NewsEuropeThis is how Russia is charting the new wheat routes

    This is how Russia is charting the new wheat routes

    Paris (AFP) – Russia, the world’s largest exporter of wheat, reinforces its dominant position in the Black Sea and seeks to redesign the routes of this grain used for bread thanks to exceptional harvests and aggressive prices.

    “Russia alone guarantees a quarter of world wheat exports, and has significant reserves,” says Sebastien Abis, author of ‘Geopolitique du ble’ (Geopolitics of wheat) and researcher at the French Institute for International and Strategic Relations (IRIS). .

    The war in Ukraine opened new routes, such as the Danube river routes. This allowed Kiev to continue exporting grains despite the suspension in mid-July of the Black Sea grain agreement, which Turkey seeks to resume and for which it is preparing “a set of proposals” together with the UN, its official said on Monday, September 4. President, Recep Tayyip Erdogan, after a meeting with his Russian counterpart, Vladimir Putin.

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    But, above all, The conflict that began in February 2022 establishes Russian dominance over the global wheat trade.

    On the one hand, waterways remain “fragile” as they are regularly bombed, recalls economist Joseph Glauber of the International Food Policy Research Institute (IFPRI) in Washington.

    On the other hand, although the maritime corridor “allowed the removal of nearly 33 million tons of agricultural products from the country” in one year, “it did not help Ukraine recover in terms of agricultural production, as a result of the war itself,” which amputated a quarter of their arable land, he explains.

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    Agricultural reorganization

    In 2023-2024, global wheat production should be less abundant than the previous harvest, partly as a result of weather events in Canada and Australia. Consumption estimates are higher than production estimates by 20 million tons (MT).

    In this context, “the world expects 45 MT of Russian wheat to reach the market,” underlines David Laborde, director of the economic division of the UN Food and Agriculture Organization (FAO).

    This Russian dominance has its history: “55 years ago, half of the wheat exported in the world came from the United States. In the last 50 years, we saw a diversification of the world market,” says the economist.

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    American hegemony was progressively “questioned by exports from Western Europe – which was emerging from the Second World War –, then by countries like Argentina and Australia, and starting in the 2000s by the emergence of the Black Sea pole,” he continues.

    Russia, a net importer of wheat 25 years ago, after the collapse of the Soviet bloc, recovered to become the world’s leading exporter in 2016.

    The presidents of Russia, Vladimir Putin (R), and Turkey, Recep Tayyip Erdogan, meet in the Russian city of Sochi on September 4, 2023 to discuss the grain deal with Ukraine © Sergei Guneyev / Pool/AFP

    Agriculture became the country’s third commercial sector, behind energy and metals/minerals, and ahead of weapons: “Russia rearranged its agriculture,” summarizes Sebastien Abis.

    With the war, “everything accelerated,” this researcher emphasizes. “Cereal Russia ‘Russified’ its wheat diplomacy“We are no longer subject to the rules of the market.”

    When the Black Sea grain deal came to an end, Putin promised free deliveries to six African countries (accounting for less than 1% of Russian exports), preferential tariffs for friendly Egypt, and keeping prices low to preserve a competitive advantage.

    Moscow “draws new maps, both strategically because it does not play with the same tools (as other market players), but also relying on the fact that Russia is the only one that produces more and exports more. The only country that competed with Russia in terms of trend was Ukraine“, highlights Abis.

    “neutral” importers

    This hegemony has an important weight for countries like Egypt and Turkiyewhich are by far the two largest importers of Russian wheat.

    While the former imports 80% of its wheat from the Black Sea, the latter transforms the grain into flour to re-export it to the Middle East, Africa or Asia, says Laborde.

    The most dependent countries are those that consume more bread, such as those in the north of Africabut also Sri Lanka, Bangladesh either Pakistan.

    The war caused food and energy prices to rise, millions of people were thrown into poverty and the UN said that many began to face greater food insecurity.

    The war caused food and energy prices to rise, millions of people were thrown into poverty and the UN said that many began to face greater food insecurity. © France 24 Spanish

    The weight of Russia traces trade routes “that are not logical in terms of geography,” says Abis. An example is that Morocco or Algeria, traditional clients of France, modified their import rules to be able to buy Russian wheat.

    And, as Joseph Glauber indicates, since the start of the war many importing countries in Africa have remained “neutral” in international bodies so as not to offend the Russian giant, and at the same time defend the Black Sea grain agreement.

    This agreement is crucial for importers because, by favoring the mobility of wheat, it caused prices to drop after the spike in the spring of 2022.

    Now, one of the great fears of operators is an incident in the Black Sea, such as the bombing of a ship with grain and an excessive increase in insurance.

    However, “the Russians are not interested in that,” since the Black Sea “must remain their exclusive corridor,” says Abis.

    Source: France 24

    This post is posted by Awutar staff members. Awutar is a global multimedia website. Our Email: [email protected]


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