Explained | Will Russia-Ukraine deal ease global food crisis? 

How did the two countries at war arrive at an agreement over grain export from Black Sea ports? 

Updated - July 24, 2022 06:21 pm IST

Published - July 24, 2022 03:37 am IST

Russia’s Defence Minister Sergei Shoigu, U.N. Secretary-General Antonio Guterres, Turkish President Recep Tayyip Erdogan and Turkish Defence Minister Hulusi Akar attend the signing ceremony of the grain deal in Istanbul on July 22, 2022.

Russia’s Defence Minister Sergei Shoigu, U.N. Secretary-General Antonio Guterres, Turkish President Recep Tayyip Erdogan and Turkish Defence Minister Hulusi Akar attend the signing ceremony of the grain deal in Istanbul on July 22, 2022. | Photo Credit: REUTERS

The story so far: In their first major deal since the February 24 war began, Russia and Ukraine on Friday agreed to resume grain exports from Black Sea ports as part of a deal negotiated by the United Nations and Turkey. The UN had initiated talks in April to unblock the millions of tonnes of wheat and other food items stuck in Ukraine’s Black Sea ports that have been blockaded by Russia. The breakthrough appeared to have come in Russian President Vladimir Putin’s summit meeting with his Turkish counterpart Recep Tayyip Erdogan in Tehran last week. The agreement, signed separately by Russia and Ukraine with Turkey and the UN, is expected to ease a looming global food crisis.

Why is the agreement important?

Russia and Ukraine together account for more than a quarter of the world’s wheat supplies. Russia’s share in the global exports of wheat, the world’s most widely grown crop, is some 20% according to 2020 figures, while Ukraine accounts for 8%. About 50 countries depend on Russia and Ukraine for more than 30% of their wheat imports. Besides wheat, Ukraine is the world’s eighth largest producer and fourth largest exporter of corn, accounting for 16% of global exports. Further, Ukraine, which produces up to 46% of sunflower-seed and sunflower oil is the world’s largest exporter of sunflower oil. The Ukraine war has therefore clearly hit one of the breadbaskets of the world. This heaped additional pressure on global food prices, which were already under strain due to climate shocks and the COVID-19 pandemic. The UN’s Food Price Index averaged 154.2 points in June, 23% higher than its value a year ago. Food price inflation has soared across economies in recent weeks. The exports agreement, if implemented, would see Russian and Ukrainian grains flowing back into the market, easing prices.

How did the war impact grain exports?

Before the war, Ukraine had the capacity to export up to six million tonnes of food items a month, mainly through its Black Sea ports. The Russians have since captured some Ukrainian ports, including Mariupol and Berdyansk, and enforced a blockade on the ports that are still in Kyiv’s control, including Odesa. According to Ukrainian authorities, more than 20 million tonnes of grain are stuck in warehouses and containers and they are not able to export them due to the Russian blockade. A new harvesting season began in June and the output is expected to be 60 million tonnes, a huge chunk of which are meant to be for exports. Ukraine would run out of warehousing capacity unless it immediately starts exports.

Russia has rejected criticism that its actions have caused the food crisis. It says Ukraine has heavily mined the waters around Odesa and Mykolaiv that have stopped vessels from anchoring in these ports. Russia also blamed Western sanctions for a fall in its exports that has also contributed to the food crisis. While the West says Russian food and fertilizer products were exempted from the sanctions, the financial sanctions have complicated payments.

What are the terms of the deal?

The agreement has sought to address the concerns of both countries while resuming grain exports. Ukraine has been wary of removing the sea mines because of the Russian threat. Russia has enforced the naval blockade on Ukraine’s ports because it doesn’t want Ukrainian ships to smuggle in weapons via the waters. According to the deal, a joint coordination centre will be set up in Istanbul comprising officials and military personnel from Russia, Ukraine and Turkey, along with UN representatives. These officials will check the vessels going to Ukraine’s ports to make sure that they don’t carry any weapons. The agreement doesn’t call on Ukraine to de-mine its southern waters. But specific routes from Odesa and other Ukrainian ports would be earmarked for the ships with grain to sail to Turkey’s Bosphorus. And if necessary, a minesweeper can be brought in to clear the routes to the ports. The agreement reached at Istanbul’s 19th century Ottoman palace Dolmabahce is for a period of 120 days, which can be renewed. The plan is to allow Ukraine to export five million tonnes of grain a month, close to its pre-war level. As part of the UN framework, Russia is also expected to ramp up its grain and fertilizer exports. The U.S. Treasury Department had said earlier this month that buyers, banks and insurers would be allowed to purchase Russian grain. Turkey, a NATO ally that hasn’t joined Western sanctions against Russia, has called the deal a “path towards” peace. But the key to unblock the path lies in its implementation.

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