Kazakhstan balks at Russian grain protectionism as food crisis looms

ALMATY -- Kazakh farmers are outraged by Russia's attempts to have Kazakhstan impose a ban on grain exports amid a worsening global food crisis.

Nur-Sultan is refusing.

At a May 20 meeting of the Moscow-led Eurasian Economic Commission (EEC), the regulatory body of the Eurasian Economic Union (EEU or EAEU), Russia insisted that all members of the bloc introduce quotas and duties on grain exports to third countries, the Russian business newspaper Kommersant.

The Russian government in mid-March introduced a temporary ban on grain exports, including wheat, meslin, rye, barley and corn, to EEU countries "to protect the domestic food market in the face of external restrictions".

Moscow is likely to extend the ban, which was set to run through June 30.

Russia's Agriculture Ministry expects the quotas and duties that Moscow is pushing will prevent re-exports of Russian grain through the EEU in circumvention of Russian restrictions, said sources cited by Kommersant.

Moscow's moves comes as Russia's navy blockades Ukraine in the Black Sea, preventing the breadbasket nation from exporting key food supplies.

Before the Russian invasion, which began February 24, Ukraine exported roughly 4.5 million tonnes of agricultural produce per month through its ports, including 12% of global wheat, 15% of corn and half of its sunflower oil, according to AFP.

The war and its ongoing blockade have largely brought the trade to a halt, with alternative routes by rail and truck unable to tackle the enormous logistical and financial hurdles needed to move so much produce to international markets.

United Nations Secretary-General António Guterres has been unequivocal on the matter, saying last week that the war "threatens to tip tens of millions of people over the edge into food insecurity".

What might follow would be "malnutrition, mass hunger and famine, in a crisis that could last for years", he warned.

To date, more than 20 million tonnes of food products remain stuck in Ukraine, according to Ukrainian authorities.

Food politics

At the EEC meeting, the Russian side criticised Kazakhstan for its lack of export duties and quotas on barley and corn.

Kazakhstan is not imposing duties because they could prevent local agricultural producers from fulfilling international obligations, Kommersant reported, citing a source with knowledge of the meeting.

Kazakhstan is a net exporter of wheat, accounting for about 4% of total global wheat exports, but the country also relies on cheaper Russian supplies to meet its domestic needs, according to Gro Intelligence, which supplies global agriculture data.

Kazakhstan has no reason to accept Russia's conditions, Andrey Sizov, managing director of SovEcon, an agricultural market think-tank in Moscow, told Kommersant.

"This will not be in the interests of the farmers of [Kazakhstan], which is a major exporter: together with flour, in terms of grain, the total supply reaches 7-8 million tonnes per season," he said.

A ban on grain exports will result in huge losses with far-reaching consequences, add Kazakh farmers.

Kazakhstan has much more grain than needed, and there will be a new harvest in the fall, said Yevgeny Karabanov of Petropavlovsk, a spokesperson for the Kazakh Grain Union.

"An export ban will be a powerful blow to our agricultural industry," he said. "Producers need to export the surplus in order to earn at least something and retain foreign buyers."

Given the abundance of agricultural products in Russia and Kazakhstan, Nur-Sultan must thwart Moscow's attempts to block grain supplies from the Central Asian republic, farmers say.

"I hope our government will support us and will not impose a ban," said Nurbol Baigaliuly, a farmer from Almaty province.

"We are a sovereign state and should make a decision based on our national interests, and not Russia's interests."

Manipulating prices

With the threat of an impending food crisis, Moscow's efforts to prevent grain shipments from partners in the EEU are in actuality a power play, say analysts.

Russia itself has a grain glut. The country expects a record harvest of 130 million tonnes of grain with annual domestic consumption of no more than 80 million tonnes, Russian President Vladimir Putin said on May 12.

Russia has turned grain into a political tool for pressuring other countries and expanding its influence, according to Kirill Pavlov, a Shymkent resident and director of the Supreme Council of Farmers, a Kazakh lobbying group.

"In recent years, Russia has been dumping on the world grain market, reducing the prices of its agricultural products in order to win the markets of countries in Africa and South Asia, and thereby getting them 'hooked'," he said.

"Now the Russian Federation is manipulating them, blackmailing them with famine."

Russia is using the war in Ukraine in its plans to expand its "food" influence, Pavlov said. For countries dependent on Russian grain, Moscow can dictate what policy they should follow to avoid a food crisis.

Aggressor and looter

Meanwhile, Russia is seizing and exporting Ukrainian wheat from occupied territories.

At a briefing on May 9, Ukrainian Minister of Agrarian Policy and Food Mykola Solskyi said that the invaders had sent approximately 400,000–500,000 tonnes of grain to Crimea valued at $250-300 per tonne.

Farmers in the occupied territories have suffered losses of more than $125 million, he estimated.

Satellite photographs provided by Maxar Technologies and published by CNN on May 23 appear to show Russia looting Ukrainian grain.

The photographs, taken on May 19 and 21, show two Russian-flagged bulk carriers moored in the Crimean port of Sevastopol, next to granary-like facilities, being loaded with allegedly stolen Ukrainian grain.

The images show grain pouring from a conveyor belt into an open hold. Both ships have already left the port.