THE RUSSIAN GRAIN EXPORTERS AND PRODUCERS UNION ANNOUNCED THAT ONLY RUSSIAN GRAIN COMPANIES COULD SELL DIRECTLY TO SOVEREIGN BUYERS.


GRAIN DIPLOMACY The uncertainty surrounding Russia’s willingness to continue or disrupt grain exports has made the global food market highly volatile. For example, the announcement of attacks on Ukrainian port facilities and infrastructure often led to immediate increases in global wheat and grain prices. The resulting impact of this has put tremendous pressure on food-importing countries, particularly in Africa and the Middle East. By creating food shortages or price spikes, Russia has gained political leverage over these nations, which may then be more willing to align with Russian interests in international forums, such as voting in favour of Russia in the United Nations9


.


Furthermore, the humanitarian crisis caused by food shortages has been used as a bargaining tool in negotiations. Russia has, at times, offered to alleviate grain blockades in exchange for sanctions relief or other political concessions from Western nations10


.


DUBBED ‘GRAIN DIPLOMACY’ Russia has employed this with great success, offering subsidised or free grain shipments to friendly countries or threatening to cut off supply to nations opposing Russian interests. This tactic strengthens Russia’s geopolitical influence, especially in developing nations that are food-insecure.


A SHIFT AT THE TOP In a move to reshape global agricultural trade, the 2024 BRICS Kazan Declaration endorsed the creation of a BRICS Grain Exchange11


Russia’s measures to curb grain exports have also caused confusion as well as economic instability in international markets due to the absence of clear government instructions. The Russian Grain Exporters and Producers Union announced that only Russian grain companies could sell directly to sovereign buyers, excluding international dealers without long-term agreements with Russian firms. This move, not officially endorsed by the government, has led to uncertainty among traders and potential friction with key importers, including political allies12


.


IN CONCLUSION Amid the ongoing conflict with Ukraine, Russia has very clearly employed strategies to manipulate grain supply and prices, often for its own economic benefit. It has also reinforced its dominance in the global grain market, forging new trade alliances away from western sway. By setting price floors and proposing new trading platforms, Russia seeks to control market dynamics to its advantage. However, these actions have also introduced challenges and uncertainties in international markets, with significant implications for global food security. Developing nations in particular have faced economic hardship due to inflated food prices, leading to social unrest and destabilisation in some regions. The war’s impact on global food supply chains has compounded the economic strain caused by the COVID-19 pandemic, leading to yet more suffering for many millions.


. This Russian-


initiated platform aims to develop a fair agricultural trading system among BRICS countries, potentially expanding into other agricultural sectors. This has, however, raised several questions over the efficacy of such a scheme, with industry experts acknowledging that extensive preparatory efforts would be required. Additionally, the necessity of such an exchange has been questioned given the existence of preestablished well-functioning global exchanges.


9 Russia starts to sow seeds of ‘wheat diplomacy’ 10 Putin tightens grip on Africa after killing Black Sea grain deal | POLITICO


11 Why Expanded BRICS Is Backing a Russia-Initiated Grain Exchange | Council on Foreign Relations


IN A MOVE TO RESHAPE GLOBAL AGRICULTURAL TRADE, THE 2024 BRICS KAZAN DECLARATION ENDORSED THE CREATION OF A BRICS GRAIN EXCHANGE...


Jamie Kirkwood E: jamie.kirkwood@admisi.com T:+44(0) 20 7716 8477


12 Russia’s tacit grain export curbs cause market confusion | Reuters


Graph 1: CBOT & MATIF wheat front month continuation - annotated


Source: Refinitiv graph created by ADMISI 15 | ADMISI - The Ghost In The Machine | Q4 Edition 2024


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