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The Impact of Russia’s 2010 Grain Export Ban

The Impact of Russia’s 2010 Grain Export Ban. Dr. George Welton. Short term impact of ban. Does not seem to have kept food prices down. Helped to accelerate food price increases globally. Increased the costs for international consumers of Russian grain. Long term impact of ban.

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The Impact of Russia’s 2010 Grain Export Ban

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  1. The Impact of Russia’s 2010 Grain Export Ban Dr. George Welton

  2. Short term impact of ban • Does not seem to have kept food prices down. • Helped to accelerate food price increases globally. • Increased the costs for international consumers of Russian grain.

  3. Long term impact of ban • Higher food prices (in Russia and global) as the ban: • Reduces investment in grain production in Russia – as it damaged the reliability of returns • Reduces trust in Russia as a grain provider • Increases the likelihood of food prices hikes in the future

  4. Production of Grain 1992-2009 (million tons)

  5. Exports of Wheat and Rye 2006-2010 (Calendar Year)

  6. Russian agricultural policy up until 2010 • 1990’s and failed liberal market reforms • Agriculture as a priority in 2005 and increase government spending • Programme for the Development of Agriculture, Regulation of Commodity Markets and Rural Development for the Period of 2008-2012 (2007) • Food Security Doctrine (2010)

  7. Key components of the 2008-2012 Russia Agricultural Development Program

  8. The 2010 food crisis and export ban

  9. 2010 July drought

  10. Consequences of the drought • 43 regions affected • 17 per cent of the total crop area destroyed • Rise in grain prices • Government’s market intervention • Imposing an export ban in August, 2010

  11. The impact of the ban on wheat prices

  12. The impact on poor and vulnerable groups • No clear evidence that the ban kept food prices at low level • Small share of grain and bread in household expenditures • Universal rather than targeted assistance

  13. Composition of the subsistence minimum 2000-2009

  14. Primary Export Countries for Wheat July 2008 – Feb 2009 (thousand MT) and their relative wealth in per capita GDP

  15. Long-term impact • Global price instability • Lower investment in grain production • High prices of meat and grain if protections in meat industry is continued • Damaging Russia’s reputation as a supplier • Under-use of a key resource

  16. Recommendations • Export bans should be avoided • For keeping domestic prices low, it’s better to give direct subsidies to producers, than to impose a ban • For vulnerable groups, policies should be targeted • Need for investment in grain industry to balance the meat industry will be good in the long-term • Import quotas for meat industry should be avoided

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