Transcript The Impact of Russia*s 2010 Grain Export Ban

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)
% of total
grain crop
in 2009
1992
1995
2000
2005
2006
2007
2008
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 20082012 (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
Recommendations
• 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