Russia Bans Grain Exports Till End of Year

Russia has announced a ban on grain exports starting August 15 running through December 1, 2010 (some reports state December 31) after their worst drought in fifty years. In addition it canceled a shipment of 45,000 tons to the Philippines.

Source: Henrik Thorn/Flickr

Though Russia is expected to meet food demands inside their country, the cost of grains is expected to increase significantly, with wheat up 75 percent since July. The Ban includes all grains including, wheat, corn, barley, rye, and flour.

The reason for this being such a big deal is that Russia has emerged as a major exporter (the third largest) of grain in the last few years.

Though the situation is not as bad as it was in 2008 when there was a global food shortage due to crops failing worldwide, it does have a major impact on countries who rely on the exports such as Egypt. Egypt currently has a six month supply of grains, and expects to be able to handle the disruption.

The real problem will come if Russia should extend the ban into winter months, and other countries are unable to make up the difference or if additional shortages drives the price beyond reach of some of the poorer nations.