Russia lost quarter of grain crop: Medvedev

TAGANROG, Russia (Reuters) - Drought has destroyed a quarter of Russia's grain crop this year, President Dmitry Medvedev said on Thursday, pushing some farmers to the brink of bankruptcy and hurting Russia's bid to expand food exports.

The disaster has led Russia to ban grain exports from Sunday, could shave one percentage point off growth in Russia's $1.3 trillion economy and stoke inflation as worried Russians stock up on food.

But Medvedev said the export restrictions, designed to restrain domestic food prices, could be lifted before their December 31 expiry, if the harvest permitted. That contradicted Prime Minister Vladimir Putin assertion this week said that the ban could be extended into 2011.

The export ban could allow the United States to take market share from the world's third largest exporter, threatening Russia's long-term ambition to diversify its economy from oil and win a bigger share on the global agricultural market.

"The situation in many regions is extreme... Unfortunately, many farmers are on the verge of bankruptcy because of crop losses," Medvedev told farmers and grains traders in southern Russia.

"Grain has been lost on one quarter of the sown area," Medvedev said. The area sown for this year's grain crop is officially estimated at 43.6 million hectares.

The drought, triggered by Russia's worst heatwave since records began, has also caused huge forest fires, although the Kremlin chief canceled a state of emergency in three out of seven regions affected by the devastating by the blazes.

The authorities have appeared ill-prepared to tackle the fires, which have killed at least 54 people, and slow to react to the choking smog which has blanketed the capital Moscow.

But political analysts say voters -- who mostly gain their news from tightly controlled mass media -- were likely to blame local officials for the crisis rather than Russia's paramount leaders.

In neighboring Ukraine, customs officials banned a wheat export cargo citing incorrect paperwork while Ukraine's traders union said the government was considering an export quota of 5 million tons for wheat and barley.

Chicago wheat futures rose around half a percent on Thursday to near $7 a bushel, while corn and soybeans were little changed ahead of a key U.S. government report on world demand and supply of grains.

NOTHING LEFT TO EXPORT?

Agriculture Ministry data showed that Russia -- which exported around 22 million tons in 2009/10 -- may have no more grain to ship abroad in the current crop year, which started on July 1, even if it lifts export bans from 2011.

"With a crop of 60-65 million tons exports may be 2.0-4.5 million tons," the ministry said in a presentation.

Of the export total, 1.6 million tons has already been shipped in July, while up to another 1.2 million tons may have left the country in the first two weeks of this month, before the ban kicks in on August 15.

Medvedev said the government would "see if we can reopen (exports) earlier." That may prove optimistic and prospects for 2011/2 crop year may also be hurt.

Weather forecasts for the next four to five days may favor the eruption of new fires but temperatures will cool gradually from August 17, Roman Vilfand, head of the state weather service told a news conference on Thursday.

Insufficient rain will delay winter sowing in the European part of Russia until at least next month, he added.

Winter sowings -- which account roughly for 40 percent of Russia's total grain output -- will be discussed at a special meeting of the government commission on drought on Friday.

Farmers could partially compensate by sowing more in the spring, but analysts say the drought will leave them with a shortage of seeds to plant next year.

U.S. THREAT

To the dismay of some Russian growers, Russia's drought-reduced wheat crop will allow the United States the chance to sell some of its mounting surplus, U.S. Agriculture Secretary Tom Vilsack said on Wednesday.

"There is no question this is an opportunity for us and we're going to take advantage of it," said Vilsack. "Tomorrow will give us an indication of what our capacities are," he said, referring to the U.S. Agriculture Department's monthly report.

"The whole of America is talking -- farmers will take advantage of the situation, will start driving Lamborghinis," Viktor Borodayev, the head of an agriculture firm in the Rostov region, complained to Medvedev at the meeting.

Medvedev declined to comment on the issue, though Agriculture Minister Yelena Skrynnik downplayed the threat.

"A market is a market ... What should I do? We will see from the results of the harvest -- may be we will regain our positions," she told Reuters after the meeting.

(Additional reporting by Aleksandras Budrys, Nastassia Astrasheuskaya and Dmitry Zhdannikov; editing by Jon Boyle)