Interest in the ongoing conflict in Ukraine has focused substantially on the military and political situation, with some arguing that there has been little attention paid to the wider implications, one of which is the growth of the BRICS+ organisation.
BRICS started as an informal reference to an unofficial grouping of countries that were growing in size but were not considered to be part of the ‘west’ as America and Europe would consider themselves.
The countries concerned were Brazil, Russia, India and China, with South Africa being included later.
Over the years, the arrangement has been formalised into a trading block which was joined by Saudi Arabia, Egypt, United Arab Emirates (UAE) and Ethiopia at the start of this year, hence the + sign now often appended to the acronym.
Driving the agenda
Russia has been an enthusiastic supporter of the organisation and holds the presidency for 2024.
It has at the top of the agenda the formation of a grain trading organisation which will rival that of Chicago-based system that has been serving as the world’s main exchange since WWII.
The challenge is one to be taken seriously for between them these countries account for 44% of the world’s grain production, and 44% of its consumption; the west will most likely lose overall control of grain prices and distribution.
There are three main reasons driving this change. The first is an altruistic desire to make grain available to developing countries that find themselves with inadequate nutrition.
Some would claim that the finance-driven markets exclude poorer nations from participating fully.
The second is that the BRICS+ is now big enough to address the old complaint of ‘American imperialism’.
BRICS+ has a point, the gross domestic product (GDP) of its members now exceeds that of the GDP of the G7, which includes the great bread baskets of the United States and Canada.
The third item is the desire to undermine the dollar as the world’s major trading currency. This is already happening with oil being paid for between BRICS+ members via the Chinese yuan, the rouble and Indian rupee.
Grain has now been dragged on stage as the next commodity to be de-westernised and this will come to influence what farmers in Ireland are paid for the grain,
Just as importantly, it will also influence what they will be paying for their feed as there is a direct connection between the two.
For the western food and milling industry, one of the major concerns will be that the usual factors affecting grain prices may no longer apply, or they will be usurped by the new considerations of BRICS+ member states, which may not coincide with the interests of western countries.
Grain priorities
This will make the forecasting of prices and trading in futures more uncertain.
Nobody is suggesting that the west and BRICS+ would trade with each other – they will continue to do so – but the policies and priorities of non-western governments will have a far larger influence on price and availability than we have hitherto been used to.
If, for instance, India suffers a bad harvest, then the priority for BRICS+ will be to ship large quantities of grain to help out, and if that means a scarcity of grain for Ireland, that may be a consequence.
The EU will have little say in the matter and the Irish government none at all.
The tillage sector would enjoy higher prices yet they will be capped by what purchasers will be willing to pay for grains, and substitution by other produce in the livestock sector.
