Russia and the BRICS Grain Exchange

The idea of regulating agricultural product prices within BRICS is of significant interest; however, successful implementation requires not just an exchange platform but also an industry union similar to OPEC. Theoretically, BRICS countries have enough potential to become an OPEC analog. After the expansion of BRICS, these indicators will reach 1.24 billion tons of production and 1.23 billion tons of consumption.[viii] However, analysts point out that unlike OPEC, most BRICS countries are net importers of grain. Only Russia and Brazil hold significant shares of the global grain market and can potentially benefit from price regulation. In Russia, the creation of a BRICS grain exchange is seen as a way to challenge the Western world order, similar to how OPEC challenged the oligopoly of Anglo-American oil companies in the 1960s.[ix]

Currently, Russia accounts for a quarter of the world’s grain exports, with global prices set by Western exchanges like the US CME Group and the French MATIF, while supplies are controlled by major European and American traders such as Cargill and Viterra. Organizational issues are likely to be resolved by the planned BRICS summit in Kazan this year.

The grain exchange would help reduce the influence of Western institutions in trade between Russia and its main grain importers. Moscow’s primary markets are Turkey, Egypt, and Iran, with increased supplies to Algeria, Indonesia, and Bangladesh. If the BRICS exchange attracts significant grain volumes, it can become a testing bridge connecting the emerging BRICS trading and currency infrastructure too.

In October 2023, the Russian grain export company Food Export Trade signed a $26 billion contract to supply China with 70 million tons of grain, legumes, and oilseeds over the next 12 years.[x] According to this agreement, Russia plans to expand grain production in Siberia, the Urals, and the Far East—regions where agriculture is less developed than in the European part of the country. The idea of selling grain to foreign buyers for rubles has been maturing in Russian state structures for a long time, and with BRICS, this can become a reality.[xi]

At a recent government meeting, Elvira Nabiullina, head of the Central Bank of Russia, reported that the share of transactions between Russia and BRICS countries conducted in national currencies has tripled, reaching 85%.[xii] Nabiullina also noted that Moscow is actively participating in discussions on the potential integration of national payment infrastructures with other BRICS members to further facilitate trade. Creating such an exchange in the current geopolitical conditions is most necessary for Russia, which faces external constraints and accounts for 22% of the world’s grain exports. Russian analysts believe that the future of projects like the BRICS grain exchange will largely depend on the relations between China and Western countries. The Kremlin has tasked Prime Minister Mikhail Mishustin and Central Bank President Elvira Nabiullina with presenting proposals by 1^st July.[xiii]

Food security is a key factor in achieving Sustainable Development Goals (SDGs) 1 and 2, aimed at eliminating poverty and hunger worldwide. Ensuring the availability and quality of food directly impacts improving the standard of living, reducing poverty levels, and providing adequate nutrition for all social groups. In the context of Russia’s national security, food security acquires strategic significance, as stable and sustainable food supply contributes to social and economic stability, preventing potential crises caused by resource shortages. Thus, strengthening food security is an integral part of comprehensive sustainable development as well as national security policies.