prices of products that contain wheat, from crackers to beer.

The Food and Agriculture Organization of the United Nations said this week that although the food-price index is 13 percent higher than it was a year ago, it is still 22 percent lower than its peak, in June 2008. "Fears of a new global food crisis are not justified at this point," the FAO said in a report.

Grain harvests around the world have been devastated by unusual weather this year.

The countryside in western Russia, suffering from the nation's hottest summer since recording began 130 years ago, is now battling wildfires that have engulfed 196,000 hectares (about 484 acres) and are continuing to spread.

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