© Augst Eibner / Pressefoto / Legion-Media
To compensate for the rice shortage and counter rising food prices, India is negotiating with Russia for the import of a substantial quantity of wheat, as reported by Reuters. In this case, the procurement could involve 9 million tons of grain or even up to 15 million tons according to other sources. As reported by Reuters, India could receive significant discounts from Russia, ranging from $25 to $40 per ton. It's expected that the agreement will be of an intergovernmental nature, as procuring such a large quantity of wheat on the open market would significantly inflate its cost, which would not be acceptable for the parties involved. If the grain deal with India does materialize, it could allow Russia to considerably boost its crop exports and potentially lead to the extension of the grain trade corridor in a new format, possibly happening in the near future.
Media reports indicate that Russia, Turkey and Qatar are preparing a new agreement to replace the grain trade deal, under which Russian grain, funded by Qatar, could be directed to impoverished African nations under the UN's auspices. Despite the sanctions hindrance, Moscow reached record grain shipments in the previous season. Now, with new possibilities, Russia's grain sales could increase even further. Since July 1st, when the grain trade corridor was halted, Russia's exports have already increased by 1.6 times. Adding to all of the above, Russian grain, along with Ukrainian and Kazakh grain, belongs to the group of Black Sea grains, imported by 55 countries today. Among them, 36 countries covered over 10% of their total needs through these supplies. Russia, Ukraine, and Kazakhstan used to compete for global markets but now Russian grain could significantly challenge Ukrainian grain, even if the corridor continues to operate, as Ukrainian grain logistics remain expensive under the current circumstances.
Comment: Ukrainian grain has been rejected by a number of countries in the EU, ostensibly because it was so cheap it was undercutting farmers, however one probably reason it was so much cheaper was because it was discovered to be contaminated with toxins and GMOs - possibly a consequence of Ukraine selling off some of Europe's best farm land to US corporations - and so, in reality, Ukrainian grain is not really a comparable competitor to Russia.
Moreover, by significantly increasing its share in the global wheat export market, which could reach 25% if the 9-million-ton deal with India is sealed, Russia would gain another crucial geopolitical tool: grain. Which might even become more influential in the future than oil or gas. Moscow is likely to leverage this tool to further strengthen ties with food-import-dependent third-world countries, potentially turning them against Ukraine.
Comment: The West and the Kiev junta is to blame for the world turning against Ukraine.
For instance, by threatening to block Black Sea ports due to maritime attacks by the Ukrainian army. Additionally, in the context of the grain theme, it's quite telling that India did not invite the President of Ukraine to the upcoming G20 summit. Whether this is related to the India-Russia wheat deal discussions or not remains uncertain, but the incident is quite illustrative.
Another current factor affecting the global food market is the El Niño hurricane, which is raging in Asia and is a natural phenomenon that triggers global temperature fluctuations and droughts. Similar catastrophes have not been observed in this region over the past seven years but as forecasted by the World Meteorological Organization, El Niño is expected to persist in Asia until at least the end of the current year. This has already had a negative impact on rice yields, a staple food crop for many Asian countries, including India, which accounts for over 40% of global rice exports. The drought caused by El Niño poses a major threat to rice plantations at the moment. As previously mentioned, India banned the export of white rice back in July this year after its price rose by 11.5% in the domestic market. Later in the same month, the UAE suspended rice export and re-export for four months. In early August, Thai authorities called on local farmers to reduce rice cultivation due to water issues. On the other hand, Vietnam, which has been less affected by natural disasters this year, plans to increase its exports. However, these volumes will still be insufficient. Overall, rice is becoming a scarce commodity and its prices have sharply risen to $650 per ton, the highest in the last decade. The future of rice remains uncertain, as analysts estimate that this season's rice cultivation is half of what it was in the past.
Comment: If true, the consequences will be dire.
A special intrigue revolves around grain as well. After Russia exited the grain trade deal, grain prices jumped by 8-12%, and they are expected to remain high in the foreseeable future. The IMF has also estimated a possible 15% increase in grain prices. According to Maxim Torero, a representative of the UN's Food and Agriculture Organization, global food imports, including grains are projected to jump this year, with grain shipments growing by 1.5% to nearly $2 trillion. Countries south of the Sahara are at risk as they already face food shortages. According to the UN, Ethiopia, Sudan, Nigeria, Somalia, Afghanistan, Yemen and some other countries are the most affected by hunger.
Comment: Afghanistan might fare better, however: US to split $7 billion STOLEN from Afghanistan's central bank between 9/11 families & aid groups, as Afghans suffer starvation
The main question still remains about the fate of the grain deal. Ukraine is actively establishing alternative routes but its logistics are currently expensive. The prospects of resuming the grain trade corridor were supposed to be discussed during the meeting between Erdogan and Putin, but it's unclear when this meeting will now take place or if it will happen at all. Meanwhile, global media reports suggest that the deal might be revived but without Ukraine's direct involvement. Russia, after exiting the grain agreement, immediately stated that it was ready to replace Ukraine in the global market. Since July 1st, when the grain corridor was fully halted, Russia has exported around 3.3 million tons, which is 1.6 times more than during the same period last year. For instance, exports to Saudi Arabia grew by 2.3 times to 428 thousand tons and to Egypt by 85%.
Comment: That might be because Egypt has been facing a worsening food crisis: Egypt: TV anchor suggests eating donkey meat as food prices soar, gov't to withdraw from UN grain treaty to reduce reliance on dollar
Russia is also expanding the geography of its exports, sending grain to Sudan, Qatar and other countries where it hadn't been working in this direction before.
In the context of this topic, it's worth mentioning that as part of its annual international comparison program, the World Bank published GDP data for 2022 adjusted for purchasing power parity, showing that Russia has maintained its position as the fifth-largest economy for the second year in a row, surpassing Germany once again.
Comment: GDP is a poor measurement for a countries wealth, particularly in our time where what really contributes to the health and wealth of a country is changing dramatically.
The first four spots are still held by China, the United States, India and Japan. Indonesia, Brazil, France and the United Kingdom also make up the top ten. Collectively, the BRICS countries exceed the "big seven" in terms of GDP. It's important to note that forecasts for the previous year predicted a catastrophe for the Russian economy. In spring 2022, the World Bank forecasted a 11.2% GDP contraction for Russia, while the International Monetary Fund projected an 8.5% contraction. However, by the end of the year, the decline was significantly less significant, at only 2.1%. Based on World Bank data, it can be concluded that the wave of sanctions did not manage to dismantle the Russian economy and, in some ways, even strengthened it.
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