Russia has urged BRICS, a trade alliance of nine emerging countries, to establish an inter-bloc grain exchange, World Grain reported.
Although the alliance’s official aim was to facilitate trade between member states, analysts have claimed that the new structure would be like the Organization of the Petroleum Exporting Countries (OPEC) for the global grain market, with the goal of influencing free pricing, the 4 April report said.
The idea of setting up an inter-BRICS grain exchange was announced in December by the Russian Union of Grain Exporters (RUGE).
An initial alliance of Brazil, China, India, Russia and South Africa was joined on 1 January by Egypt, Ethiopia, Iran and the United Arab Emirates. Saudi Arabia had also been invited to join the alliance and was considering becoming a member, the report said.
Russian President Vladimir Putin gave his backing to the proposal in March.
During a meeting with Russian farmers, Putin said: “All benchmark (grain) prices are set in the USA and Europe, for example, in Paris. How much grain do the French produce? I think less than we do. And still, according to tradition, benchmark prices are formed out there,” Putin was quoted as saying during a meeting with Russian farmers.
According to Putin, the existing pricing structure on the global grain market was unfair.
The BRICS grain exchange was expected to be technically ready by October, Eduard Zernin, head of RUGE, told Reuters.
Zernin added that the word “exchange” was used only for reference, and Russia planned to establish a modern, high-tech digital marketplace.
The business communities of all BRICS countries supported the initiative, according to RUGE.
In Russia, the BRICS grain exchange was seen as a way to challenge the Western world order, just like OPEC set up in the 1960s challenged the oligopoly of Anglo-American oil firms, World Grain wrote.
“The creation of a BRICS grain exchange will make it possible to rejiggle the global market in favour of the members of this organisation and change the directions of logistics flows and their participants,” independent Russia analyst Leonid Khazanov was quoted as saying.
Russia currently accounts for a quarter of global grain exports and global prices are set by Western exchanges, such as the American CME Group and MATIF in France, with supplies controlled by large European and American traders, such as Cargill and Viterra, according to the report.
In December, the Russian Agricultural Ministry estimated that in 2023, BRICS members accounted for 1.17M tonnes/year of grain production, 42% of the global volume. Combined consumption totalled 1.1M tonnes, comprising 40% of global consumption.
