Russia Offers More Grain to the World Amid the New Rules of the Trading Bloc

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Jul 7, 2022 | Agricultural Markets

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Russian President Vladimir Putin said, “We are able to export 50 million tons of Grain this year” at the meeting with his Indonesian counterpart last week. Putin added, “Ukrainian Grain export issue has been actively discussed. According to the United States Department of Agriculture, this is 6 million tons of Wheat. According to our data, it is somewhere around 5 million tons. The Ukrainian military authorities have mined the approaches to their ports, and no one is preventing them from clearing mines and withdrawing ships with Grains from there. We guarantee security.”

According to him, Russia is discussing alternative export options with the African Union. Potential routes are through Romania, the Danube, and the subsequent movement along the Black Sea, through Poland, Belarus, and the ports of the Sea of ​​Azov. On this issue, the Government is closely working with the relevant UN organization, UNCTAD, while saying it has taken the trouble to work out these issues with representatives of the EU and the United States.

A new decree of the Eurasian Economic Union (EAEU)

The ban on exporting Russian Grains to the EAEU countries, introduced on March 15 this year, ended on June 30. The EAEU members are Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Russia was trying to restrain the growth of domestic prices by restricting the export of key agricultural commodities. As a result, Wheat prices in Kazakhstan rose sharply, reaching from USD280/ton to USD365/ton. As the ban expires, member countries expect Russian Grain supplies at a lower cost.  

According to experts, from the beginning of 2022 until the introduction of the ban, Russian Grains exports to the EAEU countries, which is not subject to duties, have doubled compared to the same period of 2021. Russia annually exports approximately 2-3 million tons of Grain to the EAEU countries. At the same time, Russian Grain was being re-exported to other countries. 

In June, the Heads of Governments of the EAEU countries determined the rules for the functioning of a single market for sensitive types of products, securing their free circulation in mutual trade within the approved indicative balances at the intergovernmental council meeting held in Minsk. Such products include Wheat and Meslin, Barley, Corn, Sunflower Seeds, Sugar, and Sunflower Oil.

The Eurasian Economic Commission (ECC), together with the Governments of the EAEU members, was instructed to organize the preparation of balance sheets for goods from the list. In parallel, the Union members will control compliance with export restrictions the EAEU imposed on these commodities. When exporting these products to 3rd countries, the parties will not allow circumvention of export control measures established by one or more states, including through the adoption of unilateral and (or) uniform export control measures within the Union.

The decree of the Eurasian Intergovernmental Council will enter into force on the day of official publication and will be valid until September 30, 2024. 

Russia has long wanted closer integration within the EAEU and offered to move towards a single market and a single currency, but the partners refused. Mr.Mikhail Myasnikovich, Chairman of the EEC Board, considers converting pricing in the EAEU countries into national currencies as effective. Myasnikovich contemplates settlements in national currencies as a good step if it is supplemented by the formation of pricing in the national currencies of the EAEU countries. 

Moreover, Union members signed an instruction on creating and developing East-West and North-South transport infrastructure in their territories, coming as part of the interface with the Chinese One Belt, One Road initiative.

 

 

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