Mideast countries that are already struggling fear price hikes after Russia exits grain deal
Jul 01, 2023
AUGUST 2, 2023:
CAIRO (AP) — Egypt and other lower-income Middle Eastern countries like Lebanon and Pakistan are worried about what comes next after Russia pulled out of a crucial wartime grain deal. They’re already struggling with economic woes that have driven more people into poverty and fear rising food prices will create even more pain for households, businesses and government bottom lines. Many have diversified their sources of wheat, and there is enough of the grain to go around in the world. But the end of the deal that allowed Ukraine’s grain to flow during a global food crisis has created uncertainty about price hikes, a major driver of hunger.
JULY 21, 2023:
UNDATED (AP)- By pulling out of a landmark deal that allowed Ukrainian grain exports through the Black Sea, Russian President Vladimir Putin has taken a gamble that could badly damage Moscow’s relations with many of its partners that have stayed neutral or even been supportive of the Kremlin’s invasion of its neighbor. Russia also has played spoiler at the United Nations, vetoing a resolution on extending humanitarian aid deliveries into northwestern Syria and backing Mali’s push to expel U.N. peacekeepers. Putin’s declared goal in halting the Black Sea Grain Initiative is to win relief from Western sanctions for Russia’s agricultural exports. His longer-term goal could be to erode Western resolve as the war in Ukraine grinds on to its 17-month mark.
By pulling out of a landmark deal that allowed Ukrainian grain exports through the Black Sea, Russian President Vladimir Putin is taking a gamble that could badly damage Moscow’s relations with many of its partners that have stayed neutral or even been supportive of the Kremlin’s invasion of its neighbor.
Russia also has played the role of spoiler at the United Nations, vetoing a resolution on extending humanitarian aid deliveries through a key border crossing in northwestern Syria and backing a push by Mali’s military junta to expel U.N. peacekeepers — abrupt moves that reflect Moscow’s readiness to raise the stakes elsewhere.
Putin’s declared goal in halting the Black Sea Grain Initiative was to win relief from Western sanctions on Russia’s agricultural exports. His longer-term goal could be to erode Western resolve over Ukraine and get more concessions from the U.S. and its allies as the war grinds toward the 17-month mark.
The Kremlin doubled down on terminating the grain deal by attacking Ukrainian ports and declaring wide areas of the Black Sea unsafe for shipping.
But with the West showing little willingness to yield any ground, Putin’s actions not only threaten global food security but also could backfire against Russia’s own interests, potentially causing concern in China, straining Moscow’s relations with key partner Turkey and hurting its ties with African countries.
Turkish President Recep Tayyip Erdogan, who helped broker the grain deal with the U.N. a year ago, has pushed for its extension and said he would negotiate with Putin.
Turkey’s role as a top trading partner and a logistical hub for Russia’s foreign trade amid Western sanctions strengthens Erdogan’s hand and could allow him to squeeze concessions from Putin, whom he calls “my dear friend.”
Turkey’s trade with Russia nearly doubled last year to $68.2 billion, feeding U.S. suspicions that Moscow is using Ankara to bypass Western sanctions. Turkey says the increase is largely due to higher energy costs.
Their relationship is often characterized as transactional. Despite being on opposing sides in fighting in Syria, Libya and the decades-long conflict between Armenia and Azerbaijan, they have cooperated in areas like energy, defense, diplomacy, tourism and trade.
Ozgur Unluhisarcikli, director of the German Marshall Fund in Ankara, said the relationship’s dual nature dates back to the sultans and czars.
“Sometimes they compete, sometimes they cooperate. At other times they both compete and cooperate at the same time,” he said.
While the pendulum seems to have swung in Ankara’s favor for now, Unluhisarcikli noted the Kremlin has a few levers to pull, such as canceling a deferment of gas payments or removing financial capital for the Akkuyu nuclear plant being built by Russia. Moscow also could hurt Turkey by restricting Russian tourists, who visit in greater numbers than any other nationality. offering a steady flow of cash.
“How much weaker the relationship gets depends on how Russia responds to Turkey getting closer to the West,” he said.
Some observers in Moscow speculate that Russia agreed to extend the grain deal for two months in May to help Erdogan win reelection but was appalled to see his pro-Western shift afterward.
Erdogan backed Sweden’s membership in NATO earlier this month. In another snub to Moscow, Turkey allowed several Ukrainian commanders who led the defense of Mariupol last year to return home. They surrendered after a two-month Russian siege and then moved to Turkey under a deal that they stay there until the end of the war.
Kerim Has, a Moscow-based expert on Turkey-Russia ties, said Erdogan had been emboldened by his reelection to pursue rapprochement with the West, appointing a “pro-Western” Cabinet and adopting a stance that was causing “discomfort” in the Kremlin.
“It’s a dilemma for Putin,” Has said. “He supported Erdogan’s candidacy but he will face a more active, pro-Western Turkey under Erdogan in the coming period.”
Moscow could try to pressure Erdogan by challenging Turkey’s interests in northwestern Syria, where Ankara has backed armed opposition groups since the start of the conflict. Even though Russia has joined with Iran to shore up Syrian President Bashar Assad’s government while Turkey has backed its foes, Moscow and Ankara have negotiated cease-fire deals.
But Russia abruptly toughened its stand this month when it vetoed a U.N. Security Council resolution backed by virtually all members to continue humanitarian aid deliveries to opposition-held areas through the Bab el-Hawa border crossing with Turkey, a key lifeline for about 4.1 million people in the impoverished enclave. Moscow warned that if its rival draft was not accepted, the crossing would be shut.
The presence of 3.4 million Syrians in Turkey is a sensitive issue for Ankara. Erdogan has advocated their voluntary repatriation to parts of northern Syria under Turkish control.
Dareen Khalifa, senior analyst on Syria at the International Crisis Group, says Russia’s hard-line approach to the issue was an attempt to pressure Ankara.
“Turkey will be directly impacted by that if the mechanism ends,” he said.
Others were skeptical Russia could use the border crossing issue to strong-arm Ankara. “I do not think Russia is in a position to increase its pressure on Turkey in Syria,” Has said.
Joseph Daher, a Swiss-Syrian researcher and professor at the European University Institute in Florence, Italy, observed that Russia could be trying to pressure the West by raising the prospect of a new wave of refugees in Europe.
Richard Gowan, U.N. director of the International Crisis Group, noted that along with the tougher stand on Syria, Russia’s “disruptive” actions included support for Mali’s push to expel U.N. peacekeepers.
“It looks like Russia is looking for ways to annoy the West through the U.N,” he told The Associated Press.
Reflecting Moscow’s increasingly muscular stand, Russian military pilots recently have harassed U.S. aircraft over Syria in incidents that added to tensions between Moscow and Washington. The Pentagon described Russia’s maneuvers as unprofessional and unsafe, while Moscow sought to turn the tables by accusing the U.S. of violating deconfliction rules intended to prevent collisions over Syria.
Amid the hardball at the U.N. and in Syria, Russia has been courting African nations with promises of support.
The Kremlin has emphasized it stands ready to provide poor countries in Africa with free grain after the termination of the Black Sea deal, and Putin is set to woo African leaders at a summit in St. Petersburg later this month. Kremlin spokesman Dmitry Peskov said Moscow’s offer of free grain shipments would be on the agenda.
The Black Sea deal allowed Ukraine to ship 32.9 million metric tons of grain and other food to global markets. According to official data, 57% of the grain from Ukraine went to developing nations, while China received the most — nearly a quarter.
Ukrainian President Volodymyr Zelenskyy noted that 60,000 metric tons of grain destroyed by Russia’s strike on the port of Odesa on Wednesday were bound for China.
Putin, in turn, accused the West of using the grain deal to “shamelessly enrich itself” instead of its declared goal of easing hunger. Despite such rhetoric, the Russian move won’t play well in African countries.
Even as the Kremlin tried to contain the damage to those ties, it unleashed more attacks on Odesa and other ports to thwart Ukrainian attempts to continue grain shipments. Moscow described them as ” strikes of retribution ” for Monday’s attack that damaged the Kerch Bridge linking Moscow-annexed Crimea with Russia.
Hard-liners in Moscow praised Putin for halting the deal, which they have criticized as a reflection of what they described as the Kremlin’s futile hope to compromise with the West.
Pro-Kremlin commentator Sergei Markov lauded the retaliatory strikes and argued that the withdrawal from the deal was long overdue.
“The grain deal’s extension led to a drop in the government’s ratings and was fueling talk about betrayal on top,” he said.
JULY 19, 2023:
KYIV, Ukraine (AP) — Russia unleashed intense overnight (July 18, 2023) drone and missile attacks that officials said damaged critical port infrastructure in southern Ukraine, including grain and oil terminals, and wounded at least 12 people. The bombardment targeted the port city of Odesa, days after President Vladimir Putin blamed Ukraine for an attack on the crucial Kerch Bridge linking Russia with the Crimean Peninsula, which the Kremlin illegally annexed from Kyiv in 2014. Putin also pulled Moscow out of its participation in the Black Sea Grain Initiative, which enabled Ukraine’s exports to reach many countries facing the threat of hunger. Russian emergency officials in Crimea, meanwhile, said more than 2,200 people were evacuated from four villages because of a fire at a military facility.
JULY 17, 2023:
LONDON (AP) — Russia has halted a breakthrough wartime deal that allows grain to flow from Ukraine to countries in Africa, the Middle East and Asia where hunger is a growing threat and high food prices have pushed people into poverty. A Kremlin spokesman announced Monday (July 17, 2023) that Russia would suspend the Black Sea Grain Initiative until its demands to get its own agricultural shipments to the world are met. While Russia has complained that restrictions on shipping and insurance have hampered its agricultural exports, it has been shipping record amounts of wheat. It’s the end of an accord that the U.N. and Turkey brokered to allow food to leave the Black Sea region after Russia invaded its neighbor.
LONDON (AP) — Russia halted a breakthrough wartime deal on Monday that allows grain to flow from Ukraine to countries in Africa, the Middle East and Asia where hunger is a growing threat and high food prices have pushed more people into poverty.
Kremlin spokesman Dmitry Peskov said (July 17, 2023) Russia would suspend the Black Sea Grain Initiative until its demands to get its own food and fertilizer to the world are met. While Russia has complained that restrictions on shipping and insurance have hampered its agricultural exports, it has shipped record amounts of wheat.
“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 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.
Ukraine and Russia are both major global suppliers of wheat, barley, sunflower oil and other affordable food products that developing nations rely on.
The grain deal 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 because of the measures.
Ukrainian President Volodymyr Zelenskyy’s adviser, Mykhailo Podolyak, said the suspension was expected and believes it’s political theater.
“The statement itself immediately includes an escape clause,” he said. “Therefore, we are dealing with classic public techniques of the Russian Federation that no longer require significant reciprocal reactions.”
Turkish President Recep Tayyip Erdogan said the country’s foreign minister would speak with his Russian counterpart Monday — and that he was hopeful the deal would be extended.
The suspension of the deal sent wheat prices up about 3% in Chicago trading, to $6.81 a bushel. Analysts don’t expect more than a temporary bump to food commodity prices because places like Russia and Brazil have ratcheted up wheat and corn exports, but food insecurity worldwide is growing.
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, more than half of that to developing nations, according to the Joint Coordination Center in Istanbul.
The agreement was renewed for 60 days in May, 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.
The war in Ukraine 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.
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. Places like Somalia, Kenya, Morocco and Tunisia are struggling with drought.
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 and the relief hasn’t trickled down to kitchen tables.
“The Black Sea deal is absolutely critical for the food security of a number of countries,” and its loss will compound the problems for those facing high debt levels and climate fallout, said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland.
The U.N. Food and Agriculture Organization said this month that 45 countries need outside food assistance, with high local food prices “a driver of worrying levels of hunger” in those places.
The grain deal has faced setbacks since it was brokered by the U.N. and Turkey: Russia pulled out briefly in November before rejoining and extending the deal.
In March and May, Russia would only extend the deal for 60 days, instead of the usual 120. The amount of grain shipped per month fell from a peak of 4.2 million metric tons in October to 1.3 million metric tons in May, the lowest volume since the deal began.
Exports expanded in June to a bit over 2 million metric tons, thanks to larger ships able to carry more cargo.
Ukraine has accused Russia of preventing new ships from joining the work since the end of June. Joint inspections meant to ensure vessels only carry grain and not weapons that could help either side also have slowed considerably.
Asked Monday whether an attack on a bridge connecting the Crimean Peninsula to Russia was a factor in the decision on the grain deal, the Kremlin spokesman said it was not.
Meanwhile, 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, according to U.S. Department of Agriculture estimates.
JULY 15, 2023:
LONDON (AP) — Agreements that the United Nations and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks. Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday (July 17, 2023) unless its demands are met. That includes ensuring its own agricultural shipments don’t face hurdles. The Black Sea Grain Initiative has allowed 32.8 million metric tons of grain to be exported from Ukraine since last August, more than half to developing countries.
LONDON (AP) — Agreements that the United Nations and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks.
Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday (July 17, 2023) unless its demands are met, including ensuring its own agricultural shipments don’t face hurdles.
The Black Sea Grain Initiative has allowed 32.8 million metric tons (36.2 million tons) of food to be exported from Ukraine since last August, more than half to developing countries, including those getting relief from the World Food Program.
If the deal isn’t renewed, “you will have a new spike for sure” in food prices, said Maximo Torero, U.N. Food and Agriculture Organization chief economist. “The duration of that spike will depend a lot on how markets will respond.”
The good news is some analysts don’t foresee a lasting rise in the cost of global food commodities like wheat because there’s enough grain in the world to go around. But many countries are already struggling with high local food prices, which are helping fuel hunger.
Here’s a look at the crucial accord and what it means for the world:
WHAT IS THE GRAIN DEAL?Ukraine and Russia signed separate agreements in August 2022 that reopened three of Ukraine’s Black Sea ports, which were blocked for months following Moscow’s invasion. They also facilitated the movement of Russian produce amid Western sanctions.
Both countries are major global suppliers of wheat, barley, sunflower oil and other affordable food products that Africa, the Middle East and parts of Asia rely on. Ukraine is also a huge exporter of corn, and Russia of fertilizer — other critical parts of the food chain.
Interrupted shipments from Ukraine, dubbed the “breadbasket of the world,” exacerbated a global food crisis and sent prices for grain soaring worldwide.
“One major agricultural producer is waging war on another major agricultural producer, which is affecting the price of food and fertilizers for millions of people around the world,” said Caitlin Welsh, director of the Global Food and Water Security Program at the Center for Strategic and International Studies.
The deal provides assurances that ships won’t be attacked entering and leaving Ukrainian ports. Vessels are checked by Russian, Ukrainian, U.N. and Turkish officials to ensure they carry only food and not weapons that could help either side.
Meant to be extended every four months, the deal was hailed as a beacon of hope amid war and has been renewed three times — the last two for only two months as Russia insisted its exports were being held up.
WHAT HAS IT ACCOMPLISHED?The deal helped bring down global prices of food commodities like wheat that hit record highs after Russia invaded Ukraine.
As the war caused food and energy costs to surge worldwide, millions of people were thrown into poverty and faced greater food insecurity in already vulnerable nations.
Once the grain deal was struck, the World Food Program got back its No. 2 supplier, allowing 725,000 metric tons (800,000 tons) of humanitarian food aid to leave Ukraine and reach countries on the precipice of famine, including Ethiopia, Afghanistan and Yemen.
“It is a pretty unique phenomenon to have two warring parties and two intermediaries agree to establish this sort of corridor to get humanitarian products — which is ostensibly what this is — out to markets that need it most,” said John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80% of the world’s commercial fleet.
WHAT THREATENS THE DEAL?Russian President Vladimir Putin said Moscow wouldn’t extend the grain deal unless the West fulfills “the promises given to us.”
“We have repeatedly shown goodwill to extend this deal,” Putin told reporters Thursday. “Enough is enough.”
He said he wants an end to sanctions on the Russian Agricultural Bank and to restrictions on shipping and insurance that he insists have hampered agricultural exports.
Some companies have been wary of doing business with Russia because of sanctions, but Western allies have made assurances that food and fertilizer are exempt.
“It’s not uncommon in situations like this for countries to use whatever levers they have to try and get sanctions regimes changed,” said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland.
U.N. Secretary-General Antonio Guterres sent a letter to Putin this week proposing to ease transactions through the agricultural bank, a spokesperson said.
Russian “claims that its agriculture sector is suffering are countered by the reality” that production and exports are up since before the war, Welsh said.
Russia exported a record 45.5 million metric tons of wheat in the 2022-2023 trade year, with another all-time high of 47.5 million metric tons expected in 2023-2024, according to U.S. Department of Agriculture estimates.
WHO IS AFFECTED?The International Rescue Committee calls the grain deal a “lifeline for the 79 countries and 349 million people on the frontlines of food insecurity.”
East Africa, for instance, has seen both severe drought and flooding, destroying crops for 2.2 million people who depend on farming for their livelihoods, said Shashwat Saraf, the group’s regional emergency director for East Africa.
“It is critical that the deal is extended for a longer term to create some predictability and stability,” he said in a statement.
Countries that depend on imported food, from Lebanon to Egypt, would need to find suppliers outside the Black Sea region, which would raise costs because they are further away, analysts say.
That would compound costs for countries that also have seen their currencies weaken and debt levels grow because they pay for food shipments in dollars.
For low-income countries and people, food “will be less affordable” if the grain deal isn’t renewed, World Food Program chief economist Arif Husain told reporters.
WHAT ABOUT UKRAINE?Ukraine’s economy depends on agriculture, and before the war, 75% of its grain exports went through the Black Sea.
It can send its food by land or river through Europe, so it wouldn’t be cut off from world markets if the grain deal ends, but those routes have a lower capacity than sea shipments and have stirred anger from farmers in neighboring countries.
Nonetheless, the Ukrainian Grain Association wants to send more grain through the Danube River to neighboring Romania’s Black Sea ports, saying it’s possible to double monthly exports along that route to 4 million metric tons.
Ukraine’s wheat shipments have fallen by more than 40% from its pre-war average, with the USDA expecting 10.5 million metric tons exported in the coming year.
Ukraine has accused Russia of slowing down inspections of ships and preventing new ones from joining the initiative, leading to a drop in its food exports from a high of 4.2 million metric tons in October to 2 million in June.
WHAT ELSE AFFECTS FOOD SUPPLY?Fallout from the pandemic, economic crises, drought and other climate factors affect the ability of people to get enough to eat.
There are 45 countries that need food assistance, the Food and Agriculture Organization said in a July report. High domestic food prices are driving hunger in most of those countries, including Haiti, Ukraine, Venezuela and several in Africa and Asia.
While drought can also be a problem for major grain suppliers, analysts see other countries producing enough grain to counterbalance any losses from Ukraine.
Besides Russia’s huge exports, Europe and Argentina are increasing wheat shipments, while Brazil saw a banner year for corn.
“These markets adapt and producers adapt — and boy, the wheat and corn markets have adapted very, very quickly,” said Peter Meyer, head of grain analytics at S&P Global Commodity Insights.
JULY 12, 2023:
LONDON (AP) — Concerns are growing that Russia won’t extend a United Nations-brokered deal that allows grain to flow from Ukraine to parts of the world struggling with hunger. Ships are no longer heading to the war-torn country’s Black Sea ports, and shipments have dwindled. The deal originally reached last summer to ease a global food crisis is up for renewal Monday (July 10, 2023), and Russian officials say there are no grounds for extending it. They’ve threatened it before, insisting an agreement to facilitate their food and fertilizer shipments hasn’t been applied. But data shows Moscow has been exporting record amounts of wheat. The U.N. is striving to keep the fragile deal intact, with Ukraine to benefit Africa, the Middle East and parts of Asia.
LONDON (AP) — Concerns are growing that Russia will not extend a United Nations-brokered deal that allows grain to flow from Ukraine to parts of the world struggling with hunger, with ships no longer heading to the war-torn country’s Black Sea ports and food exports dwindling.
Turkey and the U.N. negotiated the breakthrough accord last summer to ease a global food crisis, along with a separate agreement with Russia to facilitate shipments of its food and fertilizer. Moscow insists it’s still facing hurdles, though data shows it has been exporting record amounts of wheat.
Russian officials repeatedly say there are no grounds for extending the Black Sea Grain Initiative, which is up for its fourth renewal Monday (July 10, 2023). It’s something they have threatened before — then have twice gone on to extend the deal for two months instead of the four months outlined in the agreement.
The U.N. and others are striving to keep the fragile deal intact, with Ukraine and Russia both major suppliers of wheat, barley, vegetable oil and other food products that countries in Africa, the Middle East and parts of Asia rely on. It has allowed Ukraine to ship 32.8 million metric tons (36.2 million tons) of grain, more than half of it to developing nations.
The deal has helped lower global prices of food commodities like wheat after they surged to record highs following the invasion last year, but that relief has not reached kitchen tables.
Russia’s exit would cut off a source for World Food Program aid for countries at risk of famine, including Somalia, Ethiopia and Afghanistan, and compound food security problems in vulnerable places struggling with conflict, economic crisis and drought.
“Russia gets a lot of good public will for continuing this agreement,” said Joseph Glauber, senior research fellow at the International Food Policy Research Institute. “There would be a cost to pay in terms of public perception and global goodwill, I think, as far as Russia is concerned” if the deal isn’t extended.
The amount of grain leaving Ukraine already has dropped, with Russia accused of slowing joint inspections of ships by Russian, Ukrainian, U.N. and Turkish officials and refusing to allow more vessels to join the initiative.
Average daily inspections — meant to ensure vessels carry only food and not weapons that could aid either side — have fallen from a peak of 11 in October to just over two in June.
That has led to a decline in grain exports, from a high of 4.2 million metric tons in October to 1.3 million in May, a low for the year-old initiative. They rose to 2 million in June as shipment sizes grew.
If the deal isn’t 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,” said Caitlin Welsh, director of the Global Food and Water Security Program at the Center for Strategic and International Studies.
The U.N. has been negotiating with Russia to stick with the initiative, with spokesman Stephane Dujarric saying Monday that top officials are “doing whatever we can to ensure the continuation of all of the agreements.”
Ukraine’s Infrastructure Ministry said Tuesday on Facebook that the final two ships are loading grain — heading for Egypt — while 29 vessels are waiting in the waters off Turkey because Russia has refused to allow their inspection.
“Ukrainian agricultural products play a significant role in global food security,” Infrastructure Minister Oleksandr Kubrakov said. But “for the past few months, the grain corridor has been practically closed.”
Russia insists the agreement hasn’t worked for its own exports, blaming Western sanctions for hindering financing and insurance.
While sanctions don’t effect food and fertilizer, Moscow is seeking carveouts from restrictions on the Russian Agricultural Bank, as well as movement on its ammonia, a key ingredient in fertilizer, to a Ukrainian Black Sea port. But the ammonia pipeline has been damaged in the war, the U.N. said.
“There is still time to implement the part of the agreements that pertains to our country. So far, this part has not been fulfilled,” Kremlin spokesperson Dmitry Peskov told reporters last week. “And so at the moment, unfortunately, we don’t see any particular grounds for extending this deal.”
Russia, however, has increased its wheat exports to all-time highs following a large harvest. Shipments went from 33 million metric tons in 2021 to 44 million metric tons last year to expectations of 46 million this year, according to S&P Global Commodity Insights.
Meanwhile, Ukraine’s shipments have fallen by around 60%, from 19 million tons in 2021 to predictions of about 7 or 8 million tons this year — a big hit to its agriculture-dependent economy.
With less from Ukraine and more from Russia, the world’s available wheat stocks are the same as in 2021 — and there is enough of it to go around, said Peter Meyer, head of grain analytics at S&P Global Commodity Insights.
Europe and Argentina are expected to boost wheat shipments, while Brazil saw a banner year for corn, of which Ukraine is also a major supplier. Meyer wouldn’t expect more than a temporary bump to grain prices on world markets if the Black Sea deal isn’t renewed.
“Markets just adapt extremely quickly,” he said. “The fact of the matter is that the global grain markets, they balance each other out.”
Ukraine can send its food by land or river through Europe, so it wouldn’t be completely cut off from selling grain, but those routes have a lower capacity than sea shipments and have stirred disunity in the European Union.
“We are a cat running out of lives in this situation,” said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland. “It only takes one thing to go wrong before we’re into trouble.”
While the U.N. Food and Agriculture Organization’s food price index has fallen below the record highs it hit when Russian troops entered Ukraine, food costs were already high because of COVID-19, conflict and drought.
Then Russia’s war helped push up the costs to produce food — including energy, fertilizer and transportation.
In developing nations increasingly relying on imported food, from Kenya to Syria, weakening currencies are keeping local prices high because they are paying in U.S. dollars.
“With approximately 80% of East Africa’s grain being exported from Russia and Ukraine, over 50 million people across East Africa are facing hunger, and food prices have shot up by nearly 40% this year,” said Shashwat Saraf, the International Rescue Committee’s regional emergency director for East Africa.
“It is vital for the international community to not only forge a long-term deal but also build durable solutions to tackle food insecurity,” he said.
MAY 17, 2023, UPDATE:
ANKARA, Turkey (AP) — Turkish President Recep Tayyip Erdogan says Russia has agreed to extend a deal that has allowed Ukraine to ship grain through the Black Sea to parts of the world struggling with hunger. Erdogan said Wednesday (May 17, 2023) that the deal would be extended for two months. The breakthrough accord brokered by the U.N. and Turkey last summer came with a separate agreement to ease shipments of Russian food and fertilizer that Moscow insists hasn’t been applied. Russia had set a Thursday deadline for its concerns to be ironed out or had threatened to bow out. Russian officials confirmed the extension but neither they nor Erdogan immediately commented on any concessions Moscow may have received.
MAY 17, 2023:
GENEVA (AP) — The United Nations is racing to extend a deal that has allowed shipments of Ukrainian grain through the Black Sea to parts of the world struggling with hunger. The breakthrough accord brokered by the U.N. and Turkey last summer came with a separate agreement to ease shipments of Russian food and fertilizer that Moscow insists hasn’t been applied. Russia has set a Thursday (May 18, 2023) deadline for its concerns to be ironed out. U.N. officials warn that a failure to extend the deal could hurt countries in Africa, the Middle East and parts of Asia that rely on Ukrainian wheat, barley, vegetable oil and other affordable food products.
GENEVA (AP) — The United Nations is racing to extend a deal that has allowed shipments of Ukrainian grain through the Black Sea to parts of the world struggling with hunger, helping ease a global food crisis exacerbated by the war Russia launched more than a year ago.
The breakthrough accord that the U.N. and Turkey brokered with the warring sides last summer came with a separate agreement to facilitate shipments of Russian food and fertilizer that Moscow insists hasn’t been applied.
Russia set a Thursday (May 18, 2023) deadline for its concerns to be ironed out or it’s bowing out. Such brinkmanship isn’t new: With a similar extension in the balance in March, Russia unilaterally decided to renew the deal for just 60 days instead of the 120 days outlined in the agreement.
The last ship participating in the deal left Ukraine on Wednesday hauling corn to Turkey. No vessels have been cleared to enter the country’s three open ports since May 6.
U.N. officials and analysts warn that a failure to extend the Black Sea Grain Initiative could hurt countries in Africa, the Middle East and parts of Asia that rely on Ukrainian wheat, barley, vegetable oil and other affordable food products, especially as drought takes a toll. The deal helped lower prices of food commodities like wheat over the last year, but that relief has not reached kitchen tables.
“If you have a cancellation of the grain deal again, when we’re already at a pretty tight situation, it’s just one more thing that the world doesn’t need, so the prices could start heading higher,” said William Osnato, a senior research analyst at agriculture data and analytics firm Gro Intelligence. “You don’t see relief on the horizon.”
U.N. humanitarian chief Martin Griffiths told the Security Council on Monday that the deal was “critical” and talks were ongoing.
Negotiators who gathered in Istanbul last week made little apparent headway. Ukrainian Deputy Prime Minister Oleksandr Kubrakov said the grain deal “should be extended for a longer period of time and expanded” to “give predictability and confidence” to markets.
Moscow opposes such an expansion. Kremlin spokesman Dmitry Peskov said Tuesday that there’s an “intense session of contacts” but that ”a decision is yet to be made.”
Russia, meanwhile, is rapidly shipping a bumper harvest of its wheat through other ports. Critics say that suggests Moscow is posturing or trying to wrest concessions in other areas — such as on Western sanctions — and claim it’s dragged its heels on joint inspections of ships by Russian, Ukrainian, U.N. and Turkish officials.
Average daily inspections — meant to ensure vessels carry only food and not weapons — have steadily dropped from a peak of 10.6 in October to 3.2 last month. Shipments of Ukrainian grain also have declined in recent weeks.
Russia denies slowing the work.
“We cannot agree that the role of the Russian representative (inspector) should be reduced to automatic rubber-stamping, or approval, or appeals submitted by Kyiv,” Russia’s ambassador in Geneva, Gennady Gatilov, told reporters last month.
Asked whether a blockade of Ukraine’s coast or more attacks on its ports could follow any withdrawal from the agreement, Gatilov said Russian authorities were “considering all possible scenarios if the deal is not extended.”
Russia has five main asks, according to Gatilov:
— A restoration of foreign supplies of farm machinery and replacement parts.
— A lifting of restrictions on insurance and access to foreign ports for Russian ships and cargo.
— Resumed operation of a pipeline that sends Russian ammonia, a key ingredient in fertilizer, to a Ukrainian Black Sea port.
— An end to restrictions on financial activities linked to Russia’s fertilizer companies.
— Renewed access to the international SWIFT banking system for the Russian Agricultural Bank.
The U.N. says it’s doing what it can, but those solutions mainly rest with the private sector, where it has little leverage.
The deal has allowed over 30 million metric tons of Ukrainian grain to be shipped, with more than half that going to developing nations. China, Spain and Turkey are the biggest recipients, and Russia says that shows food isn’t going to the poorest countries.
U.N. Secretary-General Antonio Guterres says Ukrainian corn for animal feed has headed to developed countries, while “a majority” of grain for people to eat has gone to emerging economies.
Even if a “meaningful part” of the shipments headed to developed nations, that “has a positive impact to all countries because it brings prices down,” Guterres told reporters in Nairobi, Kenya, this month. “And when you bring prices down, everybody benefits.”
Osnato, the analyst, said markets aren’t reacting to Russia’s threats to exit the deal, with wheat recently hitting two-year lows. If the agreement isn’t extended or negotiations drag on, the “loss of Ukraine grains wouldn’t be a disaster” for a month or two, he said.
He says there is “bluster” coming from Russia to push for easing some sanctions because it’s shipping record amounts of wheat for the season, and its fertilizers are flowing well, too.
“It’s more about trying to get a little leverage, and they’re doing what they can to put themselves in a better negotiating position,” Osnato said.
Trade flows tracked by financial data provider Refinitiv show that Russia exported just over 4 million tons of wheat in April, the highest volume for the month in five years, following record or near-record highs in several previous months.
Exports since last July reached 32.2 million tons, 34% above the same period from last season, according to Refinitiv. It estimates Russia will ship 44 million tons of wheat in 2022-2023.
The issue is more pressing with Ukraine’s wheat harvest coming up in June and the need to sell that crop in July. Not having a Black Sea shipping corridor at that point would “start taking another large chunk of wheat and other grains off the market,” Osnato said.
Ukraine can send its food by land through Europe, but those routes have a lower capacity than sea shipments and have stirred disunity in the European Union.
Uncertainties like drought in places including Morocco, Tunisia, Algeria, Syria and East Africa — big importers of food — are likely to keep food prices high, and an end to the U.N. deal wouldn’t help.
“Any shock to the markets can cause massive harm with catastrophic ripple effects in countries balancing on the brink of famine,” said Shashwat Saraf, emergency director for East Africa at the International Rescue Committee.
“The expiration of the Black Sea Grain Initiative is likely to trigger increased levels of hunger and malnutrition, spelling further disaster for East Africa,” Saraf said.
MARCH 21, 2023:
The United Nations Secretary-General over the weekend (March 18-19, 2023) announced an extension of the Black Sea Grain Initiative. The announcement came at the last minute as the agreement was set to expire.
The Initiative facilitates the safe navigation for the exports of grain and related foodstuffs and fertilizers, including ammonia, from designated Ukrainian seaports. During the first two terms, some 25 million metric tons of grain and foodstuffs have been moved to 45 countries, helping to bring down global food prices and stabilizing the markets.
The Black Sea Grain Initiative, alongside the Memorandum of Understanding on promoting Russian food products and fertilizers to the world markets, are critical for global food security, especially for developing countries. The original agreement was signed in July of 2022 to address the need for Ukraine to export agricultural products during the Russia-Ukraine war. Ukrainian officials indicate the agreement was extended for another 120 days.
FEBRUARY 2, 2023:
USDA’s Economic Research Service reports Ukraine’s corn and wheat exports have almost returned to seasonal-average levels since the summer of 2022. The change follows the Black Sea Grain Initiative to reopen the Black Sea shipping routes.
Russia’s invasion of Ukraine in February 2022 led to elevated security risks and infrastructure damage, causing Ukraine’s seaports to be almost completely cut off from March through July. As global exportable supplies diminished, international wheat export prices spiked. Signed in July 2022, the Black Sea agreement enabled the safe passage of Ukraine grain exports through three ports. That and ample corn and wheat stocks allowed Ukraine to export a larger combined volume of the two crops than the five-year average in September and October.
The Black Sea Grain Initiative has increased the opportunities for Ukrainian grain to leave the country and has relieved some price pressures internationally, but uncertainty remains as the agreement is set to expire in mid-March 2023 and may not be extended.
NOVEMBER 17, 2022:
ANKARA, Turkey (AP) — A wartime agreement that allowed grain shipments from Ukraine to resume and helped temper rising global food prices will be extended by 120 days. That’s according to the United Nations and other parties to the deal. The initiative established a safe shipping corridor in the Black Sea and inspection procedures to address Russian and Ukrainian concerns that cargo vessels traveling off Ukraine’s southern coast might carry weapons or launch attacks. The deal that Ukraine and Russia signed in separate agreements with the U.N. and Turkey on July 22, 2022, was due to expire Saturday (Nov. 19, 2022). Russia confirmed the extension on Thursday but said it expected progress on removing obstacles to the export of Russian food and fertilizers.
NOVEMBER 16, 2022:
Russia will likely extend the United Nations-brokered deal allowing exports of grain and other farm products from Ukraine. Four people tell Bloomberg that the deal expires on November 19 and that Russia will likely allow the deal to renew. Just ahead of the expiration, United Nations’ leadership and Russian officials met on the sidelines of the G20 summit. Reuters says the two sides had a lengthy discussion and talked through all the aspects related to facilitating Russian exports of food and fertilizers, as well as the Black Sea Initiative. The accord helped stave off a global food crisis by allowing food and fertilizer exports from several of Ukraine’s Black Sea ports. Russia wants unhindered access to world markets for its own food and fertilizer exports in return for agreeing to continue the Black Sea export deal. Moscow says it could quit the deal if progress isn’t made on its concerns.
NOVEMBER 2, 2022, UPDATE:
KYIV, Ukraine (AP) — Diplomatic efforts have salvaged a wartime agreement that allowed Ukrainian grain and other commodities to reach world markets. Russia said Wednesday it would stick to the deal after Ukraine pledged not to use a designated Black Sea corridor to attack Russian forces. The Russian Defense Ministry said Russia “believes that the guarantees it has received currently appear sufficient, and resumes the implementation of the agreement.” Russia suspended its participation in the grain deal over the weekend, citing an alleged Ukrainian drone attack against its Black Sea fleet in Crimea. Ukraine did not claim responsibility for the attack. After the announcement of Russia rejoining the deal, wheat futures prices dropped more than 6% in Chicago.
NOVEMBER 2, 2022:
KYIV, Ukraine (AP) — Russia’s defense minister has told his Turkish counterpart that Moscow has agreed to return to a Turkish and U.N. brokered deal that allowed the shipment of millions of tons Ukrainian grain through the Black Sea. Turkish President Recep Tayyip Erdogan said Russian Defense Minister Sergei Shoigu called Turkey’s Hulusi Akar and informed him that the grain corridor agreement would “continue in the same way as before” as of Wednesday (Nov. 2, 2022). Erdogan said Wednesday that the renewed deal would prioritize shipments to African nations. Russia suspended its participation in the grain deal over the weekend, citing allegations of a Ukrainian drone attack against its Black Sea fleet.
OCTOBER 30, 2022:
KYIV, Ukraine (AP) — Russia has resumed its blockade of Ukrainian ports, cutting off urgently needed grain exports to hungry parts of the world. U.S. President Joe Biden called the move a “really outrageous” act and warned that global hunger could increase. Russia has suspended a U.N.-brokered deal to allow safe passage of ships carrying grain from Ukraine, one of the world’s breadbaskets. Russia took the step because it alleged that Ukraine staged a drone attack against Russia’s Black Sea Fleet off the coast of occupied Crimea. Ukraine has denied the attack. A Ukrainian official says a ship carrying 40,000 tons of grain for Ethiopia could not leave Ukraine on Sunday as a result of Russia’s “blockage of the grain corridor.”
OCTOBER 29, 2022:
KYIV, Ukraine (AP) — Russia says it will immediately suspend a U.N.-brokered grain export deal that has seen more than 9 million tons of grain exported from Ukraine and brought down global food prices. The Russian Defense Ministry cited an alleged Ukrainian drone attack Saturday (Oct. 29, 2022) against Russia’s Black Sea Fleet ships moored off occupied Crimea as the reason for the move. Ukraine has denied the attack and said the Russians just mishandled their own weapons. The Russian declaration came one day after U.N. chief Antonio Guterres urged Russia and Ukraine to renew the grain deal. Ukrainian President Volodymyr Zelenskyy called the Russian move “predictable,” saying Russian delays have already backed up 176 grain ships at sea. Another Ukrainian official said Russia was starting a new world “hunger games.”
OCTOBER 3, 2022:
BEIRUT (AP) — An investigation by The Associated Press and the PBS series “Frontline” has documented a sophisticated Russian-run smuggling operation that has used falsified manifests and seaborne subterfuge to steal Ukrainian grain worth at least $530 million. The AP and “Frontline” used satellite imagery and marine radio transponder data to track three dozen ships making more than 50 voyages carrying grain from Russian-occupied areas of Ukraine to ports in the Middle East. The ongoing theft is being carried out bywealthy businessmen and state-owned companies in Russia and Syria. Some of them already face financial sanctions from the United States and European Union. Legal experts say the theft is a potential war crime.
This combination of Planet Labs satellite images shows a grain elevator in Rubizhne, Ukraine on April 8, 2022, top, and after it was hit by Russian forces on April 21. (Planet Labs via AP)
The cargo ship Laodicea sails through the Bosphorus Strait in Istanbul, Turkey, on July 7, 2022. An Associated Press investigation shows the ship, owned by the Syrian government, is part of an extensive Russian-run smuggling operation that has been hauling stolen Ukrainian grain from ports in occupied Crimea to customers in the Middle East. (AP Photo/Yoruk Isik)
AUGUST 8, 2022:
ISTANBUL (AP) — The first of the cargo ships to leave Ukraine under a deal to unblock grain supplies and stave off a potential global food crisis arrived at its destination in Turkey. The Turkey-flagged Polarnet docked at Derince port in the Gulf of Izmit on Monday (Aug. 8, 2022) after setting off from Chornomorsk on Aug. 5 laden with 12,000 tons of corn. The first ship to depart Ukraine, the Sierra Leone-flagged Razoni, which left on Aug. 1, still hasn’t reached its destination in Lebanon and was anchored off Turkey’s southern coast on Sunday evening, according to the Marine Traffic website.
AUGUST 5, 2022:
ISTANBUL (AP) — Three more ships carrying thousands of tons of corn have left Ukrainian ports. The movement Friday (Aug. 5, 2022) is the latest sign that a negotiated deal to export grain trapped since Russia invaded Ukraine nearly six months ago is slowly materializing. But major hurdles lie ahead to get food to the countries that need it most. While the shipments have raised hopes of easing a global food crisis, experts say much of the grain that Ukraine is trying to export is used for animal feed, not for people to eat. And the cargoes are not expected to have a significant impact on the global price of corn, wheat and soybeans for several reasons.
AUGUST 3, 2022:
ISTANBUL (AP) — The first grain ship to leave Ukraine under a Black Sea wartime deal has passed inspection in Istanbul and is heading on to Lebanon. Ukraine says 17 other vessels at its ports are loaded with grain as well and waiting permission to leave but there was no word yet on when they could depart. Authorities said a joint civilian inspection team spent three hours Wednesday (Aug. 3, 2022) checking the cargo and crew aboard the cargo ship Razoni. A July 22, 2022, deal involving Ukraine, Russia, Turkey and the United Nations aimed to ease food security around the globe by creating a safe corridor across the Black Sea. World food prices have been soaring and the war has blocked exports from Ukraine, a major global grain supplier.
AUGUST 2, 2022:
KYIV, Ukraine (AP) — The first cargo ship to leave Ukraine since Russia invaded its neighbor more than five months ago is sailing off the coast of Bulgaria as it heads toward Istanbul. The voyage puts to the test an agreement signed last month (July 2022) between Moscow and Kyiv that aims to help alleviate a global food crisis. Officials say the Sierra Leone-flagged Razoni is expected to reach Istanbul early Wednesday. Russian, Ukrainian, Turkish and U.N. officials are to inspect the ship after it anchors in Istanbul. The inspections are part of a U.N.- and Turkish-brokered deal to shift Ukrainian grain stockpiles to foreign markets and ease the mounting world food crisis.
AUGUST 1, 2022:
ANKARA, Turkey (AP) — The first ship carrying Ukrainian grain has set off from the port of Odesa. The departure of the ship laden with corn follows an internationally brokered deal that is expected to finally allow large stores of Ukrainian crops to reach foreign markets and ease a growing hunger crisis. The Sierra Leone-flagged cargo ship Razoni departed Odesa on Monday morning (August 1, 2022) headed for Lebanon. Russia and Ukraine signed separate agreements with Turkey and the U.N. clearing the way for Ukraine to export 22 million tons of grain and other agricultural goods that have been stuck in Black Sea ports because of Russia’s invasion. Ukraine is one of the world’s key breadbaskets.
JULY 27, 2022:
UNDATED (AP)- Shipping companies aren’t rushing to export millions of tons of trapped grain out of Ukraine, despite a breakthrough deal to provide safe corridors through the Black Sea. That’s because explosive mines are drifting in the waters amid Russia’s war, ship owners are assessing the risks and many still have questions over how the deal will unfold. The goal is to get some 20 million tons of grain out of three Ukrainian ports and clear the way for Russian food and fertilizer hampered by wider sanctions. But the deal is running up against the reality of how difficult and risky it will be to carry out, and the clock has started ticking.
JULY 23, 2022:
KYIV, Ukraine (AP) — Russian missiles have struck Ukraine’s Black Sea port of Odesa just hours after Moscow and Kyiv signed deals to allow grain exports to resume from there. A Ukrainian spokesperson described Saturday’s (July 23, 2022) attack as “spit in the face” of Turkey and the United Nations, which brokered the deal. The Ukrainian military says two Russian cruise missiles hit the port’s infrastructure and Ukrainian air defenses brought down two others. The Foreign Ministry said Russia would bear full responsibility if the war in Ukraine results in a global food crisis. Elsewhere, Russia fired missiles Saturday at an airfield and a railway in central Ukraine, killing at least three people, while Ukraine launched rocket strikes on river crossings in a Russian-occupied southern region.
JULY 22, 2022, UPDATE:
ISTANBUL (AP) — Russian and Ukrainian officials have signed deals to safely export wheat and other food staples across the Black Sea. Ukraine is one of the world’s key breadbaskets but a Russian blockade of its ports during the war has threatened food security around the world. The two countries signed separate agreements Friday (July 22, 2022) in Istanbul with Turkey and the U.N. so Ukraine could export 22 million tons of grain and other food stuck in Black Sea ports. The U.N. chief called the deal “a beacon of hope” on the Black Sea that will help millions of hungry people. The head of the Red Cross called the deal “nothing short of lifesaving for people across the world who are struggling to feed their families.”
JULY 22, 2022 UPDATE:
ISTANBUL (AP) — Russian and Ukrainian officials have signed deals to end a standoff over grain exports brought on by the war in Ukraine. Ukraine is one of the world’s key breadbaskets but a Russian blockade of its ports has threatened food security around the world. The two countries signed separate agreements Friday (July 22, 2022) with Turkey and the United Nations so that Ukraine could export 22 million tons of grain and other agricultural products stuck in Black Sea ports by the war. The secretary-general of the U.N. and Turkey’s president joined the signing ceremony in Istanbul. The U.N. chief called the deal “a beacon of hope” on the Black Sea that will help hungry people around the world.
JULY 22, 2022:
ISTANBUL (AP) — Russia and Ukraine are expected to sign an agreement that would allow Ukraine to resume grain shipments to world markets and Russia to export grain and fertilizers while the two countries are at war in Ukraine. Ukrainian and Russian military delegations reached a tentative agreement last week on a United Nations plan that would enable Ukraine to export 22 million tons of grain and other agricultural products that have been stuck in Black Sea ports due to the war. U.N. Secretary-General Antonio Guterres and Turkish President Recep Tayyip Erdogan planned to oversee the signing of the agreement on Friday (July 22, 2022) in Istanbul. Russia’s defense ministry and Ukraine’s infrastructure minister are the expected signatories.
JUNE 8, 2022:
ANKARA, Turkey (AP) — Russia and Turkey have backed a maritme corridor to export Ukrainian grain to global markets amid an escalating world food crisis. Turkey’s foreign minister hosted his Russian counterpart Sergey Lavrov in Ankara on Wednesday (June 8, 2022) for talks on a U.N. proposal to free Ukraine’s Black Sea ports and allow 22 million tons of grain to be shipped. Ukraine was not invited to the talks. It has expressed concerns that removing mines from its ports could allow Russia to attack its southern coast. Lavrov promised that Russia would “take all necessary steps to ensure that the ships can leave there freely.” But a Turkish minister also said Western sanctions should be lifted against Russia for allowing the grain to be exported.