Ukraine and Russia agree to establish a grain pool

In six months all the procedures for establishing a grain pool between Ukraine, Russia and Kazakhstan will be completed. This was reported by Prime Minister of Ukraine Mykola Azarov at a joint press conference with his Russian counterpart Dmitry Medvedev on the results of the 10th meeting of the Economic Cooperation Committee of the Ukrainian-Russian interstate committee, the Information-analytical Bulletin of the Cabinet of Ministers of Ukraine reads.

In turn, the Head of the Russian Government Dmitry Medvedev said: «Ministers have finally been able to form common approaches. I hope that we will be able to move forward, as our countries are the leading exporters of grain in the world. Creating of logistics chains between the two countries is also important.»

In the future, the pool will enable the working out of standard trade rules and to implement a common, coordinated policy of grain exports, whose total potential is over 70 million tons.

The member countries anticipate increasing grain production in 10–15 years to a total of 225–250 million tons, including approximately 90–110 million tons of wheat.

Agricultural experts note that it is unlikely that other exporters (USA, Australia, Argentina) will be able to ramp up grain production in the same proportions. Accordingly, the share of the pool’s wheat grain on the world market will have a dramatic increase and will have a very serious impact on pricing, and global food security.

Together, the three countries of the former Soviet Union will have control over around 20% of the world grain market. They will be able to defend its share even against the main competitor the United States, and expand its position at the expense of weaker competitors — Argentina, Australia, Brazil, to which we lose individually.

Government analysts say the creation of a grain pool must be approached very seriously, so as not to discredit domestic producers and exporters of grain. Ukraine, Russia and Kazakhstan are the main competitors on the grain market. Under free competition, Ukraine has much better export logistics and always wins over Russia because of deepwater ports in the Black Sea.