Grain exchange could become milestone project for BRICS - Russian deputy agriculture minister
ALMATY. Jan 30 (Interfax) - The creation of a BRICS grain exchange may become a milestone project for the group's member countries, Russian Deputy Agriculture Minister Maxim Titov said.
"The BRICS [grain] exchange does have good potential. It could become a milestone project for this union of countries," Titov told journalists in Almaty on Thursday.
Russia proposed creating a BRICS grain exchange. The declaration adopted at the BRICS summit in Kazan in October 2024 welcomes this initiative, which proposes establishing a grain trading platform (a grain exchange) within BRICS and then expanding it to include other segments of the agricultural sector.
"All BRICS countries support it. The exchange will be developed. I hope that this work will continue as part of interagency and international work," Titov said, adding that the Economic Development Ministry oversees this project in Russia.
The Union of Grain Exporters and Producers expects the volume of trading in agricultural and related products on this exchange to top $1 trillion in the future.
According to the union's estimates, grain production in the BRICS countries, including those that joined the group recently, stands at 1.24 billion tonnes a year, accounting for 44% of the world's total grain output. Their grain consumption is almost the same at 1.23 billion tonnes (44% of the world's total grain consumption). Specifically, the BRICS countries produce 377 million tonnes of wheat (48%) and consume 374 million tonnes of wheat (47%). Corn production in the BRICS countries amounts to 501 million tonnes (40%), and consumption is at 484 million tonnes (40%).
This new exchange is needed because the current infrastructure of the world grain market was formed after WWII, when wheat and corn shipments from the United States were predominant. Market benchmarks, which are also used by the BRICS countries, are based on grain prices on the Chicago Mercantile Exchange (CME). Mostly U.S. dollars are used as the clearing currency. Being key world grain market players, the BRICS countries cannot fully participate in forming prices for core agricultural products key to their food security and the economy such as wheat, barley and corn, global prices for which are formed and quite often become subject to manipulation in third countries.
A response to this situation could be the creation of a common BRICS trading and clearing infrastructure where grain will be traded between BRICS members' companies via an exchange.
