London – A deal allowing the United Nations and Turkey to mediate with Ukraine and Russia to bring food and fertilizer from conflict countries to regions of the world where millions are starving will ease concerns about global food security. rice field.but they face increasing risks.
Moscow has stepped up its rhetoric that it may not be able to extend the deal, which expires on Monday, unless demands are met, such as ensuring that its agricultural shipments do not face obstacles.
The Black Sea Grains Initiative will provide 32.8 million tonnes (36.2 million tonnes) of Food exported from Ukraine Since last August, more than half have gone to developing countries, including those receiving relief from the World Food Programme.
If the contract is not renewed, A new surge in food prices is certain.”said Maximo Torero, chief economist at the United Nations Food and Agriculture Organization. “Whether or not that surge continues will depend heavily on how the market reacts.”
The good news is that there is plenty of grain in the world, so some analysts don’t expect the prices of global commodities such as wheat to rise permanently.However, many countries are already Struggling with soaring local food priceshelps fuel hunger.
Let’s take a look at this important agreement and what it means for the world.
What is grain trading?
Ukraine and Russia signed a separate contract In August 2022, three Ukrainian Black Sea ports reopened after months of blockade following Moscow’s invasion. It also facilitated the movement of Russian agricultural products amid Western sanctions.
both countries A major global supplier of wheatbarley, sunflower oil Other affordable groceries that parts of Africa, the Middle East and Asia rely on. Ukraine is also a huge exporter of maize. Fertilizer Russia — other important parts of the food chain.
Shipments from Ukraine, dubbed the “breadbasket of the world,” were disrupted, worsening the global situation. global food crisis Grain prices soared around the world.
“One big farmer is waging war on another, which is affecting food and fertilizer prices for millions of people around the world,” said the Center for Strategy’s World Food.・Caitlin Welsh, Director of the Water Security Program, said: and international studies.
This transaction guarantees: ships are not attacked Entry and exit from Ukrainian ports. The vessel is inspected by Russian, Ukrainian, UN and Turkish officials and is confirmed to be carrying only food and no weapons useful to either side.
The agreement, which was to be extended every four months, was hailed as a beacon of hope in the midst of war. Updated 3 times — The last two were only two months old as Russia claimed exports were on hold.
what did it achieve?
The pact has helped bring down global prices for food items such as: Wheat hits all-time high After Russia invaded Ukraine.
If the grain trade goes through, the World Food Program will regain its second largest supplier, allowing 725,000 tonnes (800,000 tonnes) of humanitarian food aid to leave Ukraine and reach countries facing hunger. became. Ethiopia,Afghanistan, Yemen.
“It is a rather unique phenomenon that two disputing parties and two intermediaries agree to establish a corridor of this kind to bring humanitarian goods (which ostensibly are) to markets where they are most needed. ‘ said John Staupert, the company’s senior manager. Contribute to the environment and trade of the International Chamber of Shipping, which represents his 80% of the world’s merchant fleet.
What threatens trading?
Russian President Vladimir Putin has said Moscow will not extend the grain deal unless the West fulfills “promises made to us”.
“We have shown goodwill many times to extend this agreement. Enough is enough,” Putin told reporters on Thursday.
He lifted sanctions against the Agricultural Bank of Russia, Shipping and Insurance Limits Agricultural exports are being hampered, he claims.
Some companies are wary of doing business with Russia because of sanctions, Western allies have pledged Food and fertilizer are exempt.
“In such circumstances, it is not uncommon for countries to use whatever means possible to change sanctions regimes,” said Simon Evenet, a professor of international trade and economic development at the University of St. Gallen in Switzerland. said.
UN Secretary-General António Guterres sent a letter to President Putin this week Offers to facilitate trading A spokesperson said through the Agricultural Bank:
Mr Wales said Russia’s production and exports were higher than before the war, and “claims that the agricultural sector is suffering are countered by reality”.
The U.S. Department of Agriculture estimates that Russia will export a record 45.5 million tonnes of wheat in the 2022-2023 trade year, and is expected to grow to a record 47.5 million tonnes in 2023-2024. there is
Who is Affected?
The International Rescue Commission has called the Crops Pact “a lifeline on the planet for 79 countries and 349 million people.” The front lines of food insecurity. “
For example, in East Africa we see both. severe drought Shashwat Saraf, the group’s regional emergency director for East Africa, said the floods had devastated the crops of 2.2 million people who depend on agriculture for their livelihoods.
“It is important to extend contracts for longer periods to create some predictability and stability,” he said in a statement.
Countries that rely on imported food, from Lebanon to Egypt, will have to find suppliers outside the Black Sea region, which will drive up costs, analysts say.
That would make the costs even worse for similarly affected countries. currency depreciation And as we pay for food shipments in dollars, debt levels increase.
Arif Hussein, chief economist at the World Food Program, told reporters that food would be “unaffordable” for low-income countries and their populations if the grain deal was not renewed.
what about ukraine?
The Ukrainian economy is dependent on agriculture, and before the war 75% of grain exports passed through the Black Sea.
Food can be sent by land or river through Europe, so it will not be cut off from the world market even when the Grain Agreement ends, but the transport capacity of these routes is lower than sea transport, fueled the anger of farmers in neighboring countries.
Nevertheless, the Ukrainian Grain Association hopes: Send more grain through the Danube Exports to neighboring Romanian Black Sea ports say it is possible to double monthly exports on this route to 4 million tonnes.
Ukrainian wheat shipments are down more than 40% from pre-war averages, and the USDA expects 10.5 million tonnes to be exported next year.
Ukraine blames Russia delay the inspection of the vessel and prevent new participants from joining this initiative, decrease in food exports It rose from a high of 4.2 million tons in October to 2 million tons in June.
What else will affect the food supply?
Aftermath of pandemics, economic crises, droughts, etc. climate factor It affects people’s ability to eat enough food.
The Food and Agriculture Organization said in a July report that there were 45 countries in need of food aid. High domestic food prices are causing hunger in most of these countries, including Haiti, Ukraine, Venezuela, and some in Africa and Asia.
The drought could also pose a problem for major grain suppliers, but analysts believe other countries are also producing enough grain to make up for losses from Ukraine.
In addition to Russia’s huge exports, Europe and Argentina have increased their wheat shipments, and Brazil has had a great year for maize.
“These markets will adapt, and so will the producers. .
Associated Press UN correspondent Edith M. Lederer contributed.
Copyright 2023 Associated Press. all rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
https://www.local10.com/business/2023/07/15/why-allowing-ukraine-to-ship-grain-during-russias-war-matters-to-the-world/ Why it was important for the world to allow grain shipments to Ukraine during the Russian war