Institutional economics of grain marketing in Russia: Insights from the Tyumen region

- Russian grain marketing is a hybrid of the Soviet legacy and new rules and actors.
- Soviet-era elevators and newly emerged traders offer different marketing contracts.
- Traders' contracts are better suited to accommodate transaction uncertainty.
- All contracts encourage strategic behaviour of grain buyers.
- Policy implications concern grain quality control, scale economies, and extension.

Grain marketing arrangements in modern Russia are far from what they were in the 1990s. Given that grain marketing is crucial for farm revenues and an adequate functioning of the agri-food system, this paper examines why different grain marketing contracts co-exist and how well they fit the local agri-food context. Semi-structured interviews with farmers, grain buyers and regional authorities were conducted in the region of Tyumen in 2013-2014. The analysis, grounded in new institutional economics, found that the traders' contracts, compared to those offered by grain elevators, are often better suited to account for uncertainty as a salient property of marketing transactions, but discourage quality improvements and differentiation of grain. Furthermore, both contract types encourage strategic behaviour on the part of grain buyers. The paper also discusses the case in a broader theoretical and international context and offers a number of policy implications, such as those related to independent grain quality assessments and extension.