The impact of state trading enterprises(STEs) on domestic and international grain markets has beenstudied extensively over the years, generating aconsiderable body of theoretical and empirical evidence. Theaim of this note is to draw on this body of evidence toanalyze possible options for Russia's future stateinvolvement in grain trade. The note covers the followingthree parts: i) outline of the potential economic impacts ofSTEs in grain trade from an economic perspective; ii) reviewof some of the global experience with STEs that are involvedin grain exports; and iii) evaluation of options for stateinvolvement in grain trade in Russia. The coverage in thisnote is limited to grains and to the impacts of STEs incountries that are net exporters of grain. Of the majorgrains, the note focuses on wheat which is by far the mostimportant Russian export grain. Importing STEs are much morenumerous than exporting STEs worldwide. However, unlikeUkraine, which has jumped between net export and net importsituations for wheat as recently as 2003/04, it appears thatRussia has become a consistent exporter since the beginningof this decade, even in years with relatively poor cropconditions. The note is further limited to the analysis ofSTEs and not grain market regulation in general (i.e. marketand price support, income support for grain producers).However, as is discussed, such regulation can be used tohelp an STE pursue certain objectives by enhancing itsmarket power, and STEs are generally implemented as part ofan overall grain market regulation strategy.
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