Russia's Exit From Ukraine Grain Export Deal Threatens World Food Security

According to reports, prices of essential food products have shot up as Ukraine and Russia are both major global suppliers of wheat, barley, sunflower oil and other affordable food products that developing nations rely on.
Russia's Exit From Ukraine Grain Export Deal Threatens World Food Security
Russia's Exit From Ukraine Grain Export Deal Threatens World Food Security

In a major development that could potentially threaten the world food security, a wartime deal that allowed grain to flow from Ukraine to countries in Africa, the Middle East and Asia was halted by Russia amid the ongoing war.

In these countries, hunger is a growing threat and food prices have pushed more people into poverty, hence, with the export of essential food grains getting suspended, a crisis is inevitable – potentially disrupting the global food security in the process.

Kremlin spokesman Dmitry Peskov said Russia would suspend the Black Sea Grain Initiative until its demands to get its own food and fertilizer to the world are met. Since last year, Russia shipped a record amounts of wheat, even though it complained that restrictions on shipping and insurance have hampered its agricultural exports.

“When the part of the Black Sea deal related to Russia is implemented, Russia will immediately return to the implementation of the deal,” Peskov said.

The suspension is a landmark in itself as it marks the end of an accord that the U.N. and Turkey brokered last summer to allow food to leave the Black Sea region after Russia’s invasion of its neighbor worsened a global food crisis. The initiative is credited with helping lower soaring prices of wheat, vegetable oil and other food commodities.

The Black Sea grain initiative was negotiated in July 2022 between Turkey, the UN and Russia as a way of ensuring that Ukraine, one of the breadbaskets of the world, could ensure that its grain could leave its southern ports via the Bosphorus. The grain could not be exported in the quantities required using the alternative methods of road or rail through Poland or by canal and river through Romania.

According to reports, prices of essential food products have shot up as Ukraine and Russia are both major global suppliers of wheat, barley, sunflower oil and other affordable food products that developing nations rely on.

Analysts however said that only a temporary bump to global food commodity prices is expected because places like Russia and Brazil have ratcheted up wheat and corn exports. But food insecurity worldwide is growing as developing countries also struggle with climate change, conflict and economic crises. Moreover, finding suppliers outside Ukraine that are farther away also could raise costs.

The grain deal was pivotal as it provided assurances that ships won’t be attacked entering and leaving Ukrainian ports, while a separate agreement facilitated the movement of Russian food and fertilizer. While Western sanctions do not apply to Moscow’s agricultural shipments, some companies may be wary of doing business with Russia.

Meanwhile, Ukrainian President Volodymyr Zelenskyy said he wants to keep the initiative going even without Russia’s safety assurances.

“We are not afraid,” he said. “We were approached by companies that own ships. They said that they are ready, if Ukraine gives it, and Turkey continues to let it through, then everyone is ready to continue supplying grain.”

Turkish President Recep Tayyip Erdogan, on the other hand, said the country’s foreign minister would speak with his Russian counterpart. He said that he was hopeful the deal would be extended.

According to the Joint Coordination Center in Istanbul, the Black Sea Grain Initiative has allowed three Ukrainian ports to export 32.9 million metric tons of grain and other food to the world.

Russia has repeatedly complained that the deal largely benefits richer nations. JCC data shows that 57% of the grain from Ukraine went to developing nations, with the top destination being China, which received nearly a quarter of the food.

In May, the agreement was renewed for 60 days, but in recent months, the amount of food shipped and number of vessels departing Ukraine have plunged, with Russia accused of preventing additional ships from participating.

It is notable to mention that the war in Ukraine has sent food commodity prices to record highs last year and contributed to a global food crisis also tied to other conflicts, the lingering effects of the COVID-19 pandemic, droughts and other climate factors.

Moreover, high costs for grain needed for food staples in places like Egypt, Lebanon and Nigeria exacerbated economic challenges and helped push millions more people into poverty or food insecurity.

Rising food prices affect people in developing countries disproportionately, because they spend more of their money on meals. Poorer nations that depend on imported food priced in dollars also are spending more as their currencies weaken and they are forced to import more because of climate change.

Under the deal, prices for global food commodities like wheat and vegetable oil have fallen, but food was already expensive before the war in Ukraine.

Now with the deal getting suspended, a sense of “instability and uncertainty” in global food markets has descended upon that could

Shashwat Saraf, the International Rescue Committee’s regional emergency director for East Africa, said that the end of the initiative creates “instability and uncertainty” in global food markets that could raise prices and increase food insecurity for vulnerable nations already seeing their local crops die because of climate change.

Sudan, Somalia and Ethiopia, for instance, are dependent on food imports from Ukraine, he said.

According to the U.N. Food and Agriculture Organization, this month  45 countries need outside food assistance, with high local food prices “a driver of worrying levels of hunger” in those places. 

Now, it’s key to watch whether Russia “weaponizes” its wheat exports, said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland.

As Russia is the world’s largest wheat supplier right now, it could hike its export taxes which “would raise world grain prices as well as allow Russia to finance more of its military campaign in Ukraine,” Evenett said.

The grain has seen some ups and down since its inception. In November last year, Russia had temporarily pulled out of the deal. They later rejoined and extended the deal.

At the end of June, it was reported that Russia had allegedly prevented Ukraine from deploying new ships. Joint inspections meant to ensure vessels only carry grain and not weapons that could help either side also have slowed considerably.

According to U.S. Department of Agriculture estimates, Russia’s wheat shipments hit all-time highs following a large harvest. It exported 45.5 million metric tons in the 2022-2023 trade year, with another record of 47.5 million metric tons expected in 2023-2024.

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