Russia boosts its agricultural imports

For the first time since the 1990s, Russia will start to import agricultural commodities, including grains. This was officially declared by the Prime Minister Vladimir Putin on 29th November, when he called on other agricultural powers to reserve part of their grain production for Russia. Indeed, Arkady Zlotchevski, president of the Russian Union of Wheat, said that Russia was negotiating with Argentina, Ukraine and Kazakhstan for grain purchases.

The country hit by drought last summer foresees its agriculture strategy and its geopolitical position as being completely overwhelmed in less than a year. Ever since 2005, the government has relied on agriculture for the country's return as a great power on the international stage.

In 2009, all international experts were in agreement that Russia had effectively become a major agricultural power, one of the world's "breadbaskets". In 2009/2010, for the first time, Russia had even become the world's largest producer of cereals, leading ahead of the United States. But this year's fires in summer resulted in a drop of nearly 10% of local agricultural production and led the government to adopt protectionist measures by imposing an embargo on grain exports. The consequences: severe economic difficulties in most areas and a wave of concern among traders and financial analysts.

This example shows that:

1) It is extremely difficult to accurately predict, even for 12 months, the situation in global agricultural markets;
2) That the formation of large "world farms" leaves agricultural markets more vulnerable to climatic fluctuations;
3) That the strategic position of agriculture within the world major powers, coupled with the two above-mentioned points, is an additional factor for price pressure on structurally volatile markets.