Why is Russia Restricting its Fertiliser and Crop Exports?

Abstract

SummaryBoth Russia and Ukraine are major agricultural exporters, especially of grain and sunflowerseed products, and Russia is the world's leading supplier of fertiliser. Russia's invasion of Ukraine has disrupted world markets for these commodities, driving up prices and threatening world food security. Russia argues that a major cause of this trade disturbance is the economic sanctions that Western countries have imposed against it, despite the efforts of the West to exempt Russian agricultural trade from the sanctions. However, throughout its war with Ukraine, Russia has maintained heavy restrictions (involving quotas and taxes) on its exports of fertiliser, grain and sunflowerseed commodities. The trade controls bring major economic benefits to the Russian economy and government, especially in the current war environment. The gains include: keeping more output within the country, which lowers prices for consumers; earning the government additional revenue; and improving the country's terms of trade in the exported products. However, given that Russia so strongly asserts that Western sanctions are hurting the less rich countries of the world by disrupting world agricultural markets and pushing up prices, the export restrictions make Russia vulnerable to criticism of inconsistency (if not hypocrisy), when its own export controls have the same effects.