Russian wheat next load for Baltic ports

After reaping an abundant harvest for the second year in a row, Russia is turning to the three Baltic countries for help in unloading millions of tons of surplus grain for delivery to the West. In all, Russian grain exporters want the Baltics to handle approximately 8 million tons of grain that could bring as much as $40 million to the three countries.

Russian agricultural officials are estimating a harvest of over 80 million tons of grain this year. Although this is less than last year's record harvest (85.5 million tons, of which 5 million was exported), it is expected to leave the country with some 10 million tons of wheat for export.

The Russian government is hoping to send the bulk of this surplus to Canada, which has seen its grain output fall this year due to widespread drought. But considering that Novorossiisk, Russia's central shipping lane for both grain and oil, is working at full capacity, Russian grain exporters are hoping the ports at Muuga, Klaipeda and Liepaja can serve as its chief conduit to the West.

Last week the Lithuanian and Russian transportation ministers signed an agreement in Moscow that calls for the port of Klaipeda to receive 1.5 million tons of Russian grain and load it onto barges.

Valerijus Ponomariovas, deputy minister of the Lithuanian Transportation Ministry, is optimistic about the deal. "Until this deal, Russian grain export via Klaipeda was very insignificant. We hope that 1.5 million tons of grain for this year is just the beginning. The Klaipeda port can handle much bigger quantities of Russian grain," Ponomariovas told The Baltic Times.

He expressed the hope that increased grain deliveries of Russian grain via Klaipeda will spur the 2K cooperation project between the ports of Kaliningrad and Klaipeda, according to which each port will specialize in certain types of cargo, and reopen the issue of rail tariffs.

"Now companies transporting their cargo from Russia to Kaliningrad pay three times less to Russian railways than companies transporting their cargo to the Klaipeda port," said Ponomariovas. "We hope that (with the implementation of the 2K project) the tariff discrepancy will be less than threefold."

Ponomariovas added that all business deals involving grain exports were made between private companies. In this case, he explained, Lithuanian and Russian transportation officials agreed to help the Russian company Roskhlebprodukty, which exports Russian grain, and KLASCO, Lithuania's shipping company."

The bulk of Russian grain will be exported via Muuga, traditionally the busiest grain port in the Baltics. According to Estonian Railways, grain cargo from Russia has risen dramatically over the nine months to October, surging past 1 million tons. Company officials expect that number to continue rising over the next year.

Latvia, meanwhile, will receive approximately 500,000 tons grain at its port in Liepaja. Though this is the smallest portion, there are plans to build a new grain terminal in the coastal city that will double export capacity.

For Russia the current push to increase grain exports is unprecedented. Traditionally the world's largest country was forced to import millions of tons of various cultures, particularly from Canada, in order to meet internal demand. The last time Russia exported 10 million tons of grain was in 1913.