Putin: BRICS grain exchange may become full-fledged commodity exchange in future

KAZAN. Oct 23 (Interfax) - A BRICS grain exchange proposed by Russia may become a full-fledged commodity exchange in the future, Russian President Vladimir Putin said.

"In due time, we could also think of transforming this grain exchange into a full-fledged commodity exchange," Putin said at the BRICS summit's extended-format session in Kazan.

Since a number of BRICS member countries are among the world's largest producers of grain, legumes and oilseeds, "the creation of a grain exchange will help form fair and predictable price indicators for food products and raw materials" in light of measures to ensure food security, Putin said.

"Putting this initiative into practice will help protect national markets from negative external intervention, speculation and attempts to cause an artificial shortage of foodstuffs," he said.

For its part, the BRICS Kazan declaration, titled 'Strengthening Multilateralism For Just Global Development And Security', says, "We reaffirm the need to develop a fair agricultural trading system and implement resilient and sustainable agriculture. We commit to minimize disruptions and promote rules-based trade in agriculture and fertilizers with the view to ensure a continuous flow of food and essential inputs for agricultural production which should be exempted from undue restrictive economic measures, inconsistent with WTO rules, including those affecting producers and exporters of agricultural products as well as business services with regard to international shipments. In this regard, we welcome the initiative of the Russian side to establish a grain (commodities) trading platform within BRICS (the BRICS Grain Exchange) and to subsequently develop it including expanding it to other agricultural sectors."

It was reported earlier that the Russian Union of Grain Exporters came up with the initiative to set up a BRICS grain exchange. Russian President Vladimir Putin backed the idea of creating the exchange at a meeting with representatives of the agriculture sector in March, calling it very good and promising to work on it with partners.

According to the calculations of the Union of Grain Exporters, the BRICS countries, including the ones that joined the organization in 2024, produce 1.24 billion tonnes of grain per year, or 44% of world production. The grain consumption will be almost equal to the production, amounting to 1.23 billion tonnes, or the same 44% of the world consumption. The BRICS countries harvest 377 million tonnes of wheat per year, or 48% of world production, and consume 374 million tonnes, or 47% of world consumption. Production of corn will reach 501 million tonnes, or 40% of the world production, while consumption is 484 million tonnes, the same 40% of the world consumption.

As reported, in its letter to the Agriculture Ministry, the union justified its proposal by the fact that the modern world grain market infrastructure developed after WWII with the dominance of wheat and corn supplied from the United States. Market benchmarks, including those used by the BRICS countries, are formed using grain crops quotations on the Chicago Mercantile Exchange. The U.S. dollar is used as the main clearing currency.

"The BRICS countries, as key participants in the global grain market, cannot fully participate in setting prices for the basic agricultural products important for their food security and economies, such as wheat, barley and corn, whose global prices are formed and often manipulated by third countries," the authors of the letter said.

The solution could be the formation of a unified BRICS trading and clearing infrastructure, within whose framework exchange trading in grain could be conducted between companies from the BRICS member countries. "Russia has accumulated unique experience in creating high-tech, productive and reliable exchange trading and clearing platforms (for example, the MOEX group). In addition, it has accumulated rich experience with exchange technologies in terms of exchange commodity markets, has experience organizing settlements in the currencies of the BRICS countries and allowing participants from different countries to access a single exchange trading and clearing infrastructure," the letter said.