The Impact of Russia’s 2010 Grain Export Ban
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Transcript of The Impact of Russia’s 2010 Grain Export Ban
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The Impact of Russia’s 2010 Grain Export Ban
Dr. George Welton
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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.
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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
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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%
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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
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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)
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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 ($0.25)
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The 2010 food crisis and export ban
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2010 July drought
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Consequences of the drought
• 43 regions affected• 17 per cent of the total crop area destroyed• Rise in grain prices• Government’s market intervention• Imposing an export ban in August, 2010
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The impact of the ban on wheat prices
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The impact on poor and vulnerable groups
• No clear evidence that the ban kept food prices at low level
• Small share of grain and bread in household expenditures
• Universal rather than targeted assistance
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Composition of the subsistence minimum 2000-2009
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Primary Export Countries for Wheat July 2008 – Feb 2009 (thousand MT) and their relative wealth in per capita GDP
Rank Country Jul 08 - Feb 09 GDP per capita ($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
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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
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• 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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