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Russia Halts Landmark Deal That Allowed Ukraine to Export Grain at Time of Growing Hunger
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By Associated Press
Published 9 months ago on
July 17, 2023

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LONDON — Russia on Monday halted a breakthrough wartime deal that allowed 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 the Black Sea Grain Initiative would be suspended until demands to get Russian food and fertilizer to the world are met.

“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.

While Russia has complained that restrictions on shipping and insurance have hampered its agricultural exports, it has shipped record amounts of wheat since last year.

The Role of the Grain Deal in Ensuring Food Security

The suspension marks the end of an accord that the U.N. and Turkey brokered last summer to allow shipments of food from 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 food products that developing nations rely on.

The suspension of the deal sent wheat prices up about 3% in Chicago trading, to $6.81 a bushel, which is still about half what they were at last year’s peak. Prices fell later in the day.

Analysts don’t expect more than a temporary bump in global food commodity prices because countries such as Russia and Brazil have ratcheted up wheat and corn exports. But food insecurity worldwide and prices at local stores and markets have risen as developing countries also struggle with climate change, conflict and economic crises. Finding suppliers outside Ukraine that are farther away also could raise costs, analysts say.

The grain deal provided guarantees that ships would not be attacked entering and leaving Ukrainian ports, while a separate agreement facilitated the movement of Russian food and fertilizer. Western sanctions do not apply to Moscow’s agricultural shipments.

Ukrainian President Volodymyr Zelenskyy said he wanted to keep the initiative going even without Russia’s safety assurances for ships.

“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.”

The Russian Foreign Ministry again declared the area “temporarily dangerous.” Sergei Markov, a Moscow-based pro-Kremlin political analyst, speculated that if Ukraine doesn’t heed the warnings, Russia could strike Ukrainian ports or place explosive mines in Black Sea routes.

Turkish President Recep Tayyip Erdogan said officials were talking with Russia and that he was hopeful the deal would be extended.

The Future of the Black Sea Grain Initiative

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, according to the Joint Coordination Center in Istanbul.

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.

U.N. Secretary-General Antonio Guterres said the end of the deal will inevitably result in more human suffering but that the U.N. would keep working to ensure the flow of supplies from Ukraine and Russia.

The Impact of the Deal’s End on Developing Nations

“We will stay fixed on finding pathways for solutions,” he told reporters. “There is simply too much at stake in a hungry and hurting world.”

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, which was also tied to other conflicts, the lingering effects of the COVID-19 pandemic and climate factors.

The Role of the Grain Deal in Mitigating the Global Food Crisis

High grain prices in countries 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, and the relief hasn’t trickled down to kitchen tables.

“Countries such as Sudan, Somalia, Ethiopia are dependent on food imports from Ukraine, so it does hamper availability and accessibility to food,” said Shashwat Saraf, the International Rescue Committee’s regional emergency director for East Africa.

The Potential Weaponization of Russia’s Wheat Exports

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 the world’s current largest wheat supplier, Russia 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. He noted that Moscow already raised them slightly this month.

The History and Challenges of the Grain Deal

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 renew 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 over 2 million metric tons in June.

Ukraine has accused Russia of preventing new ships from joining the work since the end of June. Joint inspections meant to ensure vessels carry only grain and not weapons 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.

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