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
Recommendations