A Russian idea backed by President Vladimir Putin for a BRICS grain exchange that would allow buyers to purchase directly from producers is gaining traction ahead of summit of the group in October, the head of the Russian Union of Grain Exporters said.
China and India are the world’s biggest wheat producers and Russia the biggest exporter of the grain so any exchange based on the BRICS grouping of Brazil, Russia, India, China and South Africa as well as Egypt, Ethiopia, Iran and UAE would have global clout.
Eduard Zernin, head of the Russian Union of Grain Exporters (Rusgrain), told Reuters that he hoped organisational issues regarding the exchange should be resolved by this year’s planned BRICS summit in the Russian city of Kazan.
Zernin said the idea had support from other countries and businesses in a number of countries.
“We have seen understanding and support for the initiative,” he said, adding: “Interest in our initiative is quite high.”
Zernin said the main problem with traditional commodity exchanges was that they were beholden to “speculators”, including hedge funds which trade derivatives of the commodity, and said this had led to prices below the cost of production.
“We believe it is in the interest of both suppliers and buyers of real grain to eliminate such extreme volatility and add transparency and predictability to the world grain market”.
“We use the term “exchange” rather for reference. Ideally, we should be talking about a modern, high-tech digital marketplace,” Zernin said.
It was not immediately clear why big buyers such as Egypt and China would use a BRICS exchange as they are currently able to choose the lowest available price from a wider range of sellers which might include Ukraine or the European Union.
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