London: Ships are no longer sailing to the war-torn nation's Black Sea ports, and food exports are declining, raising fears that Russia won't extend a United Nations-mediated agreement that allows grain to flow from Ukraine to regions of the world experiencing hunger.
The ground-breaking agreement was negotiated by Turkiye and the UN last summer, along with a separate agreement with Russia to facilitate the shipment of its food and fertiliser. Moscow claims there are still difficulties, despite the fact that data indicates it has been exporting record amounts of wheat.
The Black Sea Grain Initiative, which is up for its fourth extension on Monday, has repeatedly been criticised by Russian officials as having no justification. They have threatened to do it before and have twice followed through.
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The fragile agreement, which depends on Russia and Ukraine as major suppliers of food items like wheat, barley, vegetable oil, and other products for countries in Africa, the Middle East, and parts of Asia, is being worked on by the UN and other parties. More than half of the grain shipped by Ukraine—32.8 million metric tonnes (36.2 million tons)—went to developing countries.
Although the deal has assisted in bringing down food commodity prices, such as wheat, which soared to record highs after the invasion last year, this relief has not yet reached kitchen tables.
The World Food Programme would lose a source of funding if Russia left, which would exacerbate food security issues in areas that are already struggling with conflict, economic hardship, and drought. These countries at risk of going hungry include Somalia, Ethiopia, and Afghanistan.
For maintaining this agreement, Russia receives a lot of support from the general public, according to Joseph Glauber, senior research fellow at the International Food Policy Research Institute. If the agreement isn't extended, "I think there would be a cost to pay in terms of public perception and global goodwill as far as Russia is concerned."
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With Russia being accused of delaying joint ship inspections by Russian, Ukrainian, UN, and Turkish officials and of refusing to allow more vessels to join the initiative, the amount of grain leaving Ukraine has already decreased.
From a peak of 11 in October to just over two in June, the average daily inspections—meant to make sure that ships carry only food and no weapons that could aid either side—have decreased.
Grain exports have decreased as a result, falling from a peak of 4.2 million metric tonnes in October to just 1.3 million in May, a low for the one-year-old programme. In June, they increased to 2 million as shipment sizes increased.
In the event that the agreement is not extended, "the countries that had relied on Ukraine for their imports are going to have to look at other sources for imports, very likely Russia, which is something that I imagine Russia was intending," according to Caitlin Welsh, director of the Centre for Strategic and International Studies' Global Food and Water Security Programme.
According to spokesman Stephane Dujarric, the UN has been in talks with Russia. Secretary-General Antonio Guterres wrote to Russian President Vladimir Putin this week about how to further implement Moscow's agreement.
Rebeca Grynspan, the head of the UN Trade Department, told reporters that the UN proposal entails figuring out a way to let Russia conduct international financial transactions for its shipments of food and fertiliser.
When asked if she was going to Moscow this week to press for the renewal of the agreement, Grynspan responded, "It doesn't seem so." Volodymyr Zelensky, the president of Ukraine, said he anticipates the initiative will experience "disruptions" as a result of new weapons pledges from Western allies.
After the NATO summit in Lithuania, he said, "It is understandable: Russia always reacts this way, does not keep its word, and wants to block certain humanitarian corridors to create a new crisis."
According to the Ministry of Infrastructure of Ukraine, 29 ships were waiting in Turkish waters because Russia would not permit their inspection.
Russia maintains that the agreement has not benefited its own exports and attributes this to Western sanctions.
Food and fertiliser are unaffected by the sanctions, but Moscow is requesting exceptions for the Russian Agricultural Bank and the movement of its ammonia, a crucial component of fertiliser, to a Ukrainian Black Sea port. The UN, however, claimed that the war had damaged the ammonia pipeline.
"There is still time to put the portion of the agreements that apply to our nation into effect. Dmitry Peskov, a spokesman for the Kremlin, told reporters last week that so far, this condition has not been met. Therefore, we regrettably do not currently see any justification for extending this agreement.
However, due to a large harvest, Russia has increased its wheat exports to record levels. According to projections released by the US Department of Agriculture on Wednesday, they reached 45.5 million metric tonnes in the trade year 2022-2023.
It anticipates that Russia will set a new record in 2023–2024 with 47.5 million metric tonnes. A significant blow to its agriculture-based economy, Ukraine's shipments have decreased by more than 40% from their pre-war average. The USDA anticipates 10.5 million metric tonnes of wheat in the upcoming year.
There is enough wheat to go around, according to Peter Meyer, head of grain analytics at S&P Global Commodity Insights, even with less coming from Ukraine and more coming from Russia.
While Brazil experienced a banner year for maize, which Ukraine is also a significant supplier of, Europe and Argentina are anticipated to increase wheat shipments. If the Black Sea deal isn't renewed, Meyer wouldn't anticipate anything more than a brief increase in grain prices on international markets.
Markets simply adapt very quickly, he claimed. The world's grain markets actually balance each other out, as is the case.
So that it wouldn't be completely cut off from selling grain, Ukraine could send its food through Europe by land or river, but those routes have a lower capacity than sea shipments and have stoked unrest in the European Union.
Simon Evenett, a professor of international trade and economic development at the University of St. Gallen in Switzerland, described the current state of affairs as "we are a cat running out of lives." We only need one thing to go wrong for things to get bad for us.
Food prices were already high due to COVID-19, conflict, and drought, even though the UN Food and Agriculture Organization's food price index has dropped below the record highs it reached when Russian troops entered Ukraine.
Then, the war in Russia contributed to an increase in food production costs, including those for energy, fertiliser, and transportation.
Weakening currencies are keeping local prices high because people are paying in US dollars in developing countries like Kenya and Syria that are relying more and more on imported food.
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Over 50 million people in East Africa are going hungry, and food prices have skyrocketed by almost 40% this year, according to Shashwat Saraf, the International Rescue Committee's regional emergency director for East Africa. "About 80% of East Africa's grain is exported from Russia and Ukraine.
In addition to reaching a long-term agreement, he stressed the importance of developing long-lasting solutions to the problem of global food insecurity.