Page 16 - RusRPTMay20

unlikely to drive prices higher as weather conditions – on which the new crop depends – are now the main factor impacting the market. Many countries, including Russia, have been suffering from a dry season this year, which can really ramp up grain prices.
The decision comes as Ukraine announced it was downgrading its grain forecast to 60mn tonnes this year from the record 76mn tonnes in 2019, due to dry weather and a drop in productivity caused by the coronavirus (COVID-19) pandemic.
Over the last few years Russia and Ukraine have been battling it out for the title of “world’s biggest grain exporter.” While Russia produces a lot more grain than Ukraine, both countries export about the same total of 45mn tonnes per year (tpy). In 2019 Russia produced 123mn tonnes of grain and exported 43.3mn tonnes. Ukraine produced 75.1mn tonnes and exported 50.4mn tonnes, overtaking Russia in export terms for the first time in three years. This year's Russian export crop may amount to 36mn tonnes, the Ministry of Agriculture says. Industry experts project deliveries in the range of 32-42mn tonnes.
Food continues to play an extremely important role in the Russian economy, and as it makes up about half of the average Russian’s shopping basket it has a major impact on inflation.
Moscow introduced export limits for certain grains, including wheat, rye, barley and corn, saying that the supplies should not exceed 7mn tonnes after the Ministry of Agriculture announced that the export quota was “fully exhausted” already in mid-May.
The members of the Moscow-led Eurasia Economic Union (EEU) have an exemption on the ban as they are inside a free trade area. Armenia, Belarus, Kazakhstan and Kyrgyzstan are free to continue imports of Russian grain.
“After exporting all grain declared under the quota, the export of wheat, meslin, rye, barley and corn to non-member states of the Eurasian Economic Union will be suspended until July 1, 2020,” the ministry said.
While the statement did not mention the COVID-19 outbreak, the ministry earlier said that the measure is necessary to ensure domestic food security – a theme that has been growing as other countries have also limited trade in foodstuffs to ensure there are sufficient supplies at home during the pandemic. In a bid to limit food price rises, the Russian government has also released some grain from its strategic reserves.
Last week the UN warned that some countries may face food shortages as international trade contracts and other government also restrict exports.
“The worst that can happen is that governments restrict the flow of food,” Maximo Torero, chief economist of the UN Food and Agriculture Organization (FAO), told the Guardian, adding that we may face the consequences of these steps soon.
Russia had already halted exports of buckwheat and other grains for 10 days starting from March 20. Neighbouring Kazakhstan followed suit and introduced restrictions on shipments of wheat flour, buckwheat, sugar, several types of vegetables, and sunflower oil.
The UN official warns that protectionist measures and trade barriers only make the situation worse, creating “extreme volatility.” Productivity has fallen as workers stay home due to the pandemic. Germany has already started flying in migrant workers to work in its fields as spring crops ripen. Many of Europe’s leading agro-producers have become heavily reliant on migrant and seasonal
16​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com