Food fight: Russia’s ‘grain diplomacy’ reshaping global markets

Russian President Vladimir Putin’s “grain diplomacy” continues to cause headaches for the European Union while potentially reshaping global trade dynamics and markets more in Moscow’s favor.

Significantly, the European Commission has recently proposed to increase tariffs on certain Russian and Belarusian agricultural goods, including cereals and oilseeds, to discourage the current level of EU imports.

Global grain prices soared immediately after Russia’s invasion of Ukraine, though they later declined after the Black Sea grain deal was brokered in 2022.

The deal, which allowed Ukraine to export grain from Black Sea ports that had previously been blocked by Russia’s navy, was renewed twice before being suspended last year.

Ukraine has restarted grain exports since then while Russian wheat exports have reached record levels. Fertilizer shipments have also recovered.

Russia recorded a US$13.4 billion current account surplus in March on the back of energy and grain exports, more than double February’s $5.5 billion and the second-highest surplus since March 2007.

By the end of February, total EU imports of grain and oilseed in 2023/2024 from Russia stood at 1.8 million tonnes, in comparison to 19.1 million tonnes from Ukraine, according to European Commission data.

But discussions about extending the suspension of import duties on cheaper Ukrainian agricultural exports in Europe until June 2025 have raised the ire of many European farmers.

That’s particularly true in Central and Eastern European countries, where critics argue suspended import duties and other restrictions have led to unfair competition from cheaper Ukrainian imports.

EU countries have recently responded by agreeing to also impose new restrictions on Ukrainian