Will the BRICS Grain Exchange Mean Deeper Integration?

The Declaration of the 16th BRICS Summit, held in Kazan from October 22–24, 2024, emphasized that the heads of state and government of BRICS countries endorsed Russia’s initiative to establish a grain trading platform, or a BRICS Grain Exchange, within the bloc. The idea of creating the grain exchange is unquestionably relevant. It was noted that such a step would enable BRICS members, first, to protect their domestic markets from external interference, and second, to set fair grain prices. In addition, it could introduce a transparent settlement mechanism, potentially incorporating digital currencies. Beyond this, a common trading platform within BRICS could address broader goals. First of all, it would foster deeper integration among BRICS nations both in agricultural production and in mutual trade. The exchange would also promote genuine multipolarity in international trade, countering the monopoly of major US grain exchanges. The new exchange would mitigate uncertainty shocks in the food market by ensuring a stable grain supply, not only for BRICS countries but also for other countries of the Global South.

But why has this initiative been put forward now? To find the answer, it is necessary to analyze the current dynamics of the global grain market. In 2023, wheat accounted for 37% of world trade in cereals, corn for 33%, rice for 21%, barley for 6% and other crops for only 3%. These proportions have remained consistent over the past five years, with minor fluctuations. It should be noted that the world grain export market is highly concentrated. In 2023, the leading exporters of wheat were Russia (17% of global exports), Australia (16%), Canada (15%) and the US (10%). In the corn market, Brazil and the US each exported 26% of the global total, followed by Argentina with 11%. India led rice exports with over 30% of the global total, followed by Thailand (12%) and Vietnam (11%). On the other hand, the world grain import market was much more diversified in 2023. Major wheat importers included China, Egypt and Indonesia; China, Mexico and Japan dominated corn imports, while Indonesia, the Philippines and Saudi Arabia led rice imports. Even without delving deep into statistics, it is clear that BRICS countries — Russia, India and Brazil — were leaders in grain exports, while China, Egypt, Indonesia and Saudi Arabia were top importers.

Most grain trading is currently done at exchanges either located in the US or owned by American companies. The expansion of BRICS and a significant increase in its international clout require institutional changes to the trade conditions prevailing in the global market. Following the accession of new members, BRICS nations account for 44% of the world's grain production, including 48% of wheat, 55% of rice and 40% of corn. Despite Western sanctions, Russia remains a major player in the global grain market, so there is an urgent need to establish new institutions to improve the competitiveness of Russian exports. India and Brazil are also global market leaders in their respective grain segments. At the same time, BRICS countries do not act as competitors in grain markets, as they export different types of cereals due to their distinct natural conditions and cultural traditions. The BRICS grain exchange will, therefore, unite the world’s largest grain buyers and exporters, strengthening geopolitical ties among the bloc’s members through mutual trade relations. Among other things, the exchange will serve to balance supply and demand, organize and harmonize grain resources, as well as stimulate the intra-BRICS market.

At the same time, the term “exchange” is used rather for reference, and within the integration framework, existing exchanges could be consolidated, or entirely new formats could emerge. For example, the BRICS Exchange Alliance was first established in 2011 to provide easier access for foreign investors to the BRICS markets. The Eurasian Economic Union is also currently implementing a project to establish an exchange which will serve as a mechanism for integration by facilitating cross-border transactions and fostering connections among participants in commodity sectors.

There is no doubt that the BRICS grain exchange will rely on digital technologies in its operations, including information sharing, clearing settlements and logistics. The market of digital commerce and settlements is widely represented in BRICS, and the contribution of the digital economy to their GDPs is steadily growing. Russia and Brazil have invested heavily in digital infrastructure, spending 1.3 trillion rubles in 2023 (some experts suggest the figure could be as high as 3.5 trillion rubles) and $27.6 billion in 2024, respectively. India is one of the global leaders in IT services and artificial intelligence and boasts invaluable experience in creating a digital agricultural exchange. In recent years, the UAE has launched several digital platforms, including those powered by AI.

BRICS countries have the know-how in developing unified exchanges, including with digital solutions, which will make it possible to use alternative settlement methods. This expertise paves the way for a new grain exchange to be created within the bloc, which will then be extended to other agricultural commodities. It will strengthen the integration within the newly expanded BRICS and showcase the growth of genuine multipolarity in international trade.

The Declaration of the 16th BRICS Summit, held in Kazan from October 22–24, 2024, emphasized that the heads of state and government of BRICS countries endorsed Russia’s initiative to establish a grain trading platform, or a BRICS Grain Exchange, within the bloc. The plan was first proposed by the Union of Grain Exporters to the Russian Ministry of Agriculture in December 2023, citing concerns that “BRICS countries, being key players in the global grain market, are unable to fully participate in setting prices for such key agricultural products as wheat, barley and corn, which are crucial for their food security and economies.” Russian President Vladimir Putin backed the union’s proposal for the BRICS grain exchange at a meeting with agricultural producers in March 2024.

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The idea of creating the grain exchange is unquestionably relevant. It was noted that such a step would enable BRICS members, first, to protect their domestic markets from external interference, and second, to set fair grain prices. In addition, it could introduce a transparent settlement mechanism, potentially incorporating digital currencies. Beyond this, a common trading platform within BRICS could address broader goals. First of all, it would foster deeper integration among BRICS nations both in agricultural production and in mutual trade. The exchange would also promote genuine multipolarity in international trade, countering the monopoly of major US grain exchanges. The new exchange would mitigate uncertainty shocks in the food market by ensuring a stable grain supply, not only for BRICS countries but also for other countries of the Global South.

This prompts the question: why has this initiative been put forward now? To find the answer, it is necessary to analyze the current dynamics of the global grain market. In 2023, wheat accounted for 37% of world trade in cereals, corn for 33%, rice for 21%, barley for 6% and other crops for only 3%. These proportions have remained consistent over the past five years, with minor fluctuations. It should be noted that the world grain export market is highly concentrated. In 2023, the leading exporters of wheat were Russia (17% of global exports), Australia (16%), Canada (15%) and the US (10%). In the corn market, Brazil and the US each exported 26% of the global total, followed by Argentina with 11%. India led rice exports with over 30% of the global total, followed by Thailand (12%) and Vietnam (11%). On the other hand, the world grain import market was much more diversified in 2023. Major wheat importers included China, Egypt and Indonesia; China, Mexico and Japan dominated corn imports, while Indonesia, the Philippines and Saudi Arabia led rice imports. Even without delving deep into statistics, it is clear that BRICS countries — Russia, India and Brazil — were leaders in grain exports, while China, Egypt, Indonesia and Saudi Arabia were top importers.

The exchanges with the largest volume of international grain trade are the Chicago Board of Trade (CBOT), the Minneapolis Grain Exchange and the Intercontinental Exchange, which means that most grain trading is done at exchanges either located in the US or owned by American companies. Among major exchanges for rice, the Tokyo Grain Exchange (Japan) and the Dalian Commodity Exchange (China) stand out, but the latter remains only partially open to foreign investors. Trading platforms, as President Putin pointed out, are based in the US.

The expansion of BRICS and a significant increase in its international clout require institutional changes to the trade conditions prevailing in the global market. Following the accession of new members, BRICS nations account for 44% of the world's grain production, including 48% of wheat, 55% of rice and 40% of corn. Despite Western sanctions, Russia remains a major player in the global grain market, so there is an urgent need to establish new institutions to improve the competitiveness of Russian exports. India and Brazil are also global market leaders in their respective grain segments. At the same time, BRICS countries do not act as competitors in grain markets, as they export different types of cereals due to their distinct natural conditions and cultural traditions. The BRICS grain exchange will, therefore, unite the world’s largest grain buyers and exporters, strengthening geopolitical ties among the bloc’s members through mutual trade relations. Among other things, the exchange will serve to balance supply and demand, organize and harmonize grain resources, as well as stimulate the intra-BRICS market.

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The grain exchange is expected to be based on a fundamentally new mechanism. Eduard Zernin, Chairman of the Management Board of the Union of Grain Exporters, explained: “We use the term ‘exchange’ rather for reference … we should be talking about a modern, high-tech digital marketplace,” which would allow “buyers to purchase standard grain lots directly from producers and exporters, ensuring transparent and secure transactions between the parties.” Within the integration framework, existing exchanges could be consolidated, or entirely new formats could emerge. For example, the BRICS Exchange Alliance was first established in 2011 at the 51st annual general meeting of the World Federation of Exchanges in Johannesburg. The purpose of this alliance is to provide easier access for foreign investors to the BRICS markets. This group of exchanges, known as BRICSMART, includes Brazil’s BM&FBOVESPA in Sao Paulo, Russia’s Moscow Exchange MOEX, India’s BSE Ltd, Hong Kong Exchanges and Clearing Limited (HKEX) and South Africa's Johannesburg Stock Exchange (JSE Limited).

The Eurasian Economic Union (EAEU) is also currently implementing a project to establish a similar exchange. By the end of 2024, the member states plan to approve the concept and development program for commodity exchange trading, with a common exchange market within the EAEU slated for launch in 2025. This commodity exchange will serve as a mechanism for integration by facilitating cross-border transactions and fostering connections among participants in commodity sectors. The establishment of a common commodity exchange market of the EAEU will provide seamless access for participants to trading across all member states. The project also involves addressing issues related to the development of clearing infrastructure, organization of logistics for physical deliveries, harmonization of standards for electronic document workflows, as well as alignment of EAEU member states’ approaches to commodity specifications for exchange trading.

There is no doubt that the BRICS grain exchange will rely on digital technologies in its operations, including information sharing, clearing settlements and logistics. It should be noted that the market of digital commerce and settlements is widely represented in BRICS. Statistics show that the contribution of the digital economy to their GDPs is steadily growing. Russia and Brazil have invested heavily in digital infrastructure, spending 1.3 trillion rubles in 2023 (some experts suggest the figure could be as high as 3.5 trillion rubles) and $27.6 billion in 2024, respectively. India, one of the global leaders in IT services and artificial intelligence, became the first country in the world to introduce instant interbank transfers in 2016, which revolutionized digital payments and secured the country’s leadership in this field. In recent years, the UAE has launched several digital platforms, including those powered by AI.

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India boasts invaluable experience in creating a digital agricultural exchange. In 2007, the Agri Exchange information portal was launched as an online marketplace for agricultural goods. It was designed to provide information about the needs of stakeholders trading in agricultural commodities. The portal offers data on trade statistics, prices and international market trends, including importers seeking to purchase agricultural goods. Agri Exchange also provides information about the importing countries interested in sourcing from India, export and import statistics, global agricultural production, international prices, regulations and tariffs of importing countries. A step-by-step export guide is available, covering shipment preparation, packaging, labeling, warehousing and cold storage, logistics, export documentation process, as well as subsidies and incentives offered by various organizations. Importers can access all the necessary information, including an agricultural products gallery, exporters directory, export and import statistics, the list of importing countries, as well as production and statistics by state, quality indicators, logistics and buy/sell leads that importers need. As a result, the digital agricultural exchange acts as a one-stop solution for suppliers and buyers, offering insights into current market dynamics. India has other digital platforms that enable entrepreneurs, including small businesses, to competitively trade in goods. In particular, the government launched in 2016 a unified digital market for agricultural commodities called e-NAM. According to experts, this pan-India platform is functioning.

BRICS countries have the know-how in developing unified exchanges, including with digital solutions, which will make it possible to use alternative settlement methods. This expertise paves the way for a new grain exchange to be created within the bloc, which will then be extended to other agricultural commodities. It will strengthen the integration within the newly expanded BRICS and showcase the growth of genuine multipolarity in international trade.