The Global Significance of Ukraine’s Grain Exports Amid Russia’s Conflict

A wartime agreement facilitating Ukraine’s grain exports, pivotal in addressing global hunger, has been put on hold by Russia.

This agreement, known as the Black Sea Grain Initiative, was brokered by Turkey and the United Nations. Since its inception in August, Ukraine has exported a substantial 32.9 million metric tons (36.2 million tons) of food, primarily to developing nations, as confirmed by the Joint Coordination Center in Istanbul.

While some experts suggest global wheat prices won’t be severely impacted due to sufficient global grain reserves, high local food prices in many countries are contributing to hunger crises.

This article examines the key features of this deal and its global implications:

A CLOSER LOOK AT THE GRAIN DEAL

In July 2022, Russia and Ukraine separately inked agreements. One restored access to three of Ukraine’s Black Sea ports that had been blockaded following Russia’s invasion. The other facilitated Russian food and fertilizer movement despite Western sanctions.

Both nations are crucial exporters of affordable foodstuffs like wheat, barley, sunflower oil, which are heavily relied upon in parts of Asia, the Middle East, and Africa. Ukraine is a significant corn exporter, and Russia is a key fertilizer provider—these are essential components of the food supply chain.

Disrupted grain shipments from Ukraine, known as the “breadbasket of the world,” escalated a global food crisis and caused grain prices to surge.

This agreement ensured safe passage for ships entering and exiting Ukrainian ports, subjected to inspections by Russian, Ukrainian, U.N., and Turkish officials to verify that they were only transporting food.

Despite successfully being renewed three times, no new ships have joined the initiative since June 27, for which Ukraine holds Moscow responsible. The last ship departed from Ukraine on the past Sunday.

WHAT HAS BEEN ACHIEVED?

Post-deal, global food commodity prices, like wheat, which had skyrocketed following Russia’s invasion of Ukraine, were somewhat reduced.

The deal reinstated the World Food Program’s major supplier, facilitating the export of 725,000 metric tons of humanitarian food aid from Ukraine to famine-stricken countries such as Yemen, Afghanistan, and Ethiopia.

After Russia’s withdrawal from the deal, wheat prices in Chicago experienced a moderate rise of about 3% on Monday, but eventually, the prices dropped later in the day.

WHY RUSSIA TERMINATED THE DEAL?

Russia aims to lift sanctions on the Russian Agricultural Bank and eliminate shipping and insurance restrictions that, according to Moscow, obstruct its agricultural exports.

Russia has also protested that a commitment to transfer its ammonia, an essential fertilizer component, to a Ukrainian port for export has not commenced under the agreement. The U.N. confirms this but explains that the pipeline was damaged in the conflict.

WHO IS AFFECTED?

The International Rescue Committee refers to the grain deal as a “lifeline for 79 countries and 349 million people confronting food insecurity.”

With millions of tons of food from Ukraine at stake, countries increasingly dependent on imported food due to conflict and drought may face rising costs if they need to source from farther suppliers. This exacerbates the situation for countries dealing with weakened currencies and mounting debt levels, as food shipments are paid for in dollars.

As for Ukraine, its economy heavily relies on agriculture, and pre-war, 75% of its grain exports were channeled through the Black Sea.

In addition to geopolitical issues, factors like the pandemic fallout, conflict, economic crises, drought, and other climatic elements influence people’s ability to access sufficient food.

Even with these challenges, experts note the adaptability of grain markets, with countries like Europe and Argentina ramping up wheat shipments, and Brazil having a successful year for corn.

Contributions to this article were made by Edith M. Lederer, Big Big News writer at the United Nations.

For a comprehensive coverage of the Ukrainian conflict and the food crisis, visit: https://bigbignews.net/russia-ukraine and https://bigbignews.net/food-crisis.

Frequently Asked Questions (FAQs) about Ukraine-Russia Grain Deal

More about Ukraine-Russia Grain Deal

• Ukraine’s Agriculture and its Global Impact
• Impact of Russia-Ukraine Conflict on Global Food Security
• Understanding Global Grain Markets
• Sanctions on Russia and its Effect on Agriculture
• The Role of the Black Sea in Global Agriculture