The BRICS countries are talking about creating a new organization: will Moscow win?

The BRICS member countries may soon have not only their own currency, but also a grain exchange. Vladimir Putin announced this at a meeting with farmers in the Stavropol Territory. In this international bloc (Brazil, Russia, India, China, South Africa and five other joining countries) there are simultaneously both suppliers and buyers of grain. The idea of ​​creating a separate trading platform may be of interest to everyone

As you know, Russia has enormous potential for grain exports. Therefore, there is every reason to create your own trading platform. After all, Moscow today “holds” approximately 25% of world grain exports.

In 2022, we harvested a record harvest of 157.6 million tons, almost 30% more than in 2021. Last year the figure was more modest, but not by much: 145 million tons, including 93 million of wheat. According to experts, in the current agricultural season the grain harvest will remain at approximately the same level – “near-record”.

The problem is where and how do we sell our surplus harvest?

As Vladimir Putin noted at a meeting with farmers, stock market speculation affects prices and this affects consumers. Although the indices themselves are usually formed in the USA or in Europe, in particular in Paris. We must assume that the new trading platform will operate on different, more fair conditions for the manufacturer and buyer.

According to Igor Abakumov, Candidate of Economic Sciences, host of the “Rural Hour” program, the idea of ​​​​creating such an exchange is very interesting and promising. “This is a radical step towards weakening the London, New York or any other commodity exchange,” the expert believes. “Another center of power will appear. In addition, if we are now looking for buyers all over the world for Russian wheat, now they will come to our site themselves.”

“But questions arise regarding the currency of purchase and sale,” he continues. – It is no secret that Russia has accumulated huge reserves in Indian rupees, which we do not yet know how to use. We need some kind of universal currency, a unit of account – otherwise problems will arise in mutual settlements.

Of course, someone may have a question: the countries that are friendly to us, with which Russia mainly trades, are not rich. This is the African continent, Southeast Asia, Latin America. Isn’t it better for us to “build bridges” with those states that are willing to pay, as they say, without haggling? Moreover, according to analysts, bread is not a product that the purchasing state can refuse. In force majeure circumstances, he will buy wheat at any price. Especially if the consumption of baked goods in terms of total calorie content in some countries reaches 60-80%. In general, we can calm down; our exporting farmers are not at a loss.

Doctor of Economic Sciences, chief researcher at the Center for Agricultural Policy at RANEPA Vasily Uzun believes that organizing a BRICS grain exchange is quite a complicated matter, since the seller who has not closed the contract will have to send the products to a acceptance point, which may be far away.

“The idea of ​​creating a grain exchange in Moscow has been discussed for more than 30 years,” he says. – By analogy with the Chicago, London, and Paris commodity exchanges, it was assumed that the Moscow one would be a futures exchange, that is, trading would be carried out not in natural products, but mainly in contracts for standard products.

A producer of agricultural products, for example, in the spring sees on the stock exchange the futures price for third-grade food wheat in August or September. This price suits him, he sells a contract for 100 tons on the exchange, and receives the exchange price for his goods.

When the delivery deadline arrives, the manufacturer can deliver the goods to the buyer. But as a rule, under an exchange contract, it is not delivered to the buyer, and when the delivery date approaches, they buy out their contract and close it. If the price has fallen during this time, the manufacturer can rejoice at the gain, since he can supply the product at a higher contract price. If the price increases, he will lose, but the proceeds will not be taken away from him. A futures contract is a kind of insurance.

It is not yet clear how the BRICS grain exchange, announced by the Russian President, will be organized. But one thing is clear: this idea will be discussed at the organization’s upcoming summits.