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Table SUPPLY/DEMAND BALANCE FOR GRAIN: ESTIMATES AND FORECAST (MILLION TONS) 2009/2007/08 2008/(forecast) Supply (resources) Beginning stocks 8.3 7.85 19.incl. intervention stocks 1.45 0.2 8.6.85 7.65 11.market stocks Production 81.8 108.2 97.Imports* 1.1 0.6 0.Total 91.2 116.65 117.Consumption Domestic consumption 70.0 73.5 77.Exports* 13.35 23.5 19.5-21.Total 83.35 97.0 96.5-98.Intervention purchases - 8.05 2.0-2.Ending stocks 7.85 19.65 19.6-20.incl. intervention stocks 0.2 8.25 9.3-10.market stocks 7.65 11.4 9.3-11.*including flour in grain equivalent.

Source: Sovecon.

INFRASTRUCTURAL PROBLEMS OF THE RUSSIAN GRAIN MARKET Despite being high in 2008-2009, the actual exports of grain were far below the countrys capacity to supply this item to foreign markets. The reason for that was the shortage of elevators and port shipment facilities as well as underdeveloped transport infrastructure unable to digest record volumes of grain.

First, exports mainly consist of grain from southern regions of Russia that is shipped through the Novorossiysk port. Meantime the delivery of grain from Siberia or Altai is economically unjustified because of the high transportation costs. These problems increase infrastructural burden on each exported ton of grain and thus lower its competitiveness on the world market.

Second, in 2009 the problem of grain quality grew acute. Egypt has set stricter requirements to crop infestation by chinch bug (the share of grain infested by it should not exceed 1%). The toughening of requirements is due to good crop in the exporting countries, low world prices and consequently stiffer competition between suppliers. According to expert estimates, out of all regions of Russias South only Krasnodar kray produces wheat that meets the new quality requirements.

Small supply of adequate quality wheat in Russias South may result in the extending of export supply zone up to Western Siberia and other regions free of the chinch bug problem. This will inevitably require complex development of grain market infrastructure. In 2010 Turkey is also likely to toughen requirements to wheat quality.

So, large-scale infrastructural projects are needed to develop and expand Russias grain export potential that will help to alleviate the burden born by agricultural producers.

In the Soviet times Russia was the largest importer of grain in the world and respectively grain terminals in most sea ports were adapted to import operations. The state of grain market infrastructure is presently one of the key factors hindering further growth of grain exports.

After 2000 the increase of grain exports from Russia was supported by the development of ports shipment capacities from 2001 to 2009 they increased from 8 to 20 million tons. In 2008/2009 MY Russias grain export potential was record high owing to bumper crop 32 million tons. However, only 23.5 million tons of grain and grain products (in grain equivalent) were actually exported.

Taking into account that maximum ports capacities were utilized by 100%, their deficit amounted to about 10 million tons.

In 2010 the pressure on Russian ports will increase due to the transit from Kazakhstan. The Kazakh government allocated 5 billion tenge (33 million dollars) to compensation of exporters expenditures on transit transportation of 1.7 million tons of Kazakh grain through the territory of Russia basing on the rate of 20 dollars per ton of grain. It is also expected to allocate additional funds to subsidizing of grain transit through Russia. This will not only aggravate the overall deficit of ports grain shipment capacities but will also strengthen competition with Kazakh grain since the latter is supplied to markets traditionally being buyers of Russian wheat. This also places great pressure on grain prices in the Western Siberia and the Urals regions where producers hoped for the market revival owing to bigger exporters demand for higher quality wheat1.

According to projections of the RF Ministry of Agriculture, by 2015 Russias grain exports may increase up to 40 million tons. Taking into account this estimate the annual deficit of ports shipment capacities may reach 20 million tons of grain (Picture 1). In this situation the elimination of port capacities deficit and the technical upgrading of grain terminals turn out to be an indispensable condition for realizing Russias grain export potential.

An open joint-stock company United Grain Company (UGC) was set up in order to develop elevator capacities, transport and port infrastructure of the domestic grain market and to enhance the countrys grain export potential. The company is 100% state-owned. It was formed in by transforming the federal state unitary enterprise (FSUE) Federal agency for food market regulation (affiliated to the Ministry of Agriculture) into a joint-stock company. From 1997 the FSUE operated as a state agent for carrying out state purchase and commodity interventions aimed at regulating agricultural and food markets. Authorized capital of UGC will incorporate assets of 31 joint-stock companies in 19 regions, with the share of state in the capitals thereof being not less than 25%. Among the most attractive assets are: the Novorossiysk factory of bakery products, six elevators and three grain terminals in Norossiysk, Eysk and Kaliningrad ports. The summary grain bunker capacity of UGC will exceed 3 million tons.

1 Data of Sovecon.

RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES The company will act on behalf of Russia as the largest grain exporter, participant of international tenders 32,35 and supplier of grain in the framework of international humanitarian programs. It will engage in construction 20 of grain elevators and export port terminals. The forming 10,8 of its own railway car fleet is planned for transporting grain by rail.

5 7,The shipment capacity of ports is to be increased by 2001 2009 larger transshipments at Grain shipment capacities of ports Potential grain exports the Novorossiysk factory of bakery products and at the Actual grain exports terminal in Azov Sea. The construction of new deepSource: RF Ministry of agriculture.

water port terminals is also planned in the Black Sea Fig. 1. Grain shipment capacities of Russian ports and the Far East. According to UGCs projections, by its port shipment capacities should reach 16 million tons. The company intends to become one of the leading grain exporters and to supply 16 million tons of grain to the world market.

On the one hand, the market can benefit from this project. Exporting of intervention grain that stockpiled last year and became a heavy burden for the new marketing year will unload elevators whose capacities are limited as it is. A positive side may also be the establishing of trade relations with new countries-importers of Russian grain since so far domestic traders cannot count on autonomous expansion to new markets. On the other hand, one cannot exclude that the state company will start operating on the already developed markets and in this case may become a serious competitor to private exporters.



THE ISSUES OF THE MILITARY PERSONNEL NUMBER AND THE INCREASE OF THEIR MONEY ALLOWANCE E.Trofimova As stated by the top military leadership of Russia, by early 2010 the first phase of reforming of the RF Armed Forces which involved the formation of a new combat composition of the Armed Forces had been completed. One of the next goals of reforming will be to improve the system of money allowances. The information released by the RF Ministry of Defense and the mass media makes it possible to analyze the various options of solving this problem with due regard to the declared parameters of the new image of the RF Armed Forces.

When congratulating the personnel of the RF Armed Forces with the new 2010 year, RF Minister of Defense A. Serdiukov noted that the task of forming a new combat composition of the Armed Forces had been successfully completed1. As a result of the measures implemented in 2009 in the sphere of personnel organization of the army, a new table of organization has been introduced. The number of RF Armed Forces active military personnel now amounts to 1 million. The number of officer positions has been reduced from 355 thousand to 150 thousand, the institution of praporshchiks (warrant officers) (142 thousand positions) has been totally abolished2. The remaining military personnel its current total amount being 850 thousand is constituted by privates and noncommissioned officers (PNCO) enrolled by conscription and under contracts. According to Head of the RF Armed Forces General Staff N. Makarov, within the framework of creating a new image of the Armed Forces, it is planned that, every year, approximately 700 thousand persons are to be conscripted3. Consequently, the number of PNCO contractees will amount to 150 thousand persons. It should be noted that when, in 2004, the federal target program (FTP) for the switchover of troops to a contractual basis was launched, the number of contractees in the RF Armed Forces was nearly the same as at present. So the people in charge tacitly decided that the awkward question of what the sum of 100 billion rubles allocated within the framework of that FTP had been spent on (moreover, in 2003 prices) should be put to rest.

To make the picture of the future structure of expenditures complete, it should be added that not all of the redundant officers were actually discharged. The reason for this state of affairs is the shortage of housing. These officers have been made supernumerary, but still they will be paid a minimum money allowance as seconded for temporary service.

As RF President D. Medvedev has said, in 2010 the transition of Russias Armed Forces to a qualitatively new level should be complete, and we will have created a modern, efficient and mobile army. The system of money allowances (MA) to be paid to the military personnel of the new RF Armed Forces will also be changed. The President has promised that the new system of payment for military service and material incentives should significantly improve the lives of our soldiers. The glitch, however, is that it will actually be implemented only by 2012.What the money allowance system for the military personnel in the new RF AC is going to be like is yet unknown, but on the basis of information released by the RF Ministry of Defense and the 1 See Krasnaia zvezda [The Red Star]. 31 December 2009 .

2 Novoe shtatnoe raspisanie VC [The new table of organization of the AC] // Voenno - promyshlennyi kurer [The Military Industrial Courier]. 16 22 December 2009.; Genshtab vystroil novyi oblik [General Staff has built a new image] // Nezavisimoe voennoe obozrenie [The Independent Military Review]. 30 December 2009; Cherniak I., Gavrilov Yu. Armia pri tseli. [The army has a goal]. Interview with Minister of Defense A. Serdiukov // Rossiiskaia gazeta [The Russian Newspaper]. 24 December 2009.

3 Khudodeev V. Na lidiruiushchikh pozitsiiakh. [In the leading position] // Krasnaia zvezda [The Red Star].

Weekly issue. 20 January 2009.

4 RF President D. Medvedevs Message to the Federal Assembly of the Russian Federation // Rossiiskaia gazeta [The Russian Newspaper]. 13 November 2009.

RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES mass media it is possible (with a certain degree of probability) to estimate some of its parameters and to identify its new features. The results of our estimations (as projections for the year 2012) are presented in Table 1.

The plans for increasing the size of the money allowance to be paid to officers are impressive:

from 50 thousand rubles per month to a lieutenant to 180 thousand rubles per month to a general. A private or a PNCO contractee is promised no less than 30 thousand rubles per month.

Simultaneously, the RF Ministry of Defense has developed and is currently implementing a system for training sergeants of a new type. After graduation from a sergeants training center (where they are to be trained for 2 years and 10 months) they will be paid 35 thousand rubles per month (the first training center had been established in Riazan)1.

Table THE OVERALL STRUCTURE OF EXPENDITURES ALLOCATED TO MONEY ALLOWANCES FOR THE MILITARY PERSONNEL OF THE NEW-TYPE ARMED FORCES IN Number of Size of monthly Total MA per Total MA per Ranks military military personnel, MA, thousand month, thousand annum, thousand personnel persons rubles rubles rubles Officers Total, including: 150 000 10 686 800 128 241 General 780 180 140 400 1 684 Colonel 8 000 150 1 200 000 14 400 Lieutenant - 16 220 120 1 946 400 23 356 Colonel Major 25 000 80 2 000 000 24 000 Captain 40 000 60 2 400 000 28 800 Lieutenant 60 000 50 3 000 000 36 000 NCOs and other ranks under contract Total, including.: 150 000 4 575 000 54 900 Sergeant 15 000 35 525 000 6 300 Private 135 000 30 4 050 000 48 600 NCOs and other ranks under conscription Total, including: 700 000 275 880 3 310 Starshina (highest 22 000 0,605 13 310 159 NCO) Senior sergeant 40 000 0,550 22 000 264 Sergeant 50 000 0,495 24 750 297 Junior sergeant 88 000 0,440 38 720 464 Yefreitor (corporal) 220 000 0,385 84 700 1 016 Private 280 000 0,330 92 400 1 108 Military personnel, TOTAL 1 000 000 15 537 680 186 452 Unfortunately, the military leaderships plans do not even offer any hints as to any possible increase of the allowances to be paid to the military personnel serving under conscription. The period of service under conscription is 1 year, during which a money allowance is paid in the amount of 330 to 605 rubles per month2. They represent the component of the new-type RF Armed Forces characterized by absence of any rights and a beggars allowance.

1 Cherniak I., Gavrilov Yu. Uravnenie v stroiu. [Equation in the ranks]. Interview with Minister of Defense A.

Serdiukov // Rossiiskaia gazeta [The Russian Newspaper]. Weekly issue. 24 December 2009; Baranets V. Nachalnik shtaba, general armii Nikolai Makarov: K 2012 godu ofitsery rossiiskoi armii budut poluchat v tri raza bolshe. [Head of Staff, General of the Army Nikolai Makarov // Komsomolskaya pravda. 6 June 2009; Gavrilov Yu. Dekabristy 09.

[The Decemberists 09]. // Rossiiskaia gazeta [The Russian Newspaper]. 9 September 2009; Litovkin V. Serzhant s poluchkoi polkovnika i diplomom. [A sergeant with a colonels salary and a diploma] // Nezavisimoe voennoe obozrenie [The Independent Military Review]. 25 December 2009.

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