The World Bank has urged world grain exporters not to restrict sales volumes of gains on Russia's model. Russia banned the export of grains as a result of the drought. Russia's decision significantly complicated the situation on the international market. Ukraine followed Russia's example and banned the export of grain too. As a result, the United States and its genetically modified products obtained the complete advantage on the market.
Large grain-trading corporations are also interested in banning the export of grain. The profit for them is obvious: restricted export is categorized as force majeur, which allows to terminate the contracts based on old prices. The old contracts considerably reduced the sellers' potential profit against the background of the growing prices on wheat. To be more precise, the contracts stipulate possible agreement termination in the event the grain exports are banned, which creates a form of quasi force majeur.
Ukraine has not made an official decision yet, but the nation's customs blocked grain-loaded vessels in Ukrainian ports. Analysts say that the national agricultural fund is losing the fight with grain traders, which jeopardized grain shipments for the state reserve of the country. Ukraine has purchased only 40,000 tons of new harvest wheat whereas the purchase of 4-4.5 million tons was originally scheduled.
Russia Today: Food prices in the drought spotlight
Most likely, Ukraine will temporarily ban the exports of grain soon until the state acquires the needed amounts of the product.
As for Russia, the ministry for agriculture has revised its forecast about the grain harvest. Prime Minister Putin stated that Russia would harvest approximately 65 million tons of grains. In May, the ministry set forth the number of 90 million tons. Afterwards, the forecast was revised to 80-85 million and then to 70-75 million tons (in August).
Russia 's home grain needs are evaluated at about 78 million tons. The nation has about 31 million tons of reserved grains, which says that Russia will not suffer from the lack of grains this year.
The decree about the ban on the export of grain from Russia also contains a proposition to other members of the recently established Customs Union - Russia, Kazakhstan and Belarus - to follow Russia's example. The proposition has not received any reaction yet. Kazakhstan, one of the world's ten largest exporters of grains, increased its grain harvest forecast for the first time this year from 13.5 million tons to 15 million. Nevertheless, it would be too naive to say that the Asian nation will conquer the world market of grain this year. The United States will.
The USA will benefit from the restricted export of grains from the former USSR. Australia will be able to export 16 million tons. Argentina is not expecting a record-breaking harvest either - 13 million tons for export at best.
The export of grains from the countries on the coast of the Black Sea will not exceed the level of 14.6 million tons. The export of US wheat may reach 32.6 million tons, which marks an increase of 9.1 million tons in comparison with the results of 2009-2010.
Most of the US and Canadian grain is genetically modified. Thus, the world may begin to consume dangerous products. Up to 80 or even 90 percent of soy, corn and cotton growing in the United States is genetically modified. The USA, Canada, Brazil and Argentina are the world leaders on the volumes of GM crops.
The United States was planning to sow wheat on 21.8 million hectares of land from September 2009 to June 2010, which is nine percent less than a year before. The export potential this year will increase by almost 30 percent.
Today, the USA tries to make farmers cooperate with the corporations selling GM seeds. The farmers will probably be forced to purchase the seeds from agricultural enterprises rather than build up the stock of the seed grains single-handedly. Special seed sterilization technologies can be used as well, RIA Novosti reports. The technology makes the seeds ripen only to a certain extent when they are unable to grow, which nullifies the use of a part of the harvest as seed grains.
It is worthy of note that the patents for over 90 percent of all GM seeds in the world belong to three giant companies: Syngenta (Novartis, Switzerland) and its Swiss division, Monsanto (Pharmacia, USA). Du Pont (Pioneer) is also named as one of the largest producers of GM products, as well as Advanta (Astra Zeneca + Cosun, Britain-Holland).
These companies control nearly two-thirds of the whole market of pesticides, a quarter of the commercial market of grains and practically 100 percent of the market of GM grains.
Russia, Kazakhstan, Belarus and Ukraine need to join their efforts in coordinating their actions to confront such a perspective. The potential for growing healthy wheat on the former USSR is enormous. However, many of Russia's friends may wish to plant resistant GM wheat after the drought.