World Grain - June 2020 - 6

FROM THE EDITOR

What will Russia do?

A

s the 2019-20 grain marketing year
winds to a close, we await word on
whether the world's biggest wheat
exporter, Russia, will choose to limit exports
when the new marketing year begins on July 1.

Uncertainty often breeds instability,
and the global coronavirus (COVID-19)
pandemic, which has infected millions
and killed hundreds of thousands, cerWDLQO\TXDOL¿HVDVDQHYHQWZLWKQRFOHDU
endpoint that has destabilized the global
food supply chain, although not as badly as initially feared.
Historically, when faced with global
economic or political crises, some of
the world's biggest grain exporters
have reverted to protectionist policies
to maintain their domestic supplies in
hopes of preventing food price spikes
and civil unrest.
While this sounds like a logical strategy, Simon Evenett, professor of International Trade and Economic Development at the University of St. Gallen in
Switzerland, said studies have found
that export curbs lead to increased food
price volatility globally and often fail
to keep prices low even in the countries
limiting or completely halting exports.
Prior to the current pandemic, the last
global crisis was the Great Recession.
During that period of roughly 200811, more than 100 countries (including
Russia) limited or banned agricultural
exports. Despite these measures, food
prices increased as did civil unrest,
most notably in the Middle East where
the Arab Spring protests destabilized
the region.
Why do food prices often rise even in
countries that lock down their supply of
grain and other agricultural products?
Evenett said typically it's a "domestic
GLVUXSWLRQ´ WKDW OHDGV WR IRRG LQÀDWLRQ
rather than a supply issue.
Although COVID-19's economic impact is more devastating than the Great
Recession, Evenett noted that only 27
countries had curbed agricultural ex6

SRUWV DV RI PLG0D\ D VLJQL¿FDQWO\
smaller number than in any recent global crisis. Evenett believes countries are
starting to understand there's often more
WRFRQVLGHUWKDQIRRGVHFXULW\DQGLQÀDtion when mulling an export ban, not
the least of which is the impact on farm
income when foreign markets are eliminated.
This brings us to Russia. At the time
of this writing in late May, the world's
largest wheat exporter was enduring a
sharp rise in COVID-19 cases, creating
high demand for inexpensive grain-based
foods with a long shelf life as people sheltered at home. At the same time, the price
of oil - Russia's most lucrative export
commodity - plunged to a record low
before rebounding slightly. The Russian
economy is reeling, and President Vladimir Putin's popularity rating has sunk to
its lowest level in his two decades.
,QWLPHVRIHFRQRPLFGL൶FXOW\5XVsia has a history of disrupting the wheat
market through restrictions or taxes. But
the last time it imposed an outright ban
was in 2010 during the Great Recession
after drought destroyed crops. That was
a time when it produced and exported
less wheat, so it will be interesting to see
what Russia decides to do with plenty of
wheat in storage but a struggling econoP\WKDWLQFOXGHVIRRGLQÀDWLRQ
Will Putin decide to restrict exports if
food prices keep rising and his popularity rating continues to decline? Or will
he send a message to
the world that Russia,
like several of its competitors, is a grain superpower that continues to export in good
times and bad?
The world, and particularly those
countries that depend on Russian wheat,
eagerly await the decision.
Arvin Donley
Editor

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WORLD GRAIN (ISSN 0745-8991) Volume 38, issue 6,

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World Grain - June 2020

Table of Contents for the Digital Edition of World Grain - June 2020

World Grain - June 2020 - 1
World Grain - June 2020 - 1
World Grain - June 2020 - 2
World Grain - June 2020 - 3
World Grain - June 2020 - 4
World Grain - June 2020 - 5
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http://digital.world-grain.com/sosland/wg/2020_07_01
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http://digital.world-grain.com/sosland/wg/2020_01_01
http://digital.world-grain.com/sosland/wg/2019_12_01
http://digital.world-grain.com/sosland/wg/2019_11_01
http://digital.world-grain.com/sosland/wg/2019_10_01
http://digital.world-grain.com/sosland/wg/2019_09_01
http://digital.world-grain.com/sosland/wg/2019_08_01
http://digital.world-grain.com/sosland/wg/2019_07_01
http://digital.world-grain.com/sosland/wg/2019_06_01
http://digital.world-grain.com/sosland/wg/2019_05_01
http://digital.world-grain.com/sosland/wg/2019_04_01
http://digital.world-grain.com/sosland/wg/2019_03_01
http://digital.world-grain.com/sosland/wg/2019_02_01
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http://digital.world-grain.com/sosland/wg/2018_12_01
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https://www.nxtbook.com/sosland/wg/2017_01_01
https://www.nxtbook.com/sosland/wg/2016_12_01
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https://www.nxtbook.com/sosland/wg/2016_08_01
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https://www.nxtbook.com/sosland/wg/2015_04_01
https://www.nxtbook.com/sosland/wg/2015_03_01
https://www.nxtbook.com/sosland/wg/2015_02_01
http://digital.world-grain.com/sosland/wg/2015_01_01
https://www.nxtbook.com/sosland/wg/2014_12_01
https://www.nxtbook.com/sosland/wg/2014_11_01
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https://www.nxtbook.com/sosland/wg/2014_09_01
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https://www.nxtbook.com/sosland/wg/2014_07_01
https://www.nxtbook.com/sosland/wg/2014_06_01
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https://www.nxtbook.com/sosland/wg/2014_02_01
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https://www.nxtbook.com/sosland/wg/2013_12_01
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https://www.nxtbook.com/sosland/wg/2012_12_01
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http://digital.world-grain.com/sosland/wg/2009_12_01
http://digital.world-grain.com/sosland/wg/2009_11_01
http://digital.world-grain.com/sosland/wg/2009_10_01
http://digital.world-grain.com/sosland/wg/2009_09_01
http://digital.world-grain.com/sosland/wg/2009_08_01
http://digital.world-grain.com/sosland/wg/2009_07_01
http://digital.world-grain.com/sosland/wg/2009_06_01
http://digital.world-grain.com/sosland/wg/2009_05_01
http://digital.world-grain.com/sosland/wg/2009_04_01
http://digital.world-grain.com/sosland/wg/2009_03_01
http://digital.world-grain.com/sosland/wg/2009_02_01
http://digital.world-grain.com/sosland/wg/2009_01_01
http://digital.world-grain.com/sosland/wg/2008_12_01
http://digital.world-grain.com/sosland/wg/2008_11_01
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