The Russian ruble settlement order has been extended to agricultural exports, causing a global food crisis?

　　Author: Pan Yinru

　　Following the natural gas transaction, the Russian government extended the ruble settlement transaction mechanism to the export of some agricultural products.

　　According to CCTV news reports, the Russian government issued an order on July 1, local time, stipulating that export taxes on agricultural products such as wheat, corn, and sunflower oil should be settled in rubles.

At the same time, the Russian order also stipulates that the order to pay tariffs on exports of sunflower oil and sunflower seeds in rubles will be extended by one year until August 31, 2023.

The relevant order was published on the Russian legal portal.

Russian Agriculture Minister Patrushev also said that in the future Russia will only export agricultural products to "friendly countries".

　　This is another expansion of this new transaction mechanism after the Russian government adopted ruble settlement in international natural gas transactions in May.

Wei Jinshen, an associate professor at the School of Politics and International Relations at Lanzhou University, told China Business News that Russia has expanded the scope of the ruble settlement order to include food transactions other than energy, which is a new measure by Russia to counter Western sanctions.

Since the outbreak of the Russia-Ukraine conflict at the end of February, the West has imposed six rounds of sanctions on Russia, involving Russia's energy, transportation, finance, trade and other fields.

　　As for whether Russia's move will ease the current urgent food crisis, Russian economist Alyosha (pseudonym) told Yicai.com that he is not optimistic, "It will only exacerbate the current global inflation and is not conducive to global food trade. supply chain recovery.”

　　Why are agricultural exports anchored in the ruble?

　　In the field of agricultural products trading, according to CCTV news reports, according to the information released by Russia, the current export tax of Russian wheat is about 15,000 rubles per ton (about 1,824 yuan), and the corn and corn meal is 13,875 rubles per ton (about 1,824 yuan). 1,688 yuan), and sunflower oil is 82,500 rubles (about 10,032 yuan) per ton.

The relevant exchange rate calculation is based on the average exchange rate between the Russian ruble and the US dollar in the previous 5 working days of the Bank of Russia.

　　Not just an energy powerhouse, Russia is the world's largest exporter of wheat and a major supplier of sunflower seeds.

　　Wei Jinshen said that now Russia is expanding the scope of the ruble settlement order mainly for three reasons.

First of all, Wei Jinshen believes that after the ruble settlement mechanism was launched in Russia's energy trade, it not only stabilized the ruble exchange rate, but also attacked the dollar hegemony and stabilized Russia's financial and economic system. "The practice of ruble settlement in energy trade has strengthened Russia's Expanding confidence in the ruble settlement order".

　　Although the ruble exchange rate plunged directly after the outbreak of the conflict between Russia and Ukraine at the end of February, the exchange rate of the ruble gradually rebounded as the Russian government adopted strict foreign exchange control measures and linked energy transactions such as natural gas to the ruble.

Today, the ruble's performance in the foreign exchange market has not only recovered to its pre-conflict level, but it has also continued to strengthen.

　　Secondly, Wei Jinshen believes that the reason why we use the food field is because food is another field in which Russia has an advantage after energy.

According to the World Food and Agriculture Organization (FAO) statistics, Russia is one of the world's top ten grain producers, the world's largest wheat exporter, the world's second grain exporter, and has a major influence in international grain trade.

"In the current situation that the international grain trade is seriously affected, the use of rubles for the import of Russian grains will further consolidate the ruble's position in the world monetary system." Wei Jinshen said.

　　As of July 1, the ruble has risen 42 percent against the dollar this year, making it the world's best-performing currency.

So in Russia, the Russian Central Bank, the Russian Ministry of Finance and the Ministry of Economic Development have different opinions on whether to intervene in the continued strengthening of the ruble.

　　In addition, Wei Jinshen also believes that Russia's move will further promote cooperation with countries that import Russian grain. "Many countries in South Asia, the Middle East and Africa need to import grain from Russia, and the settlement of grain trade in rubles will further strengthen Russia's relationship with Russia. cooperation between these countries.”

　　According to the annual data released by the Russian government, the export value of Russian agricultural products in 2021 will be 37.7 billion US dollars, a year-on-year increase of 23.6%.

Among them, the export value of grain was 11.4 billion US dollars, an increase of 12%.

Among the top ten export destinations, the EU (first), South Korea (fourth), Ukraine (eighth), Japan (tenth) and other countries and regions will not be able to obtain agricultural exports from Russia according to the new policy of the Russian government.

Turkey, Egypt, Tunisia, Pakistan, as well as countries in the Middle East and Africa are highly dependent on Russia for staple food such as wheat, and are currently popular destinations for Russian agricultural exports.

　　Russia-Ukraine grain export negotiations fail

　　Since 2022, the world has frequently raised the alarm of "food crisis".

　　Barsali Bhattacharyya, an industry research analyst at the Economist Intelligence Unit (EIU), said in an interview with China Business News that after the outbreak of the new crown epidemic, industrial disruptions due to stagnant supply and environmental factors have pushed up global food prices .

U.S. wheat futures actually reached their highest level in nearly nine years in November 2021, he said.

“The Russian-Ukrainian conflict, which further exacerbates the supply crisis, is the biggest driver of higher commodity prices in 2022.”

　　"The conflict has closed Ukrainian ports, affected the movement of goods along the Black Sea coast, and blocked access to Russian and Ukrainian airspace. Western sanctions will make trade with Russia challenging," he explained.

　　Alyosha told China Business News that at a time when global food prices are already rising, coupled with the recent rise in the ruble exchange rate, it is not good news for these "friendly countries" to use the ruble to pay agricultural export tariffs, " It remains to be seen whether countries in the Middle East, Africa and other regions will maintain their enthusiasm for grain trade with Russia."

　　At the same time, on the same day that the above-mentioned settlement order was promoted, the Russian Ministry of Agriculture issued a statement that from July 1 to December 31, Russia will temporarily restrict the export of amino acid feed and rice.

The purpose of this grain hoarding operation is to stabilize the price of agricultural products in Russia.

　　Some experts believe that the ruble settlement order may be a double-edged sword, and it will also bring inflationary worries to the Russian economy.

Russia is still facing greater inflationary pressures.

According to Rosstat, Russia's PPI in May increased by 19.3% year-on-year and 6.9% month-on-month.

From the CPI point of view, the inflation rate in Russia was 16.7% in March, and the inflation rate in April was still as high as 17.8%.

As of June 17, the annual rate of Russia's CPI was 16.42%.

This level remains high.

　　Since the conflict between Russia and Ukraine, as of June, rough statistics show that more than 20 countries have banned the export of grain or livestock, including India, Egypt and other countries that play an important role in the global food field as Russia.

　　Although the West did not directly target the Russian grain field, due to secondary sanctions such as the cancellation of insurance for ships transporting Russian grain, the prohibition of these Russian ships from entering the ports of European countries, and the exclusion of Russia from the international payment system. To "disguised" to stop Russia's grain exports.

　　In addition, as the other side of the conflict, Ukraine, which is also a major food country, pointed out that Russia blocked Ukraine’s sea ports, which not only prevented the export of a large number of Ukrainian agricultural products, including grain, but also disrupted Ukraine’s farming because of the reality of the backlog in inventory. Rhythm.

　　In order to solve the current food crisis, it was reported at the beginning of June that with the help of a third party Turkey, Russia, Ukraine and Turkey negotiated the establishment of a "food corridor": the Turkish army first carried out demining work in the Ukrainian waters, and then the Turkish and Russian ships would be separated. Duan escorted the grain ship away, hoping to cool the world's high food prices.

　　However, a month has passed, and the above-mentioned consultations are only on paper and have not been effectively implemented.

In this regard, Wei Jinshen told Yicai that the previous grain export negotiation between Russia and Ukraine has actually reached a deadlock. The key reason is whether the parties in the negotiation are pursuing the maximization of interests, or are they looking for the "greatest common divisor" to solve the current contradiction.

　　"There is no doubt that Russia is the dominant party in the negotiation, so its purpose is how to use the negotiation to maximize its interests. For Ukraine, its grain shipments rely heavily on the Black Sea passage. On the one hand, Russia controls the Black Sea and Asia. On the other hand, Ukraine has doubts about Turkey's security commitments, and in this case, it is not surprising that the grain export negotiations between Russia and Ukraine have reached an impasse," he said.

　　The Organisation for Economic Co-operation and Development (OECD) released a report on the outlook for agriculture over the next 10 years on June 29.

According to OECD estimates, the complete loss of Ukraine's export capacity will drive up global wheat prices by 19%; in the extreme case of a combined reduction of 36 million tons of wheat exports due to the Russian and Ukrainian factors, wheat prices will rise by one-third from before the conflict above.

"Without peace in Ukraine, the global food security problem will continue to worsen," the OECD noted.