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How Russia’s ‘grain diplomacy’ is reshaping global trade dynamics

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NEW DELHI: Russian President Vladimir Putin’s strategic use of ‘grain diplomacy‘ is reshaping global trade dynamics, potentially shifting the balance of agricultural market power more in favor of Moscow. Amidst ongoing geopolitical tensions, the European Union has found itself grappling with the implications of Russia‘s maneuvering, which includes significant increases in Russian grain exports.
According to recent actions by the European Commission, tariffs on certain Russian and Belarusian agricultural goods have been proposed to curb the level of EU imports. These measures reflect the broader struggle to counteract Russia’s expanding influence in the global grain market, which has seen a dramatic uptick following the initial spike in prices due to Russia’s invasion of Ukraine.
While the Black Sea grain deal initially facilitated Ukrainian grain exports, easing some market pressures, Russia’s subsequent suspension of this agreement and the booming export of Russian wheat to record levels have added new layers of complexity to international trade relations. The situation has led to a $13.4 billion current account surplus for Russia in March, bolstering its economic position significantly, an Asia Times report said.
Furthermore, the discussion in the EU about extending the suspension of import duties on Ukrainian agricultural exports until June 2025 has sparked controversy among European farmers, particularly in Central and Eastern Europe. These farmers argue that suspended duties lead to unfair competition from cheaper Ukrainian imports.
Amid these developments, the proposal of a Brics grain exchange by Putin aims to challenge the Western-dominated grain pricing system and could redefine the global agricultural trade landscape. This move could strengthen Russia’s geopolitical and economic influence across the BRICS nations, which now include significant global players in grain production and consumption.
The influence of Russian grain diplomacy extends beyond mere economics. In Africa, where many countries rely heavily on Russian and Ukrainian wheat, Russia has initiated a program to ship free grain to several nations, enhancing its diplomatic ties and presence on the continent.
For traditional grain-exporting countries like the US and Australia, the rise of a Russia-led Brics grain exchange represents a formidable challenge. It compels these nations to reassess their agricultural policies and explore new markets to maintain their global market shares amidst increasing competition.

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