Medvedev Creates State Firm For Grain Market Purchases

President Dmitry Medvedev has signed an order establishing a state grain-trading company based on the Agency for Commodity Market Regulation, according to a statement posted on the Kremlin's web site Monday.

The government will initially hold 100 percent of the company's shares. Medvedev signed the order Friday, the Kremlin statement said. The agency, which operates under the auspices of the Agriculture Ministry, has managed interventions in the grain market and runs other state regulatory programs.

According to the decree, the state's stakes in 31 companies will be transferred to the new company's balance sheet "within the next nine months." The asset base of the grain giant includes grain silos, flour mills, industrial production facilities and export terminals spread across 14 regions.

The company's resources are such that it could control up to half of Russian grain exports, said market experts familiar with the company, which has been in the making since the summer.

"The company will certainly be a big market player," said Alexander Korbut, vice president of the Russian Grain Union. "It will create more competition, and the market will develop as a result. But the government doesn't plan on making this a monopoly," he said.

According to the order, the company will help increase grain export volumes and develop the country's storage capacity as well as domestic transport and port infrastructure.

By November, the company must produce a business-development strategy through 2015 that includes its intention to sell stakes to private companies and investors. Market experts say the state would eventually like to cut its share to a blocking stake of 25 percent plus one share.