The European Union continues to be concerned by Russian President Vladimir Putin’s “grain politics,” which may turn the world’s trade patterns and areas in its favor.
In order to deter the present level of EU goods, the Western Commission has recently suggested increasing taxes on some Russian and Belarusian agricultural products, including cereals and soybeans.
International grain prices soared soon after Russia’s war of Ukraine, though they afterwards declined after the A Black Sea corn offer was broken in 2022.
The agreement, which allowed Ukraine to export corn from Black Sea ships that had formerly been blocked by Russia’s army, was renewed half before ending. suspended next month.
Since then, Ukraine has resumed exporting corn, and Russian wheat exports have reached record highs. Nitrogen shipments have even recovered.
Russia recorded a US$ 13. Energy and grain exports contributed to a 4 billion current account surplus in March, which was more than twice the$ 5 million that was available in February. 5 billion and the second-highest deficit since March 2007.
By the end of February, entire EU exports of corn and oilseed in 2023/2024 from Russia stood at 1. 8 million kilograms, in comparison to 19. 1 million tonnes from Ukraine, according to Western Commission information.
However, conversations about extending the expulsion of trade duties outrage of some German producers has been raised by lower prices on Russian agricultural exports in Europe until June 2025.
Especially in Central and Eastern Europe, where critics claim that Ukraine goods that have been subject to placed import duties and other restrictions have created unfair competition.
Recent actions by EU nations have included appointing new restrictions on Russian agricultural imports. Food imports contribute more than 40 % of Ukraine’s trade revenue and 60 % of all imports, making the shipping a crucial revenue source.
As such, fresh EU trade regulations will actually adversely affect Ukraine’s already beleaguered war-time business, and by extension, likely bag its ability to sustain fighting against Russia.
It remains to be seen how directly and indirectly the Global South will be impacted by the new International tariffs, even though the transport of Ukrainian grain through the union to other nations will still be permitted to break Russian sea blocksades.
The other major importing countries are Africa and Asia, two two extremely food-insecure regions, aside from the EU.
Between 2018 and 2020, Africa imported $ 3. 7 billion in wheat ( 32 % of total African wheat imports ) from Russia and US$ 1. 4 billion from Ukraine ( 12 % of total African wheat imports ).
A 2022 report from the United Nations identified 36 states reliant on Russia and Ukraine for more than 50 % of their wheat exports, including some of the world’s most resilient economies like war-torn Syria and Somalia.
Putin has made a critical point about the fact that under the Black Sea Grain Initiative, Europe was the largest supplier of Ukrainian corn, as opposed to the world’s regions and nations in desperate need of the items.
The Soviet leader has even condemned the West for not taking steps to give Soviet agricultural items and nitrogen products equitable access to world markets.
The weaponization of meal supplies is key to Russia’s war approach, with Moscow then seeking to exchange Russian food supplies in reduced- and lower-middle-income countries with Russian-grown alternatives.
This approach enables Russia to project power while exerting influence on global food trade dynamics, including over supplies, availability, access and prices.
Russia has a significant influence over global grain markets and, more broadly speaking, on the dynamics of agricultural trade. It is the world’s top wheat exporter, which accounts for nearly 25 % of the global grain trade.
Turkey, Bangladesh and fellow BRICS members Egypt and Saudi Arabia are among Russia’s biggest buyers. ( The BRICS bloc comprises Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. )
Putin recently endorsed the establishment of a BRICS grain exchange, which is a significant step that has the potential to transform global agricultural markets.
The move attempts to compete with the country’s current, Western-dominated grain pricing system, which could also pose a new challenge to the US dollar’s position as the world’s top trading currency.
Some of the biggest grain exporters and buyers in the world would be a part of the proposed BRICS grain exchange.
More than 1 percent of the expanding bloc now belongs to the four new members who were elected in January. 1.4 % of the world’s total grain production, and 1.24 billion tonnes. 23 billion tonnes of global grain consumption.
In light of rising global supply chain disruptions and growing food insecurity, a BRICS grain exchange could strengthen Moscow’s geo-economic influence and diplomatic leverage over participating nations.
Through stronger agricultural and trade ties with Russia, this could increase geopolitical and geostrategic alignment between the participating countries.
The influence of Putin’s “grain diplomacy ” is already apparent in Africa.
In February, Russian Agriculture Minister Dmitry Patrushev said that Moscow had completed an initiative to ship 200,000 metric tonnes of free grain to six African countries, namely Somalia, Central African Republic, Mali, Burkina Faso, Zimbabwe, and Eritrea.
Russia’s expanding presence and influence on the continent is highlighted by the grain diplomacy initiative. A Russian military base is being sought by the Central African Republic; and has received Russian weapons, security expertise and training.
Meanwhile, in Burkina Faso, where Moscow has recently opened an embassy, the country has seen the arrival of Russian troops, the first deployment of the so-called Africa Corps, an armed Russian force designed to replace the now-disbanded Wagner Group’s mercenaries in Africa.
A BRICS grain exchange, in addition to the emerging economic bloc’s collective strength, would increase competition to find alternative markets for their goods for traditional grain exporting nations like the US and Australia.
In the face of competition from less expensive Russian grain, US and Australian exporters could soon face new difficulties in negotiating favorable trade terms and maintaining market shares.
US and Australian governments may also need to reevaluate their broad agricultural policies and begin looking for alternative markets to offset the impact of potential disruptions brought on by a Russia-led BRICS grain exchange.
For instance, Canberra may seek stronger ties with nearby Southeast Asia, as emphasized by the Albanese government’s Southeast Asia Economic Strategy to 2040.
For traditional exporting countries like the US and Australia, the need is rising to reevaluate trade policies and geo-economic strategies in a world that might eventually develop into competitive grain blocs. However, grain trade disagreements continue to stoke the seeds of dissention in Europe and beyond.
Genevieve Donnellon-May is a Research Associate at the Asia Society Policy Institute, Melbourne, Australia.