Russia, the world’s largest wheat exporter, is considering abolishing its grain export quota which it usually sets up in the second half of the July-June marketing season as reported by a local news agency– Interfax citing Russia’s Deputy Prime Minister.
To secure enough supply for domestic needs, Russia re-evaluates and sets up export quotas for the period- starting from mid-February until the end of June. The country does so as the shipment volumes are high for Africa and the Middle East.
“The harvest is big, so, in principle, probably, yes, there are no prerequisites to impose any quantitative restrictions at the moment,” Viktoria Abramchenko, who is in charge of the agriculture sector in the government, was quoted as saying on Tuesday.
According to President Vladimir Putin’s forecast, Russia is on track to harvest a record grain crop of 150 million tonnes, including 100 million tonnes of wheat, in 2022.
Russia usually sets up grain export quotas for the period from mid-February until the end of June.
Russia’s Union of Grain Exporters in a statement on social media said that it is ready to comply with the quota system till its size of it is not of a restrictive nature. The quota of 25 million tonnes of grains for exports from mid-February until June 30 “could become a compromise option”, the union said. “The quota was introduced as a systematic measure to regulate grain exports, so there is probably no point in canceling it because of the circumstances of a particular season,” it added.
What is an Export Quota?
A quota is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period. Countries use quotas in international trade to help regulate the volume of trade between them and other countries. Countries sometimes impose quotas on specific products to reduce imports and increase domestic production. In theory, quotas boost domestic production by restricting foreign competition.
In order to ensure domestic grain availability, Russia sets up export quotas in the second half of the July-June marketing season.
Wheat Export Insights
Let’s take a look at the export insights of the most exported agro-commodity in Russia
In 2020, going by the value, Russia exported US$10.1 billion of wheat, making it the number one wheat exporter in the world. In the same year, wheat was the seventh most exported product in Russia. The main destinations of wheat exports from Russia included Egypt (US$3.23 billion), Turkey (US$1.66 billion), Nigeria (US$556 million), Bangladesh (US$409 million), and Pakistan (US$394 million).
The fastest-growing export markets for Wheat in Russia between 2019 and 2020 were Egypt (US $672 Million), Pakistan (US $394 Million), and Turkey (U S$272 Million).
A lot has been disrupted in the supply chain after tensions began escalating between Russia and Ukraine. Multiple countries around the world that relied on grain shipments from Russia and Ukraine were majorly affected. However, the commencement of the Black Sea Grain Corridor allowed outbound grain shipments from both Russia and Ukraine to reach its customers worldwide.