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Irina Deryugina

PhD in Economics, Head of the Center for Agrarian Research and Food Security, Leading Researcher at the Institute of Oriental Studies under the RAS

After Russia’s withdrawal from the Black Sea Grain Initiative, political vilification of Russia as the main supplier of wheat to the global market has been on the rise. Nevertheless, when assessing the situation on the global food market, it is necessary to separate the real component from the political and ideological bias of certain states. The termination of the grain deal had minimum impact on the world grain market. On July 17, 2023, when the suspension of the grain deal was announced, wheat futures on the Chicago Exchange went up 4% and traded at $253 per ton, but world wheat prices ceased growing by August 1 already, so December futures are now trading at $252 per ton. The world wheat market is absolutely stable, as was pointed out by Vladimir Putin at the press conference on the results of Russian-Turkish negotiations.

Meanwhile, due to extreme weather conditions in the fall of 2022, India’s harvest of rice, the main Asian food crop, notably shrank. This forced the Indian government to impose export restrictions on most rice varieties in July 2022, with the notable exception of basmati. Eventually, the ban affected 80% of world rice exports, which causes anxiety, as India accounted for 40% of global rice exports (22.3 million tons) in 2022. Whereas basmati rice was exported in 2022 mainly to Saudi Arabia (21%), Iran (22%), United Arab Emirates (7%), other varieties were supplied to Benin (8%), China (7%), Senegal (7%), Cote d’Ivoire (7%) and some other African markets. In the meantime, India has not lifted a ban on wheat exports, introduced in July 2022.

This led to rice exchange prices in the Asia-Pacific soaring to a 15-year high. Currently, the export price of rice in Thailand and Vietnam exceeds $600 per ton. In the midst of rising prices, Russia and the UAE had to introduce a ban on rice exports. The situation is aggravated by the fact that it’s almost impossible to replace the rice varieties consumed by certain countries.

In the midst of recent events, Russia’s position on the world grain markets is getting stronger. Minister of Agriculture of the Russian Federation Dmitry Patrushev reported that 112 million tons of grain had been harvested in Russia as of September 6, 2023. Earlier, the grain harvest in Russia in 2023 was estimated at 123 million tons, including 78 million tons of wheat.

During the 2022-23 crop year (July 1, 2022 to June 30, 2023), Russia exported 60 million tons of grain, which was a record high figure for the country. In 2023, Russia’s grain exports continued to grow amid strong global demand.

The food security of Sub-Saharan Africa causes concern. FAO estimates that hunger has struck more than 20% of the population. However, in reality, the grain deal did not even come close to solving the problem of providing food to hungry African population. Thus, these countries received only 3.1% of agricultural goods, which was repeatedly noted by the Russian side, while more than 70% of food products exported from Ukraine went to affluent nations.

Moreover, one should not overestimate Ukraine’s input in solving the food crisis and providing grain to poor countries. Ukraine’s share in global grain exports in 2022 stood at about 5%, including 4% of wheat. In the meantime, grain production has plummeted in Ukraine since 2022. It is expected that grain harvest will amount to 54.5 million tons in the agricultural season of 2023-24, which is 37% lower than in the 2021-22 season, when 86.7 million tons were harvested.

In their statement reviewing the results of the Russia-Africa Forum, President of Russia and Chairman of the African Union pointed out that Russia would provide from 25 to 50 thousand tons of grain on a free-of-charge basis to six nations: Burkina Faso, Zimbabwe, Mali, Somalia, Central African Republic and Eritrea. Also, Russian producers are ready to double the supply of mineral fertilizers to African countries in five years to come.

On July 18, 2023, Russia pulled out of the grain deal that had been in effect since July 22, 2022. On July 27-28, 2023, the Russia-Africa Forum was held in Saint Petersburg, followed by the 15th Extended BRICS summit that took place in Johannesburg on August 22-24, while Sochi hosted negotiations between Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan on September 4. On September 9-10, 2023, New Delhi hosted the 18th G20 Summit, and China will host the 3rd One Belt, One Road Forum in October 2023. All of these meetings have addressed or will address food security issues to a greater or lesser extent, and so it is safe to say that global food security currently plays a key role in global affairs.

After Russia’s withdrawal from the Black Sea Grain Initiative, political vilification of Russia as the main supplier of wheat to the global market has been on the rise. Nevertheless, when assessing the situation on the global food market, it is necessary to separate the real component from the political and ideological bias of certain states. The termination of the grain deal had minimum impact on the world grain market. On July 17, 2023, when the suspension of the grain deal was announced, wheat futures on the Chicago Exchange went up 4% and traded at $253 per ton, but world wheat prices ceased growing by August 1 already, so December futures are now trading at $252 per ton. The world wheat market is absolutely stable, as was pointed out by Vladimir Putin at the press conference on the results of Russian-Turkish negotiations.

Meanwhile, due to extreme weather conditions in the fall of 2022, India’s harvest of rice, the main Asian food crop, notably shrank. This forced the Indian government to impose export restrictions on most rice varieties in July 2022, with the notable exception of basmati. Eventually, the ban affected 80% of world rice exports, which causes anxiety, as India accounted for 40% of global rice exports (22.3 million tons) in 2022. Whereas basmati rice was exported in 2022 mainly to Saudi Arabia (21%), Iran (22%), United Arab Emirates (7%), other varieties were supplied to Benin (8%), China (7%), Senegal (7%), Cote d’Ivoire (7%) and some other African markets. In the meantime, India has not lifted a ban on wheat exports, introduced in July 2022. India could partially be replaced by Thailand, Sri Lanka and Vietnam in the global rice market, but their export volumes are not comparable with India’s, to begin with, and secondly, their exports have gradually been sagging since 2020. For example, Thailand and Vietnam faced prolonged drought. This led to rice exchange prices in the Asia-Pacific soaring to a 15-year high. Currently, the export price of rice in Thailand and Vietnam exceeds $600 per ton. In the midst of rising prices, Russia and the UAE had to introduce a ban on rice exports. The situation is aggravated by the fact that it’s almost impossible to replace the rice varieties consumed by certain countries.

Heavy rains also threaten the rice crop in southeastern China, the main rice-yielding region. In general, rice self-sufficiency in China has been high since the 1990s, with only certain varieties of rice imported. However, the country started to ramp up rice imports after the pandemic. In 2022, imports reached 6.1 million tons, up from 3 million tons in 2018. The main rice exporters to China were India, which accounted for 35% of China’s imports in 2022, Pakistan (19%), Vietnam (13%), Myanmar (13%), and Thailand (12%). However, even with increased rice imports, the country cumulatively brings in no more than 3% of national rice production, and only 1% from India, which does not suggest a strong dependence of consumption on world markets. Therefore, India’s imposition of an embargo on rice exports will have virtually no impact on the Chinese national market.

Benin finds itself in a completely different situation, since the dependence on rice imports is quite strong there, with self-sufficiency in rice not exceeding 75%. Moreover, 61% of all imports in 2022 came from India and 21% from Thailand. The situation is similar in Senegal, where India plays a leading role in imports, accounting for 58% of imported rice. Cote d’Ivoire, Togo, Bangladesh will also suffer greatly from rice shortages. It should be noted that it is poor countries that will be affected by the restrictions, as it will virtually be impossible for them to make external purchases under soaring world rice prices.

What is really important for China is the import of soybeans which the country needs, among other things, for meat production. China’s soybean self-sufficiency is very low, as the country imports 80% of soybeans it requires. Moreover, Brazil is the main exporter, its share in the volume of imported grain exceeding 60%. Ukraine also used to export soybeans to China, but its volume in total imports was so small (0.08%) that it is of no real importance to China. The main cereal entering China from Ukraine under the initiative under review was corn (China imported 75% of corn from the U.S. and 22% from Ukraine in 2022), but the total volume of imports did not exceed 6% of total consumption, so it can be safely assumed that the termination of the grain deal will not significantly affect China’s grain market either.

Long-term observations of Indian agriculture have revealed one very important pattern as the Indian government pursues an extremely flexible export policy, limiting the export of agricultural goods during periods of low harvests, i.e. making national consumption its top priority. India is currently discussing with Russia the possibility of purchasing wheat at a discount. New Delhi is eyeing the purchase of 9 million tons of wheat from Russia to increase domestic stocks amid rising prices, as the Indian wholesale wheat price rose 6.2% year-on-year to $319 per ton, 26% higher than the price on world markets. According to Russian sources, Moscow offers India wheat at competitive prices, but India, according to Reuters, expects to receive a discount of $25 to $40 per ton.

In the midst of recent events, Russia’s position on the world grain markets is getting stronger. Minister of Agriculture of the Russian Federation Dmitry Patrushev reported that 112 million tons of grain had been harvested in Russia as of September 6, 2023. Earlier, the grain harvest in Russia in 2023 was estimated at 123 million tons, including 78 million tons of wheat. For comparison, in 2022 Russia’s grain harvest amounted to 153.83 million tons, and in 2021 to 121.4 million tons. It is expected that the 2023 harvest may be higher, though.

During the 2022-23 crop year (July 1, 2022 to June 30, 2023), Russia exported 60 million tons of grain, which was a record high figure for the country. In 2023, Russia’s grain exports continued to grow amid strong global demand. According to the Russian Grain Union, from August 1 to August 27, the country increased shipments of wheat, barley and corn by 27% year-on-year. In two months of the new season (July-August 2023), Russia exported 45% more wheat than a year earlier. This said, the geography of grain supplies is changing. Algeria, rather than Egypt, has emerged as the leading importer, and the demand for Russian grain in African and Latin American markets has drastically burgeoned. Yet Egypt, one of the world’s largest importers of wheat, has continued robust purchases of the Russian grain, and its state grain company GASC alone purchased about 480 thousand tons of Russian wheat.

The food security of Sub-Saharan Africa causes concern. According to statistics, the arable area per unit of population has decreased by 21% over the last decade in the countries of this region, and 40% of arable land has been degraded by heavy metals accumulated in the soil. FAO estimates that hunger has struck more than 20% of the population. However, in reality, the grain deal did not even come close to solving the problem of providing food to hungry African population. Thus, these countries received only 3.1% of agricultural goods, which was repeatedly noted by the Russian side, while more than 70% of food products exported from Ukraine went to affluent nations.

Moreover, one should not overestimate Ukraine’s input in solving the food crisis and providing grain to poor countries. Ukraine’s share in global grain exports in 2022 stood at about 5%, including 4% of wheat. In the meantime, grain production has plummeted in Ukraine since 2022. It is expected that grain harvest will amount to 54.5 million tons in the agricultural season of 2023-24, which is 37% lower than in the 2021-22 season, when 86.7 million tons were harvested.

In the meantime, Russia plays an important role in providing the continent with agricultural products, supplying almost 20% of total wheat imports, 18% of barley imports, 13% of imported soybean and sunflower oil. Moreover, Russia is ready to provide food aid for hungering African population on a free-of-charge basis, and the country is also ready to share agricultural development technologies with them to enhance their food security.

In their statement reviewing the results of the Russia-Africa Forum, President of Russia and Chairman of the African Union pointed out that Russia would provide from 25 to 50 thousand tons of grain on a free-of-charge basis to six nations: Burkina Faso, Zimbabwe, Mali, Somalia, Central African Republic and Eritrea. Also, Russian producers are ready to double the supply of mineral fertilizers to African countries in five years to come. Uralchem plans to build up its fertilizer supplies to Africa tenfold, and the company has already supplied 2.5 million tons of fertilizers to African nations during the past five years. PhosAgro, one of the world’s largest producers of phosphate-based fertilizers, plans to double its fertilizer supplies to Africa within three years.

At a press conference following the talks with President of Turkey on September 4, 2023, Vladimir Putin announced that Russia would organize the supply of 1 million tons of grain at a preferential price to be processed in Turkey along with gratuitous transportation to the poorest countries. The given scheme assumes that Qatar will provide the required financial support.

The Russian side allows for “resuscitation” of the grain deal after Russia’s conditions are fully met—this includes reconnecting Rosselkhozbank to SWIFT and lifting sanctions on Russian agricultural products and fertilizers. However, even if the West goes for it, making these steps will actually take several months. At the G20 summit held on September 9–10, 2023, the EU once again planned to raise the issue of extending the grain deal and food security, but no real proposals have been made yet.


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