Food Supply to Muslim Countries
13- Nov2019
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Food Supply To Muslim Countries On Fair Market Prices

In the name of Allah the entirely merciful the special merciful.

All praise belongs to Allah who is Lord of all the Worlds.

Grains, particularly wheat is one of the most important necessity for human beings. When gold and silver coins or currency did not exist in ancient times, people used to trade these though barter. Therefore, when Prophet (peace be upon him) prohibited loan/credit in silver and gold and their exchange of homogeneous with excess or premium and it was considered as Riba being used as currency their quality was irrelevant because of their intrinsic value at that time, similar to the gold and silver the Holy prophet SAW prohibited exchange on in equal quantity of some other commodities like weat /grain, barley, dates, salt, as they were used as medium of exchange in the ancient era of barter and were considered as gold and silver and the qualities also were considered irrelevant while exchange homogeneously in excess was also considered as RIBA. Because they could serve as a medium of exchange, such as gold, silver.

In short gold silver, wheat, Dates, salt, their homogenous trading, was considered same like as in currency and their unequal homogeneous exchange of the commodities was declared to be a type of Riba and almost all Shariah rulings which pertained to silver and gold were legislated for these commodities as well, which are following:

  • While their exchange with the same commodity (homogeneously), trading in unequal quantity or defer payment/delivery is impermissible, for example exchange of gold with gold or wheat with wheat irreavant of their qualities.
  • If they are not exchanged with the same commodity but different kind of commodity (i.e heterogeneously), like exchange of wheat with dates, or silver with gold, their exchange in unequal quantity is permissible, however their exchange on deferred payment/ delivery or gain over credit is type of Riba.
  • Trading in gold and silver also requires the same ruling, but there is an additional condition, that they should be delivered at the session of contract so that an important element of law of contract is fulfilled because these commodities do not determines by indication, specification or pointing at, which is a condition for a valid sale and it will become liability and debt which could not be determined and it leads to exchange of these commodities on deferred basis from both side which is not permissible.
  • Majority of the scholars are of the opinion that the modern paper currency notes come under the same rulings of gold and silver as mentioned in point 3 above.
  • It is allowed to sell grains against currency on differed delivery basis, provided grains are determined and known and price is also known to prevent exchange of commodities on deferred delivery basis from both side. At least one side/consideration should be determined and delivered and possession is handed over, and the second side/consideration is at least known through specifications.

There are some other guideline with respect to trading in grains which is meant to create smooth supply and distribution of food product on fair market rate, for example in auction Najash ( شجن ( is disliked, it means someone bids in auction to raise the price without any intention to buy it, likewise Talaqi Al Jalab, یقلت بلجلا is discouraged which means to stop the Carwan at the outskirts of the city and town and purchase the merchandise over there without allowing them to enter the city and sell the merchandise on fair market rate, to prevent its storage /hoarding ( راکتح ا ( with the intention to create shortage and demand and onward selling on higher rates.

It is not allowed to sell anything before its ownership and possession, likewise future or forward trading, sale of debt with debt or stipulation of any condition which is against the norm of market and in favor of anyone involved in the trading, or to contingent the contract on occurring any future event, or there is any such uncertainty, ambiguity, for example price is not known or merchandise is not known, which could lead to dispute, or there is any sort of gambling, lottery or fraud, all these prevention are meant to avoid unfair distribution of wealth in the society, and cruelty against the human beings which will result in outbreak in the World.

Food product trading is very important all over the World, because it pertains to basic needs of human being, currency is just medium of exchange, and currency itself should not be traded like other commodities, its excess against the commodities leads to inflation, expensiveness and high prices.

Russia is the largest exporter of the food grains. Socialism, which was emerged due to the defects and evils of Capitalism, failed because it was against the nature and Shariah, similarly capitalism, is also creating inequality and injustice or unfair distribution of wealth in the society because it is based on the elements which are against the nature and Shariah, wealth is concentrated in the hand of few rich which is not liked by Islam, and poor is get poorer due to these prohibited transactions such as RIBA, Gharar (uncertainty) void contracts (uqood fasidah and Batilah) and Maysir ( speculative transactions such as gambling) and as mentioned above.

If guidance is sought from Islamic Economic System, it has potential to eliminate all these evils, poverty and leads to fair distribution of wealth.

Russia has come forward in this regard and a Russian university has conducted a research to analyze how food product could be supplied safely to common people on fair prices, and farmer, trader and investor could be enabled to trade in compliance with Shariah principles so food products could be distributed to consumer on fair market price. And steps should be taken on international level on food safety, security and its distribution to increase trading scale and investment in this sector.

In this regard, a higher authority in Russia, HSE-Skolkovo Institute for Law and Development has directed a large Russian university to conduct research on the subject, formulate a strategy, and outlines for the same. For this purpose they have contacted us and first of all they invited my honorable father to support them for this cause, I personally travelled with my father to visit this region particularly Uzbekistan. In this journey we met with some Russian professors who were already acquainted with me and they already had my book on that topic which they were referring for guidance in this regard

After the journey when we came back, because of busy schedule of my father, they invited me to further work on the subject to further clarify the initial picture, define the outline and present it before Islamic Scholars, traders and bankers to look into its implementation.

For this purpose, on November 2-3, 2019, a session chaired by Justice Rtd. Mufti Muhammad Taqi Usmani and other distinguished speakers and panelist’s and it was allocated in a conference which was scheduled with the support of Bahrain based institution AAOIFI and World Bank and we were asked to support in inviting the relevant participants, stakeholders etc., In response we worked several months to design outline and conducted the session and Alhamdulillah it received very positive response and a number of players showed their interest in the project.

During this conference several meetings were held with a Russian delegation to convey the concept and purpose of this project and its practical implementation was discussed, and Alhamdulillah! The event went very successful. We also met with the several large investors to discuss the investment opportunities and building infrastructure for food trading in Shariah compliant manner.

In next stage, we will be discussing Sukuk Issuance, setting deals with grains traders, importers and exporters and preparation of documentation for the same, which will take enough time and hard work which if completed with the commitment and integrity, it will be very big achievement insha’allah. Since Russia is the largest grain exporter, to the successful implementation of this project, will set a good example for other countries Insha’allah. We pray for the success of this project and its acceptance in the sight of Allah Subhanahu Watalal. Allah (Subhanahu Wata’ala) may make it easy for us. Ameen.

Dr. Muhammad Imran Usmani

AAOIFI Event Gallery

Press Release: Islamic Finance and Food Security: Connecting Russia and Muslim Countries
30- Oct2019
Posted By: admin
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Press Release: Islamic Finance and Food Security: Connecting Russia and Muslim Countries

Usmani & Co (UCO) is proud to be part of this project as Shariah advisors for the betterment of the greater good.

On 3 November 2019, the HSE-Skolkovo Institute for Law and Development will hold the special session and present the Agrofinmost project at the 14th international AAOIFI-World Bank conference on Islamic banking.   

The aim of the special event is to look at food security governance in Middle Eastern countries; to highlight those elements of international trade in commodities, which are in conflict with Shari’ah principles; and to offer a practical solution in the form of sustainable models in compliance with Shari’ah. 

The session will bring together experts from Russia, which is the world’s largest wheat exporter (in 2018/2019), Shari’ah scholars, and international community to discuss how Islamic finance instruments can be used to change the situation in the international food commodity markets for the better, how to reach sustainability and transparency and to avoid the influence of the speculative financial capital on food trade.

The event will be chaired by the member of the Agrofinmost project board Mufti Muhammad Taqi Usmani, the most authoritative scholar of our time in the field of Islamic economics and finance, as well as in other areas of Islamic erudition. He leads the Sharia councils of a number of major Islamic banks and ranks first in “The Muslim 500”.

The session will also feature the following speakers and commentators:

Sheikh Nizam Yaqouby, member, AAOIFI Shari’ah board

Dr. Ikbal Daredia, Advisor to CEO, Islamic Corporation for the Development of the Private Sector (ICD), IDB

Mr. Erlan Baidaulet, Director General, Islamic Organization for the Food Security

Dr. Imran Ashraf Usmani, Member, Board of Jamia Darul Uloom University, Karachi, Pakistan

Mr. Ijlal Alvi, CEO IIFM

Mr. Andrey Bezrukov, President of the Association for Technology Sovereignty

Mr. Ivan Starikov, Lead Research Fellow of Russian Academy of Science

Mr. Haydar Kamaletdinov, Vice-President, International Association of Islamic Business

Mr. Rudik Iskuzhin, Expert in Middle East affairs, ex-Member of the Federation Council of the Federal Assembly of the Russian Federation

Dr. Alexander Kudelya, Head of Grain Export and Port Elevator Projects of the Afanasy Nikitin Association

Prof. Alexey Ivanov, Director, HSE-Skolkovo Institute for Law and Development; Associate Professor of Law; Academic Supervisor of the Agrofinmost Project, Higher School of Economics University, Russia

Dr. Madina Kalimullina, senior researcher, HSE-Skolkovo Institute for Law and Development, Higher School of Economics University, Russia

Mr. Mikhail (Shamil) Orlov, Chairman of the Russian – Egyptian Business Council, Board Member of the Agrofinmost project

Dr. Kirill Molodyko, associate professor, senior researcher, HSE-Skolkovo Institute for Law and Development, Higher School of Economics University, Russia

“The Agrofinmost project will set up an organizational and legal platform to attract Islamic investment in the Russian agri-food sector in accordance with Islamic law (fiqh) structures. The key feature of such a financing model, which distinguishes it from the usual speculative models, is its focus on building long-term partnership in implementing socially beneficial projects, rather than seeking short-term interest gains,” says Alexey Ivanov, Director of the HSE-Skolkovo Institute for Law and Development. “Not only did we devise mechanisms for long-term partnership in the supply of Russian agricultural produce to Middle East countries, which are based on principles that make sense even to the most conservative of Islamic investors, but also took into account the growing needs of these countries in ensuring food security of the region. 

Dr. Imran Ashraf Usmani, “Usmani & Co (UCO) is a leading global Shariah advisory firm Chaired by Justice Sheikh Mufti Muhammad Taqi Usmani who is a leading scholar of our time and regarded as an expert in the fields of Hadith, Islamic jurisprudence and Islamic economics & finance. UCO is headed by his son and renowned Shariah scholar Mufti Muhammad Imran Ashraf Usmani with a vision to establish a shariah compliant economy which offers freedom to humanity from the shackles of interest based debt financing system. Agrofinmost is an innovative project which aligns with the Islamic principle of fairness, transparency, food security and availability for the mankind. It’s a thoughtful initiative which connects Russia and Middle East through agricultural trade using Islamic finance and investments. We at UCO are proud to be part of this project as Shariah advisors for the betterment of the greater good.”

Mr Omar Mustafa Ansari, Secretary General of AAOIFI, “The 14th AAOIFI – World Bank Conference is pleased to host the special event in coordination with HSE-Skolkovo Institute for Law and Development in the Kingdom of Bahrain. The project is based on the underlying Islamic principles of just and fair system in terms of agricultural output and food security. The event is set to attract key stakeholders from around the world and AAOIFI looks forward to welcome everyone.” (https://aaoifi.com/announcement/aaoifi-board-of-trustees-appoints-new-secretary-general/)

 

Global commodity trade remains one of the last havens of pure financial capitalism with its sole focus on higher returns on investments and total negligence of the human condition and sustainability concerns. The Agrofinmost project offers practical solutions to establish fair market prices for agricultural products, which as a result could provide food security in Middle Eastern countries, on the one hand, and fair international trade without speculations based on Islamic legal principles, on the other. The project aims to attract Islamic investments into the Russian agricultural sector using Shari’ah-compliant financial instruments and make a meaningful contribution to food security of importing countries by setting up a stable and reliable channel for Russian agricultural supplies.

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The HSE-Skolkovo Institute for Law and Development is a research unit of the HSE that arose in 2014 as a result of the intellectual and resource cooperation of the HSE and the Skolkovo Foundation. Among the latest research projects commissioned by state authorities and international organizations there are proposals for adapting the institution of intellectual property to the needs of the new economy, antitrust reform for the digital economy, development of the legal aspects of the implementation of distributed registry technologies and artificial intelligence technologies, the legal concerns for the regulation of biotechnology, food security, and other pressing issues at the intersection of law, economics, and technology.

PR:

Lyubov Korotetskaya

lkorotetskaya@hse.ru

+ 7 915 132 83 69

Usmani & Co is a globally well-reputed Shariah advisory Firm, committed to offering comprehensive advisory services by leveraging on its global presence, integrated structure, and internationally recognized award-winning Scholars. Usmani & Co. is unique to have proven expertise to offer customised solutions, with multi-disciplinary, multi-linguistic and globally present strategic partners.”

AAOIFI, established in 1991 and based in Bahrain, is the leading international not-for-profit organization primarily responsible for development and issuance of standards for the global Islamic finance industry. It has a total of 110 standards and technical pronouncements in issue in the areas of Shari’ah, accounting, auditing, ethics and governance for international Islamic finance. It is supported by over 200 institutional members, including central banks and regulatory authorities, financial institutions, accounting and auditing firms, and legal firms, from over 45 countries. Its standards and technical pronouncements are currently followed by all the leading Islamic financial institutions across the world and have introduced a progressive degree of harmonization of international Islamic finance practices. 

For more information on AAOIFI its activities, please contact: 

Mr. Rizwan Malik, Senior Manager, Standards Development and Strategic Developments, AAOIFI, Office: +973 – 17375418; e-mail: rmalik@aaoifi.com