Grain is rushed to the exit – Newspaper Kommersant No. 69 (7514) dated 04/20/2023

Russian grain exporters will be able to refuse part of their export quotas so that they can be distributed to other suppliers, such a draft government decree is published on regulation.gov.ru. So the authorities intend to prevent a reduction in grain exports in the face of overstocking of the domestic market and the aggravation of the situation on the external. In recent days, the situation with the supply of grain in the world has escalated against the backdrop of disputes over bans on the import of Ukrainian agricultural products to the countries of Eastern Europe and the increased importance of extending the Black Sea grain initiative in this regard.

The draft resolution prepared by the Ministry of Economy allows exporters to refuse part of the tariff quotas for the export of grain.

• The released volume of quotas will be distributed by the Ministry of Agriculture among other participants in foreign trade on a declarative basis and in the order in which applications are received.
• It is clarified that exporters who have already exhausted previously received volumes or have contracts for the supply of grain in the appropriate amount will be able to apply for additional quotas.
• The total additional volume of the quota will not exceed 45% of the initially allocated to the exporter.

It should be noted that the initiative of the Ministry of Economy is consistent with the desire of the authorities to make full use of existing export opportunities – in the conditions of overstocking of the domestic market caused by a record harvest last year, a reduction in grain exports is a serious problem for the Russian Federation.

Meanwhile, the situation on the world market is becoming more and more complicated. Over the past week, restrictions on the supply of Ukrainian agricultural products have been announced Poland, Hungary and Slovakia. On Wednesday, a similar ban was introduced Bulgariathe issue of a possible import restriction is being discussed and in Romania.

Eastern European countries explain their decisions in a similar way – they talk about the threat that Ukrainian products pose to local producers.

Recall that the first joint statement, which described the problem of Ukrainian grain, was published by the states of Eastern Europe back in February – after the protests of local farmers (see “Kommersant” dated February 2). It noted that the import of agricultural products from Ukraine to the border states – members of the European Union in 2022 increased by a factor of 2021 compared to 2021. On Wednesday, the European Commission (EC) proposed new steps to resolve the crisis: its head, Ursula von der Leyen, announced a second support package for farmers in Eastern Europe in the amount of €100 million (the first was €56 million), and also promised the introduction of “preventive measures” for certain cereal categories (including wheat, sunflower and rapeseed) and “research” on other products.

Although earlier the EC stated that the trade policy of the EU is the competence of the entire community, and any unilateral actions of countries are unacceptable, so far there is no talk of lifting the restrictions adopted by countries. For Russia, this is important because, according to some estimates, about 40% of Ukrainian grain is exported from ports on the Black Sea as part of a grain deal (see “Kommersant” dated April 19), so that the importance of its extension is now only increasing, and for all parties. As a reminder, the Black Sea Grain Initiative expires on May 18. The Russian Federation insists that the deal is partially not implemented, and offers conditions for its extension. This includes the resumption of deliveries of agricultural machinery to the country, the lifting of restrictions on the access of Russian ships to foreign ports and the unblocking of foreign accounts of Russian companies associated with the production and transportation of food and fertilizers. It should be noted that for Russia and Ukraine, as for the most important grain exporters, the extension of the deal means an opportunity to unload domestic markets. For the EU, given the attempts of the Eastern European countries to close the bypass routes to Ukrainian grain, the extension of the deal means a simpler and cheaper solution to both existing and potential problems related to this.

Christina Borovikova