Procurement: Russian Grain Crises

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March 17, 2025: Russia, long a major exporter of grains and other food crops, has seen its food exports disrupted by the Ukraine War and the resulting economic sanctions. Russian food exports are not subject to sanctions. For many countries that require imported food, Russian grains are a major part of the supply chain. In 2024 Russian exported 72 million tons, but 2025 exports are expected to be 42 million tons. Normally the grain exports bring in 15 to 16 billion dollars a year. Over the past year, bad weather and government refusal to allow imported seeds caused grain harvests to fall by about a third. A related problem was the failure to maintain enough grain storage facilities. The government paid for some of this, but the money has been diverted to war related activities. This resulted in nearly 10 million tons of grain rotting. Then there is the labor shortage, caused by the military taking so many men, including farm workers. Many men simply left Russia to avoid the increasing number of aggressive army recruiters. Service is supposed to be voluntary, but the recruiters have orders to obtain more soldiers any way they can.

Russian efforts to disrupt Ukrainian agricultural exports had some success. Before Russia invaded in 2022, Ukraine grain and other agricultural exports represented ten percent of such exports worldwide. Most of these agricultural exports left by ship from Ukrainian Black Sea ports before the 2022 Russian invasion. Then most were stopped by a Russian blockade. Russia offered to allow renewal of Ukrainian grain exports to get economic sanctions on Russia lifted. Before 2022 Ukraine exported about 33 million tons of grain and other agricultural products a year. Since the war began, that has declined to 13.5 tons a year. Russia normally exports nearly three times more grain and other agricultural goods than Ukraine.

The more Ukrainian food exports Russia can block, the more Russia receives for its grain. In the 2022r Russia shipped 60 million tons of food and received above average prices for it. Unlike Ukraine, which only ships grain from Black Sea ports, Russia has other options. Russia has lost a lot of support from African and Middle Eastern countries that depend on Ukraine and Russian grain exports. Russia assures these nations that it will supply the grain but does not mention that prices will be higher because of the Russian disruption of Ukrainian food exports. Many of the nation’s Russia exports food to are relatively poor countries for whom the higher prices are a burden.

The United States is one of the five major wheat exporters. The other top five are Russia, Australia, Canada, and Ukraine. Together these nations export over 115 million tons of wheat a year worth nearly $32 billion. Food importing nations have noted that the Western economic sanctions on Russian exports have deliberately excluded food. Russian efforts to block Ukrainian grain exports increase the price of exported grain and Russian benefits while nations purchasing this grain must pay or go hungry.

 

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