Wheat and corn prices on global markets jumped yesterday after Russia pulled out of a key deal that allowed grain exports from Ukraine. The collapse of the agreement will result in an increase in the prices of basic foodstuffs such as bread and pasta in the coming months, according to analysts.
A deal allowing Ukraine to export grain across the Black Sea expired at midnight last night after Russia announced it would suspend its participation. "Unfortunately, the part of the Black Sea agreement that refers to Russia has not been implemented so far, so it is no longer valid," Kremlin spokesman Dmitry Peskov said.
The Secretary General of the United Nations, Antonio Guterres, said that Russia's withdrawal also means the collapse of the related agreement that facilitates the export of Russian grains and fertilizers. "Today's decision by the Russian Federation will deal a blow to people in need around the world," Guterres told reporters.
The deal, brokered by the UN and Turkey last July, was aimed at easing the global food crisis by allowing safe exports of Ukrainian grain that had been blocked by the war.
In accordance with the agreement on the establishment of a safe navigation channel, Ukraine managed to export 32,9 million tons of agricultural products, including 16,9 million tons of corn and 8,9 million tons of wheat, reports Reuters.
Last year, economic shocks that included the impact of the war in Ukraine and the pandemic were the main reasons for "acute food shortages" in 27 countries, affecting nearly 84 million people, according to a report by the Food Security Information Network (FSIN). . FSIN defines acute food shortage as a lack of sufficient food to the extent that it puts a person's life or livelihood at risk.
Before the war, Ukraine was the fifth largest wheat exporter in the world, accounting for 10% of total exports, according to the Organization for Economic Co-operation and Development, Reuters reported.
"Today's decision by the Russian Federation will deal a blow to people in need around the world," Antonio Guterres said
Ukraine is among the world's three largest exporters of barley, corn and rapeseed oil. Ukraine is by far the largest exporter of sunflower oil, with a share of 46% in world exports.
When Russia temporarily suspended participation in the grain export deal in October last year due to an attack on its fleet in Sevastopol, Guterres said the deal's collapse could turn a "food affordability crisis into an availability crisis" if farmers around the world could not get fertilizer. required before the start of the planting season. Russia is the largest global supplier of fertilizers.
However, analysts estimate that the situation is now better than it was in the first months of the war as supplies from other producers such as Brazil have increased.
Despite this, the situation remains complex, Reuters points out and reminds that the World Food Program (WFP) announced last month that numerous emergency situations have overlapped, creating the largest and most complex hunger crisis and humanitarian situation in the last 70 years.
According to the SPH annual report, in 2022 a record 349 million people experienced acute hunger, while 772.000 people were on the verge of starvation.
Shashwat Saraf, East Africa emergency director at the International Rescue Committee (IRC), said the consequences of the deal's collapse would be far-reaching in Somalia, Ethiopia and Kenya, which are facing the Horn of Africa's worst drought in decades.
"I don't know how we will survive," Halima Hussein, a mother of five who lives in an overcrowded camp in the Somali capital Mogadishu, told Reuters.
Moscow said it would reconsider joining the grain export agreement if it saw "concrete results" on its demands, but in the meantime it was withdrawing its guarantees for the safety of navigation.
Ukrainian President Volodymyr Zelensky has opened up the possibility of resuming grain exports without Russia's involvement, suggesting that Kiev will seek Turkey's support to effectively neutralize the de facto blockade imposed by Russia last year.
"We are not afraid," spokesman Sergei Nikiforov said, quoting Zelensky. "Companies and ship owners have approached us. They said that they are ready, if Ukraine allows them to go, and Turkey still allows them to pass, that they are all ready to continue supplying grain".
Three times in the past year, Russia has agreed to extend the Black Sea agreement, despite threats to withdraw. It suspended participation after an attack on its fleet in October, leading to several days when Ukraine, Turkey and the UN maintained exports without Moscow.
Any resumption of exports without Russia's blessing would likely depend on insurance companies. Industry sources told Reuters they were considering suspending insurance coverage.
"The key question is whether Russia will mine the area, which would effectively make it impossible to provide any form of cover," said one insurance industry source.
Turkish President Recep Tayyip Erdogan, sponsor of the grain deal, said earlier yesterday that he still believes Russian President Vladimir Putin wants the deal to continue.
European Commission President Ursula von der Leyen described Russia's suspension of the deal as a "cynical move" and said the EU would continue to work hard to provide food for poor countries.
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