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14 July, 2024
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Former President's startling revelation about food

Medvedev's eye-opening statement

Source: CNN

In April 2022, former Russian President Dmitry Medvedev, now deputy head of Russia’s Security Council, said on his Telegram channel: “Our food is our silent weapon. Silent — but formidable.”

Not silent any longer. Russia is expected to rake in a historically high wheat harvest for the second year in a row and is increasingly using that bounty to undermine Ukraine and gain global influence.

Despite Moscow’s claims that Western sanctions have put a stranglehold on its food exports, Russia’s share of the global wheat market has grown dramatically since its full-scale invasion of Ukraine in February 2022.

It is expected to export 47.2 million metric tons (52 million tons) of wheat in the current season, which started in the summer, according to data from S&P Global shared with CNN. This will amount to 22.5% of global wheat exports, a market-leading share. Two years ago, Russia exported 32.6 million tons, 16% of the market.

In the same period, Ukraine’s share of global wheat exports has shrunk from 9% to an expected level of a little over 6% for this season.

Moscow’s words and actions suggest a determination to strip Ukraine of its position as one of the world’s top wheat exporters, constraining its economy and, by extension, its war-fighting potential.

“Our country has the capacity to replace Ukrainian grain, both commercially and as free aid to needy countries,” Russian President Vladimir Putin said at the summit of the BRICS group of developing nations in late August.

Those comments came just a few weeks after Russia pulled out of the Black Sea Grain Initiative, which had ensured the safe passage of ships carrying grain from Ukrainian ports.

Since the deal’s collapse, Moscow has stepped up military attacks on Ukraine’s export facilities. The attacks have damaged grain silos and infrastructure both at Ukraine’s sea ports and its Danube river ports, which provide an important alternative route for exports and serve no military purpose.

“They are aiming to completely wipe out Ukraine’s agriculture sector,” Caitlin Welsh, director of the global food and water security program at the Center for Strategic and International Studies, told CNN.

Doing so would be a big prize for Moscow, given the importance of agriculture to Ukraine’s economy. Before the invasion, the sector accounted for 11% of the country’s gross domestic product.

“Ukraine’s [grain] exports are vital to its economy and to feed the world,” Bridget A. Brink, the US ambassador to Ukraine, wrote Monday on X, formerly known as Twitter.

Yet experts say there is more to Russia’s actions than waging economic warfare on its neighbor.

The “free aid to needy countries” highlighted by Putin, they say, reflects Moscow’s desire to continue cultivating alliances with the developing world — especially with African nations, many of which have so far refused to condemn Russia’s war in Ukraine but disapproved of its decision to pull out of the grain deal.

It’s more about PR than genuine generosity, though, according to Andrey Sizov, who runs SovEcon, a consultancy for the wheat and corn industries. He points out that the 300,000 metric tons of grain Russia pledged at the end of July as aid to a handful of African countries is a tiny fraction of both Russia’s monthly exports and Africa’s needs. The latter amount to 8 million tons a month, he estimates.

“Russia wants to get some good press, but volumes are extremely small,” he told CNN.

Moscow’s pullout from the grain deal also presented a major new test to Europe’s united front in supporting Ukraine. Three days after Russia’s departure, which caused the agreement to fall apart, five European Union countries on or near Ukraine’s border wrote to the European Commission, the EU’s executive arm, asking it to extend a temporary ban on the imports of Ukrainian grain into those countries till the end of the year.

Those nations, including Poland, feared they would otherwise be inundated with Ukrainian grain as more of it would now be exported over land to Ukraine’s neighbors and near-neighbors and — as happened before the EU blocked the shipments — some of the grain meant to be in transit could end up being sold in those countries. This, in turn, threatened the livelihoods of local farmers.

When the EU refused to extend the curbs, several of the countries issued unilateral import bans, something that escalated into a rare episode of public mudslinging between Ukraine and staunch ally Poland.

“Russia benefits from the potential disunity,” Welsh said, “and also from the drain on EU resources as the EU is … supporting alternative routes [for Ukraine’s grain].”

Tensions between Ukraine and Poland have since eased.

Russia’s wheat exports are hitting all-time highs. In May, the US Department of Agriculture predicted that Moscow would export “a record” 45 million metric tons of wheat in the 2022-23 season. That tallies with the S&P Global data, which has 46.1 million for that season, a figure forecast to be exceeded by the amount to be shipped in 2023-24.

However, wheat prices have been falling since a post-invasion spike, hitting their lowest closing level in more than three years at the end of last month (though prices are still higher than for most of the last decade). This means Russia’s record exports cannot guarantee record revenues.

Sizov at SovEcon notes Moscow has been trying to enforce an unofficial floor on wheat export prices. In March, Reuters reported, citing two sources, that the Russian government wanted exporters to ensure prices paid to farmers were high enough to cover average production costs.

But other players are starting to undercut Russia. According to Sizov, a closely watched recent tender to sell wheat to Egypt was won by Romania, which offered a price of $256 a ton, while Russian sellers offered $270.

Paul Hughes, chief agricultural economist at S&P Global, believes Russia’s biggest challenge will come if sellers in the EU — another major wheat exporter — lower their prices.

“At that point, Russia will have a choice,” he told CNN. “One, maintain the [export price] floor and give up export share to the EU or, two, abandon their floor, reduce price and maintain their export pace,” he said in emailed comments, calling such a scenario a “moment of reckoning.”

But Ukraine, where about 8% of farmland is out of action because of the war, is already in a bind. S&P Global expects its wheat exports to fall by 3.7 million tons to 13.4 million in 2023-24, the lowest in nine years. And a significant reduction in the global wheat supply could yet lift prices, suggests Welsh.

“Ukraine starts to harvest its crops late summer into fall and it exports its crops November, December, January, February,” she said. “So if Ukraine continues to have only limited access to its ports as its export season ramps up, that’s where you could see greater impacts on global markets.”

And if wheat prices rise, Russia will be well-placed to reap the benefits.

Cyprus  |  Russia  |  Ukraine  |  war

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