Global Food Prices Up thanks to Russian Embargo!

No country has disrupted grain markets over the years more dramatically than Russia — perpetrator of the infamous “great grain robbery,” when the Soviet Union secretly bought up a quarter of U.S. wheat stocks after a poor harvest in 1971.

Even with the embargo, USDA estimates food prices will rise 15 percent in Russia over the next year. Clayton Yeutter, who served as secretary of agriculture in the first Bush administration, calls the embargo “singularly unhelpful” in a period of economic uncertainty.

Even as prices rise,  China and India are sitting on very large wheat stocks — a reflection of policies heavily tilted toward protecting domestic consumers. India’s surplus stocks are twice the government’s desired level and China’s amount to 43 percent of its total yearly grain production, according to USDA estimates. China has discouraged exports since 2008 and imported some wheat this year. Indian exports are negligible because the government has been supporting the price of wheat paid to farmers at above the world price.


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