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By Javier Blas in London

http://www.ft.com/cms/s/0/debdb184-5f3f-11dd-91c0-000077b07658.html 

Published: July 31 2008 23:31 | Last updated: July 31 2008 23:31

Russia plans to form a state grain trading company to control up to half of the country's cereal exports, intensifying fears that Moscow wants to use food exports as a diplomatic weapon in the same way as Gazprom has manipulated natural gas sales.

The move by Moscow, the world's fifth-biggest exporter of cereals, has been sharply criticised by US agriculture diplomats as a "giant step back" to the Soviet era.

The decision to control food exports is the latest sign of how soaring food prices are reshaping the agriculture industry. The recreation of Soviet-style state trading will aggravate anxieties of food-importing countries about their dependence on the international market, which has been severely disrupted this year after exporters, including Russia, imposed prohibitive foreign sales duties or export bans.