27 April 2024,   23:18
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Russia is winning the global grain war – POLITICO

Russia is winning the global grain war. POLITICO publishes an article with such title.

“Farmers across Europe have taken to the streets this year, convinced that cheap Ukrainian produce spilling over the border is to blame for their woes. The mass protests have forced EU governments from Warsaw to Paris to make huge concessions to farmers, and have sent Kyiv’s political ties with its Western allies spiraling to their weakest since Russia’s full-scale invasion over two years ago.

Newly reelected Russian President Vladimir Putin must be rubbing his hands with glee. After all, he is the real mastermind behind the crisis.

The main reason why EU farmers can’t sell their own goods this year has nothing to do with Ukraine and its huge agricultural sector. Instead, it is Russia, whose own record farm output — and world-beating exports — have driven crop prices down to the point where farmers everywhere are hurting.

“It’s absolutely the case that Russia is using its food exports, particularly wheat exports, as a form of soft power,” said Caitlin Welsh, director of the Global Food and Water Security Program at the Center for Strategic and International Studies and co-author of a recent paper on Russia’s growing dominance of global agricultural markets at Ukraine’s expense.

Aided by extremely favorable weather, Russia has grown unprecedented amounts of wheat over the past two years and sold it cheaply on the world market. That has reversed a boom in grain prices, and driven them down to prewar levels that are uneconomic for farmers in countries like Poland. They responded by blocking the border with Ukraine at the start of this year, blaming their eastern neighbor for making their own harvest unprofitable.

That’s despite the fact that the government in Warsaw unilaterally banned grain imports from Ukraine last year. This was a response to a supply glut that followed Russia’s full-scale invasion of February 2022 and blockade of Ukraine’s main export route to world markets via the Black Sea. After Russia killed off a U.N.-brokered initiative to restore Ukraine’s ability to export produce via the Black Sea last July, Kyiv has succeeded in establishing its own secure export corridor — taking most of the pressure off overland export routes across EU territory.

The protests have threatened Poland’s fragile coalition government, forcing Prime Minister Donald Tusk to go on a charm offensive to convince other EU capitals of the need to limit Ukrainian grain imports into the bloc — most recently winning the support of French President Emmanuel Macron, who is also under fire from farmers at home. With all the attention on Ukrainian imports, several EU countries have continued to tap into cheap Russian produce. Spain, Italy and France are regular buyers of Russian grain.

Urged by Poland, Latvia, Lithuania and other eastern EU countries, the European Commission is poised to reimpose tariffs on the imports from Russia, which would effectively double their price and crush demand. However, market analysts see the move as more of a distraction than a real solution to the difficult economic situation facing European farmers, given the relatively low share of the EU market accounted for by imports.

Instead of squabbling over what impact Ukrainian or Russian imports may be having on farmers, EU countries would be better off helping Ukraine export its own agricultural products to stave off Russia’s global dominance, especially in lower-income countries, the analysts say.

Kyiv agrees. “We need to take seriously this concept that Ukraine should be brought back to its traditional markets in third countries in order to squeeze Russia,” said the country’s top trade official, Taras Kachka. “This is absolutely clear and we are already doing it.”

Amid the political turmoil in the EU, Russia has largely managed to divert attention away from itself, redirecting its prodigious wheat exports to other regions of the world, where it has sought to maintain geopolitical influence. Over the past year, Moscow has sent hundreds of thousands of tons of free grain to countries in Africa and Asia, currying favor with authoritarian regimes there and helping them stave off civil unrest.

Putin’s foreign affairs envoy Sergey Lavrov has also signed lucrative deals with Brazil, Mexico and other Latin American countries whose own harvests have been decimated by extreme weather.

Unlike other big grain exporters, Moscow does not play by the rules, so there are long-term risks from this growing dependence on Russian goods, according to Joseph Siegle, director of research at the Africa Center for Strategic Studies, based in Washington D.C. “Russia exports only two products to Africa: grains and guns”, he said. “African countries are becoming key to Moscow because of its growing international isolation.”

But given Russia’s unpredictability, those countries should be looking to diversify their sources, he added. “Russia wants to prevent that”, - writes the author of the article.

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