Why Expanded BRICS Is Backing a Russia-Initiated Grain Exchange

The 2024 BRICS Kazan Declaration endorsed an initiative to establish a BRICS Grain Exchange as part of their effort to “develop a fair agricultural trading system.” This idea is a Russian initiative first proposed by Eduard Zernin, Chairman of the Board of Russia’s Union of Grain Exporters, to  Russian President Putin in March. The Kazan Declaration described the exchange as a platform for trading grain commodities within BRICS, with potential future expansion into other agricultural sectors.  

Global commodities exchanges have been around for a long time. The United States and Europe host some of the world’s leading internationally integrated commodities exchanges, like the CME Group and Intercontinental Exchange (ICE) in the United States and Euronext in Europe. These exchanges offer a variety of derivatives to help market participants manage risk. Brazil, a founding member of BRICS, has its own global exchange, Brasil, Bolsa, Balcão (B3). In 2010, B3 established a preferred strategic partnership with CME Group to develop a multi-asset class trading platform and explore partnerships with other international exchanges. 

The proposed BRICS Grain Exchange could fill a gap in the grain commodities exchange market in the Global South. There are over forty commodities exchanges worldwide on every continent (excluding Antarctica). These existing exchanges specialize in the trade of grains or other food commodities, many of which are in Africa and Asia. Most of the existing commodity exchanges are domestic and are priced in local currencies. However, some, such as the Africa Exchange, operate in multiple countries, with contracts priced in the currency where the exchange is headquartered (in this case, in the Nigerian naira). While all five original BRICS members—Brazil, Russia, India, China, and South Africa—have their own domestic grain commodities exchanges, only Brazil has a truly globally integrated grain exchange. 

How successful would the proposed grain exchange be? The expanded BRICS bloc wields significant influence in global agricultural markets, accounting for roughly 44 percent of the world’s grain production and consumption, and nearly 25 percent of global grain exports. Heavyweights like Brazil and Russia lead in global grain production, while giants like China rank among the top food importers. With such a substantial market within its ranks, the expanded BRICS has a sufficiently large market to sustain the proposed platform. 

In practice, the proposed BRICS Grain Exchange is the latest attempt by the group to dilute the dominance of the dollar-based global trade and financial system, all under the banner of promoting food security. The Kazan Declaration endorses the BRICS Grain Exchange  

“...with the view to ensure a continuous flow of food and essential inputs for agricultural production which should be exempted from undue restrictive economic measures, inconsistent with WTO rules, including those affecting producers and exporters of agricultural products as well as business services with regard to international shipments.” 

The group’s firm stance against “undue restrictive economic measures” is a rebuke against the West’s economic coercion, such as the collective sanctions against Russia. Yet, as U.S. Secretary of State Antony Blinken pointed out, there are no G7 sanctions against Russian food or fertilizer exports, contrary to Russia’s claims. It was Russia that chose to suspend the Black Sea Grain Initiative, a UN-brokered deal between Russia and Ukraine that had partially resumed exports of agricultural products, including grain, through previously Russia-blocked Black Sea shipping routes in the wake of its invasion of Ukraine in 2022. Russia’s termination of the agreement worsened food insecurity in Ukraine and increased global food price volatility. 

The Kazan Declaration did not specify what currencies the BRICS Grain Exchange would use to price and settle commodities futures, despite the fact that it dedicated extensive real estate to discuss various BRICS arrangements to promote an alternative financial system, such as the New Development Bank, BRICS Cross-Border Payments Initiative, BRICS Payment Task Force, BRICS Clear, among others. Nonetheless, the BRICS Grain Exchange, once materialized, can function as another instrument to advance the bloc’s stated preference to promote the use of local currencies in the cross-border flow of goods and services.  

President Putin claimed that the proposed BRICS Grain Exchange, once implemented, would shield national markets from “negative external interference.” Yet Russia itself has recently been accused of effectively setting a price floor for wheat exports. Even if there is no external interference, internal manipulation by the group’s major exporters and a potential lack of transparency may undermine the credibility and efficiency of the proposed exchange. The expanded BRICS includes top Russian grain buyers like Egypt. Any price meddling could spark dissent within the group. Even if the group is able to work through its internal politics, key figures in the proposed grain exchange acknowledged that it will take years of work before the group could launch it. Although the proposal has made it past the first hurdle, divisions within the group could still derail the project.