Following on from the Russian announcement, the Ukrainian government stated on 11 October that it wanted to limit grain export sales to 3 million tonnes of corn, 1 million tonnes of wheat, and 100,000 tonnes of barley. The government states that this measure will stay in place until the end of 2010 so as to guarantee the country's supply.
Ukraine, the number one supplier of barley in the world and number 6 for wheat, is famous for its very fertile black earth. But it was hit by the major drought last summer, and consequently saw forecasts for its grain harvest drop from 46 million tonnes in 2009 to 39 million tonnes today. This has sparked off strong reactions in the country, with the Ukrainian Grain Association, a body of several dozen grain producers and merchants, declared that introducing quotas could "totally paralyse the grain market”.
A few weeks ago Russia, which had also been affected by the drought, imposed a blanket embargo on grain exports until summer 2011, triggering a sharp rise in prices on world markets. It is thus more than likely that the Ukrainian decision will have the same harmful consequences, destabilising markets and causing increased price volatility for agricultural raw materials.
So it is high time that the international community acted to better anticipate and regulate agricultural markets. The Russian example clearly shows how the anticipations of the various actors in these markets (farmers, investors, the state, and so on) now play a major role in agricultural raw material price volatility, and this despite there being no real change in the fundamental physical characteristics of the volume of supply and demand.