Russia, facing sanctions from the West for its invasion of Ukraine, will now export grains to other nations only in exchange for rubles.
In addition to grains, the Russian government has added sunflower oil and extracted meal to the list of export items to be paid in rubles. A resolution to this effect was adopted on Friday. Russia is the largest exporter of wheat in the world and a major supplier of sunflower seeds.
The government resolution also extends a provision to pay for exported sunflower oil and meal duties in rubles until Aug. 31, 2023. As part of this payment mechanism, the base price for calculating wheat’s export duties has been set at 15,000 rubles ($263) per ton.
According to the Russian Minister for Agriculture, Dmitry Patrushev, Moscow’s grain harvest for the year could reach 130 million tons, which would be enough to meet the needs of the domestic market and ensure export potential.
“Our [agricultural] products will be on foreign markets, but only in those countries that are friendly to us, that do not create hurdles and difficulties for us,” he told reporters in mid-June, according to RT.
Meanwhile, Ukraine continues to be unable to export much grain as its maritime grain export routes have been blocked by Russia. Before the war, Ukraine used to export up to 6 million tons of grain per month. But the maritime blockade cut down exports to just 300,000 tons in March and around a million tons in April.
In an interview with Reuters, Ukraine’s Agriculture Minister Mykola Solskyi predicted Russia’s invasion would create a global shortage of wheat for at least three seasons by keeping away much of Ukraine’s wheat from markets.
EU Wheat Production
The Russian decision comes amid concerns about the European Union’s wheat production. According to a report published by agriculture consulting firm Strategie Grains in June, the EU is forecast to produce around 5 percent less wheat in 2022 than last year.
Wheat production in France—accounting for around 18 percent of total European production—is expected to decline by over 5 percent this year.
“Combined with spells of extreme heat—the mercury having risen well above seasonal averages—this weather took a negative toll on the condition of all cereal crops in Europe, during the period of critical yield formation phases,” the report said, according to The Wall Street Journal.
On July 1, the EU’s executive cut down the bloc’s 2022/23 soft wheat (common wheat) production to 125 million tons, down from 130.4 million tons projected a month prior. In 2021/2022 the bloc produced 130.1 million tons of soft wheat.