Ukraine’s agreement with Russia to allow grain exports over the Black Sea has been terminated by Russia without its consent.
As a result of the agreement, Ukraine was able to supply more than 32 million tonnes of food items to global markets. It is now necessary for it to investigate other potential routes for its exports.
The grain pact between Ukraine and Russia allowed for the safe passage of cargo ships in a corridor in the Black Sea that measured 310 nautical miles in length and three nautical miles in width. This corridor connected the Ukrainian ports of Odesa, Chornomorsk, and Yuzhny/Pivdennyi.
In July of 2022, Turkey and the United Nations worked together to broker the agreement.
Additionally, it enabled the Russian navy to conduct armament searches on ships passing through the Bosphorus Strait, which is located near the mouth of the Black Sea.
In addition to sunflowers, maize, wheat, and barley, Ukraine is one of world’s exporters of barley.
Because of Russia’s blockade, around 20 million metric tons of grain became stranded in the country’s Black Sea ports. Because of this, global food costs shot through the roof.
It also posed a risk of causing food shortages in a number of nations in Africa and the Middle East, particularly those who were largely reliant on grain imports from Ukraine.
According to Food &nd Agriculture Organization of the United Nations (FAO), global food prices dropped by around 20 per cent after the agreement was struck and grain supplies were resumed.
When the UN was mediating the arrangement, it assured Russia that it would assist the country in increasing the quantity of grain and fertilizers that it exported.
Russia claims that the sanctions that Western countries have placed have prevented shipping companies, international banks, and insurers from doing business with its producers. This is despite the fact that Western countries have not imposed any penalties on agricultural items produced in Russia.
Russia submitted a request to have its state-owned agricultural bank, Rosselkhozbank, linked to the Swift rapid payment system (which all Russian banks were banned from using as of June 2022).
The United Nations (UN) proposed that Russia establish a subsidiary of the bank, which would be permitted to utilize Swift. Russia, however, declined this option on the grounds that it would take too much time.
Other potential plans, such as handling payments for fertilizer and food through the United States bank JPMorgan Chase or the African Export-Import Bank, were also unsuccessful.
Russia has indicated that it will return to the pact if all of its criteria are satisfied.
Recep Tayyip Erdogan, President of Turkey, has stated that when he meets with Vladimir Putin, the President of Russia, at the beginning of August, he will attempt to convince Putin to rejoin it.
The European Union already has a strategy in place to distribute grain produced in Ukraine that cannot be transported via the Black Sea.
It is stated that it can be moved across the border between Poland and Ukraine and taken to ports on the Baltic Sea, or it can be delivered between Poland and Romania by rail and barge to the port of Constanta in Romania.
Since the beginning of the conflict, around ten per cent of Ukraine’s total grain exports have been transported across the country’s land border with Poland. If more grain is exported through this method, however, there is a good chance that there will be bottlenecks.
Due to the fact that the gauge of Ukraine’s railways is different from that of the rest of Europe’s, each and every trainload of grain needs to be switched from one set of wagons to another when it reaches the border.
Additionally, the rail network in Eastern Europe does not have the capability to convey even the relatively low volumes of grain that Ukraine has been exporting by land up to this point to the Baltic ports or to Constanta. This is because the capacity of this network is limited.
Instead of being shipped to other countries, a significant quantity of grain has been kept in Poland, Hungary, Romania, Bulgaria, and Slovakia. These countries include Poland, Hungary, Romania, and Bulgaria. Their marketplaces have been saturated, which has resulted in precipitous drop in price of local food.
The EU has decided to place restrictions on the export of food from Ukraine to these countries until September 15 in order to protect the earnings of local farmers.
According to the United Nations, among all of the food products that Ukraine has exported over the course of the past year as part of the grain deal:
47% of it has been invested in “high-income countries,” which includes countries like Spain, Italy, and the Netherlands.
26% of it went to “upper-middle income countries” like Turkey and China.
According to Russia, one of the reasons it decided to walk out of the contract was because Ukraine was unable to increase the amount of grain it sent to nations with lower incomes.
However, according to the United Nations, as part of the agreement over the grain, Ukraine has already sent 625,000 tonnes of food as a form of humanitarian assistance to the countries of Afghanistan, Ethiopia, Kenya, Somalia, Sudan, and Yemen.
More than fifty per cent of the grain that the World Food Programme of the United Nations purchased in 2022 originated from Ukraine.