WORLD GRAIN FORUM IN ST.PETERSBURG

UNCLAS MOSCOW 001556

SENSITIVE
SIPDIS

USDA FAS FOR OCRA/KUYPERS, NENON; OSTA/BEAN,
HAMILTON, HAXTON; ONA/TING, SALLYARDS
PASS FSIS DUTROW, HARRIES
PASS APHIS TANIEWSKI
STATE FOR EUR/RUS
STATE PASS USTR FOR CHATTIN, HAFNER, S MURPHY

E.O. 12958: N/A
TAGS: EAGR ETRD ECON WTO RS
SUBJECT: WORLD GRAIN FORUM IN ST.PETERSBURG
CONCLUDES WITHOUT DECLARATION

SENSITIVE BUT UNCLASSIFIED


1. (SBU) SUMMARY: On June 6-7 the Government of
the Russian Federation hosted its first World
Grain Forum in St. Petersburg. With
approximately 1,500 representatives from over 40
countries ranging from Agriculture Ministers to
grain industry experts the forum focused on the
role of grain production in global food security.
Despite the concrete call from the Russians for a
harmonized grain policy, the forum was more
conceptual and concluded without any tangible
declarations. END SUMMARY.


2. (SBU) The President of the Russian Federation
Dmitry Medvedev and First Deputy Prime Minister
Viktor Zubkov opened the forum on Saturday
afternoon. While Minister of Agriculture Yelena
Skrynnik participated in the plenary with eight
other panelists, she took second chair to German
Gref, President and Chairman of the Board of
Sberbank and previous Russian Minister of
Economic Trade and Development, who moderated the
session. The previous Agriculture Minister,
Alexei Gordeyev, would never have accepted a
secondary role to Gref as the two historically
clashed over agricultural trade policy. Mr. Gref
displayed a fluency in English and masterfully
moderated the 2.5-hour session which President
Medvedev attended throughout.


3. (U) In the President's remarks he identified
solving the problems in the grain market
(unstable prices) as the most effective way to
ensure food security. The President called for a
global mechanism to overcome the imbalance in
supply and demand. Medvedev declared that, "We
need to ensure that exporters coordinate their
programs in order to maintain reasonable prices
in the grain markets. In fact, we can consider
the formation of a new policy on grain production
and international trade in grain." In the course
of the forum Skrynnik repeatedly echoed the need
for more coordination and voiced her willingness
to unite grain production policy with Ukraine and
Kazakhstan and articulated her desire to expand
Black Sea exports in Asia.


4. (SBU) In the breakout sessions that followed,
neither the Minister of Agriculture from
Kazakhstan nor the Deputy Minister from Ukraine
voiced support or opposition to a Black Sea grain
cartel, however industry representatives were
extremely skeptical about either countries'
desire and ability to limit private traders'
participation in the market. The opposition to
any kind of grain reserve (virtual and/or
physical) was more forceful. The consensus of
experts in several breakout sessions was that in-
kind international grain reserves are impossible
to manage in practice. Based on the experiences
of the 1970's, private traders, leaders of
international organizations, and academics agreed
that international mechanisms to coordinate grain
supply and demand will not work.


5. (U) During the breakout session on innovations
and biotechnology, the Brazilian Minister of
Agriculture described the benefits of biotech
crops and the development of biofuel from sugar
cane molasses. Other speakers, including the COO
of Syngenta, professors from the USA and China,
and the Deputy President of UK's National Farmers
Union, spoke about the benefits of biotechnology
and other new technologies for farmers. U.K.'s
representative complained that the nature saving
approach that prevails in the U.K. hampers the
development of British agriculture.


6. (SBU) On Saturday morning, June 6,
approximately 15 ministers of agriculture

including those from Russia, Brazil, Germany,
Pakistan, and Turkey and other selected heads of
delegations attended a meeting and lunch hosted
by Deputy Prime Minister Zubkov. They listened
to a presentation by Wayne Jones of OECD on the
global economic crisis and its effects on food
security worldwide which was followed by a
roundtable discussion led by Mr. Zubkov himself.
Noticeably absent was any consensus among
ministers for coordinated policy and market
intervention. It was also noteworthy that
although Minister Skrynnik attended and sat at
the right hand of Mr. Zubkov, she did not say one
word during the 1.5 hour meeting. Skrynnik's
lack of leadership may be a window into the
motivations for her appointment and her future
role in the formation of Russia's agricultural
policies.


7. (U) The U.S. delegation was led by the
Administrator of the Foreign Agriculture Service
(FAS),Michael Michener. In addition to leading
the delegation, Mr. Michener was invited to be a
member of the food aid panel where he
presented the U.S. positions on food aid,
agricultural development, and biotechnology.
Other members of the panel included David
Nabarro, Assistant Secretary General in the
United Nations; Nicole Menage and Chris Moore of
the United Nations World Food Program; and Klaus
Rohland, Country Director for the World Bank in
Russia. In response to a question about the
safety of biotech grain for food aid, Mr.
Michener stated that it is the responsibility of
all governments to inform their citizens on the
science and safety of biotech products, much as
it is their responsibility to inform on the
science concerning global climate change.


8. (SBU) COMMENT: The forum may have fallen
short of its initial ambitions. It has been a
long standing goal of the Russian Agriculture
Ministry to form a global grain cartel,
effectively expanding its sphere of market
influence in oil and gas to include grain. The
Russians have unsuccessfully proposed "a
harmonized grain production policy" numerous
times bilaterally with the U.S., Canadians, and
others. However, at the June 2008 G8 meeting,
President Medvedev seized the opportunity created
by the global food crisis to propose the idea of
the grain forum under the guise of food security.
Currently Russia is the third largest wheat
exporter and has 20 million hectares of land
currently laying fallow (11-13 million hectares
non-marginal). With substantial investment in
infrastructure (storage, transportation, and
ports) and technology, Russia does have the long-
term potential to rival the U.S. in wheat
production and exports. END COMMENT


9. (U) FAS Administrator Michael Michener has
cleared this cable.

BEYRLE