OREANDA-NEWS.  June 18, 2014. The Federal Antimonopoly Service (FAS Russia) exposes such underuse of elevator capacities, analyzing the market of grain storage and warehousing. Already in 2012 the amount of grain stored by elevators was only 45.72% of 2008. In the Stavropol region, for instance, more than 75% of the respondents – agricultural producers reported about keeping grain in their storage facilities.

The reason is insufficient financial funds available to agricultural producers to use elevator services. Grain storage by producers themselves considerably decreases its quality and, consequently, prices, so producers try to sell grain immediately after harvesting. Even in this case prices of agricultural producers go down significantly.

To address the problem, it is proposed to apply financial instruments enabling use of grain documentations as security documents to obtain loans from banks. The Ministry of Agriculture already drafted a Federal Law “On Grain Commodity Warehouses of General Use”.

“Adopting the draft Law will expand access of agricultural producers to credit resources, increase elevator capacity utilization, and preserve grain quality with the correct storage”, pointed out the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko.

Analysis also showed that economic concentration on the markets of grain storage and warehousing had increased. If in 2006 low concentrated markets with developed competition were typical in the Belgorod, Volgograd, Lipetsk, Samara, Saratov, Penza, Kurgan, Tambov, Voronezh, Rostov, Krasnodar and Stavropol region; now FAS has identified such type of markets only in the Krasnodar, Voronezh, Novosibirsk and Omsk regions.

Another problem on the market is related to grain from the intervention fund sold by the State as part of government commodity interventions (which take place to make sure that prices on the market reflect balanced demand). The costs of services for storage of such grain are regulated by the State, while the costs of shipment can only be set an elevator and such services can only be provided by an elevator storing the grain.

As a result, in view of the obtained data, FAS decided to increase control over this market, particularly, actions of elevator networks included in vertically and horizontally integrated structures. Typically, they enjoy competitive advantages over other market participants that can be used as instruments of unfair competition and restricting competition on the adjacent markets.