The Impact of Russia’s 2010 Grain Export Ban

Dr. George Welton

Short term impact of ban

• Does not seem to have kept food prices down.

• Helped to accelerate food price increases globally.

• Increased the costs for international consumers of Russian grain.

Long term impact of ban• Higher food prices (in Russia and global) as the

ban:– Reduces investment in grain production in Russia –

as it damaged the reliability of returns– Reduces trust in Russia as a grain provider– Increases the likelihood of food prices hikes in the

future

Production of Grain 1992-2009 (million tons)

1992 1995 2000 2005 2006 2007 2008 2009 % of total grain crop in 2009

Wheat, winter and spring

46.2 30.1 34.5 47.6 44.9 49.4 63.8 61.7 64%

Barley, winter and spring

27 15.8 14 15.7 18 15.6 23.2 17.9 19%

Oats 11.2 8.6 6 4.5 4.9 5.4 5.8 5.4 6%

Rye, winter and spring

13.9 4.1 5.4 3.6 3 3.9 4.5 4.3 4%

Corn for grain

2.1 1.7 1.5 3.1 3.5 3.8 6.7 4 4%

Other 6.392 3.06 3.88 3.28 3.95 3.41 4.16 3.28 3%

Total 106.792 63.4 65.3 77.8 78.2 81.5 108 96.6 100%

Exports of Wheat and Rye 2006-2010 (Calendar Year)

Exports of wheat and rye 2006 2007 2008 2009 2010

Volume (million tons) 9 14 12 16 11

Total value ($m) 1319 3544 2875 2624 1849

Price per ton ($) 142 251 245 163 175

Russian agricultural policy up until 2010

• 1990’s and failed liberal market reforms• Agriculture as a priority in 2005 and increase

government spending• Programme for the Development of

Agriculture, Regulation of Commodity Markets and Rural Development for the Period of 2008-2012 (2007)

• Food Security Doctrine (2010)

Key components of the 2008-2012 Russia Agricultural Development Program

Title Description Total planned spending 2008-2012 (billion roubles/£)

Sustainable rural development General spending on rural infrastructure and access to social services in rural areas

112.37 ($4)

Creation of general conditions for functioning of agriculture

Mostly spent trying to support and improve soil fertility, some information provision and the development of agricultural support services

66.55 ($2.4)

Priority agriculture subsector development

Supporting the growth of brood livestock, veterinary services, subsidies of feed development in the North

72.66 ($2.6)

Financial sustainability of agriculture

Offering subsidised loans to a variety of sectors, particularly meat

292.69 ($10.5)

Agriculture product market regulation

Smoothing out price variations, particularly in grain, by buying when price is low and selling when it is high.

7.01 ($0.25)

The 2010 food crisis and export ban

2010 July drought

Consequences of the drought

• 43 regions affected• 17 per cent of the total crop area destroyed• Rise in grain prices• Government’s market intervention• Imposing an export ban in August, 2010

The impact of the ban on wheat prices

The impact on poor and vulnerable groups

• No clear evidence that the ban kept food prices at low level

• Small share of grain and bread in household expenditures

• Universal rather than targeted assistance

Composition of the subsistence minimum 2000-2009

Primary Export Countries for Wheat July 2008 – Feb 2009 (thousand MT) and their relative wealth in per capita GDP

Rank Country Jul 08 - Feb 09 GDP per capita ($PPP) World Bank (2009)

1 Egypt 3,156 5,673

2 Turkey 1,576 13,668

3 Azerbaijan 972 9,638

4 Pakistan 943 2,609

5 Syria 552 4,730

6 Iran 542 11,558

7 Bangladesh 459 1,416

8 Jordan 438 5,597

9 Yemen 386 2,470

10 Tunisia 327 8,273

Long-term impact

• Global price instability• Lower investment in grain production• High prices of meat and grain if protections in

meat industry is continued• Damaging Russia’s reputation as a supplier • Under-use of a key resource

• Export bans should be avoided• For keeping domestic prices low, it’s better to give

direct subsidies to producers, than to impose a ban

• For vulnerable groups, policies should be targeted• Need for investment in grain industry to balance

the meat industry will be good in the long-term• Import quotas for meat industry should be

avoided

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