Russia halted a wartime grain deal with Ukraine. What does it mean for global food prices?

Russia has suspended its participation in a UN-brokered grain export deal with Ukraine, citing unmet demands. The suspension raises concerns about higher food prices globally, as Ukraine and Russia are major grain exporters.

Turkey Russia Ukraine War Grain Deal

The Black Sea Grain Initiative saw 32.8 million tonnes of food shipped out of Ukraine over the past 12 months. Credit: Sercan Ozkurnazli

Key Points
  • Russia halts a wartime grain deal between itself, Ukraine and Türkiye, angering the United Nations.
  • UN Secretary-General Antonio Guterres called the move "a blow to people in need everywhere".
  • The interruption in grain exports from Ukraine and Russia could drive up food prices worldwide.
Russia has halted participation in the year-old UN-brokered deal that lets Ukraine export grain through the Black Sea, spreading fear in poorer countries that price rises will put food out of reach.

Hours earlier, a blast knocked out Russia's bridge to Crimea in what Moscow called a strike by Ukrainian sea drones, killing two people in what Moscow cast as a terrorist attack on the road bridge, a major artery for Russian troops fighting in Ukraine.

Why did Russia exit the deal?

The Kremlin said there was no link between the attack and its decision to suspend the grain deal, over what it called a failure to meet its demands to implement a parallel agreement easing rules for its own food and fertiliser exports.

"Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated," Kremlin spokesman Dmitry Peskov told reporters on a conference call.
UN Secretary-General Antonio Guterres signalled that Russia's withdrawal meant that the related pact to facilitate Russia's grain and fertiliser exports was also terminated.

"Today's decision by the Russian Federation will strike a blow to people in need everywhere," he told reporters.
Moscow said it would consider re-joining the grain deal if it saw "concrete results" on its demands but that its guarantees for the safety of navigation would meanwhile be revoked.

In Washington, the White House said Russia's suspension of the pact "will worsen food security and harm millions".

US Secretary of State Antony Blinken called it unconscionable.
A grain export worker loading grains into a ship.
The Black Sea grain deal allowed grain to flow 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. Credit: AP

How will Russia's move impact global food prices?

Ukraine and Russia are some of the world's biggest exporters of grain and other foodstuffs and any interruption could drive up food prices across the globe.

Shashwat Saraf, the emergency director in East Africa for the International Rescue Committee (IRC), said the impacts would be far-reaching in Somalia, Ethiopia and Kenya, which have been facing the Horn of Africa's worst drought in decades.

"I don't know how we will survive," said Halima Hussein, a mother of five children living in a crowded camp in Somalia's capital Mogadishu for people displaced by years of failed rains and violence.
Ukraine's President Volodymyr Zelenskyy raised the prospect of resuming grain exports without Russia's participation, suggesting Kyiv would seek Türkiye's support to effectively negate the Russian de facto blockade imposed last year.

"We are not afraid," spokesperson Serhiy Nykyforov quoted Zelenskyy as saying.

"We were approached by companies, shipowners. They said that they are ready, if Ukraine lets them go, and Türkiye continues to let them through, then everyone is ready to continue supplying grain."
The grain deal was hailed as preventing a global food emergency when it was brokered by the United Nations and Türkiye last year.

Global commodity food prices rose on Monday, though the increase was limited, suggesting traders did not yet anticipate a severe supply crisis.

European Commission President Ursula von der Leyen said the EU would continue to try to secure food for poor countries.

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3 min read
Published 18 July 2023 7:15am
Updated 18 July 2023 11:49am
Source: Reuters


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