MercoPress. South Atlantic News Agency

Russian exporters propose international “grain OPEC”

A challenge for consumers and farmers

With global grain prices reaching record levels the idea of an international “Grain OPEC” is floating again in the air and under consideration in a Moscow conference. Russia is one of the world's leading producers and exporters of cereals.

Proponents of the idea argue that such an organization could help overcome the steep supply and demand fluctuations of the industry as has been the history of agriculture. For example droughts in Australia or North America, transportation issues in Europe, changing food demand in emerging economies and increased use of grain for creating bio-fuels. Russian Grain Union President Arkady Zlochevsky said that although OPEC is the first frame of reference, it is not necessarily how a grain organisation would work. "OPEC regulates world oil prices from the viewpoint of the producers' gains and interests, while the grain organisation should watch over the interests of consumers," proposed Arkady Zlochevsky. Rising grain prices in Russia have forced the government to take steps to defend consumers' pockets and price stability that have also led to sudden price drops at farm level, which in turn affect future production plans. Since grains are staple food both for humans and livestock, Zlochevsky believes it is possible to stabilize markets but only at a global level. But in spite of Russian enthusiasm with the proposal, foreign analysts are more sceptical. "Grain OPEC - that's difficult. It's already difficult in the sphere of oil and there you have a limited number of producers. With grains it's a entirely different game, you have many producers. It will be hard to get them into one single boat" warned Stefan Uhlenbrock, grain analyst at F.O.Licht. Russia is currently one of the world's largest grain producers, along with the European Union, the United States, Canada, Argentina and Australia. Different factors influence demand and production in all of these countries and reconciling interests is uproad. However according to Russian sources a grain organisation which enables local supply and demand issues to be addressed at an international level may garner support in the face of a changing global consumption environment.