LONDON (AP) — The deals the United Nations and Turkey brokered with Ukraine and Russia to allow food and fertilizer to flow from countries at war to parts of the world where millions are suffering hunger have allayed concerns about global food security. But they face growing risks.
Moscow has stepped up its rhetoric, saying it could not extend the deal which expires on Monday unless its demands are met, including ensuring that its own agricultural shipments do not face obstacles.
The Black Sea Grain Initiative has enabled the export of 32.8 million metric tons (36.2 million tons) of food from Ukraine since last August, more than half of which to developing countries, including those receiving assistance from the World Food Programme.
If the deal isn’t renewed, “you’ll definitely have another spike” in food prices, said Maximo Torero, chief economist at the UN’s Food and Agriculture Organization. “How long this spike lasts will depend a lot on how the markets react.”
The good news is that some analysts don’t expect the cost of global food products like wheat to rise on a sustained basis, because there’s enough grain in the world to go around. But many countries are already grappling with high local food prices, which are helping to fuel hunger.
Here’s a look at the crucial deal and what it means for the world:
WHAT IS THE GRAIN DEAL?
Ukraine and Russia signed separate agreements in August 2022 that reopened three of Ukraine’s Black Sea ports, which were blocked for months after Moscow’s invasion. They also facilitated the circulation of Russian products despite Western sanctions.
Both countries are major global suppliers of wheat, barley, sunflower oil and other affordable food products that Africa, the Middle East and parts of Asia depend on. Ukraine is also a huge exporter of maize and Russia of fertilizers, other essential elements of the food chain.
The halt in shipments from Ukraine, dubbed the “breadbasket of the world”, has exacerbated a global food crisis and is driving up grain prices around the world.
“A major agricultural producer is waging war on another major agricultural producer, which affects the price of food and fertilizer for millions of people around the world,” said Caitlin Welsh, director of the global food and water security program at the Center for Strategic and International Studies.
The agreement guarantees that ships will not be attacked when entering and leaving Ukrainian ports. The ships are vetted by Russian, Ukrainian, UN and Turkish officials to ensure they only carry food and not weapons that could help either side.
Intended to be extended every four months, the deal was hailed as a beacon of hope in the midst of war and has been renewed three times – the last two for just two months as Russia insisted its exports were blocked.
WHAT HAS HE ACCOMPLISHED?
The deal helped drive down global prices of food items like wheat that hit record highs after Russia invaded Ukraine.
As the war caused food and energy prices to soar around the world, millions of people were pushed into poverty and faced greater food insecurity in already vulnerable countries.
Once the grain deal was done, the World Food Program picked up its second-largest supplier, allowing 725,000 metric tons (800,000 tonnes) of humanitarian food aid to leave Ukraine and reach countries on the brink of famine, especially in Ethiopia, Afghanistan and Yemen.
“It is quite a unique phenomenon that two warring parties and two intermediaries agree to establish this type of corridor to get humanitarian goods – which is apparently what it is – to the markets that need them most” said John Stawpert, senior director of environment and trade for the International Chamber of Shipping, which represents 80% of the world’s commercial fleet.
WHAT THREATENS THE BUSINESS?
Russian President Vladimir Putin has said Moscow will not extend the grain deal unless the West fulfills “the promises made to us”.
“We have repeatedly shown goodwill to extend this agreement,” Putin told reporters on Thursday. “It’s enough.”
He said he wanted an end to sanctions on the Russian Agricultural Bank and restrictions on shipping and insurance that he said have hampered agricultural exports.
Some companies have been reluctant to do business with Russia because of the sanctions, but Western allies have assured food and fertilizers to be exempt.
“It’s not uncommon in situations like this for countries to use every lever at their disposal to try to get sanctions regimes changed,” said Simon Evenett, professor of international trade and economic development. at the University of St. Gallen in Switzerland.
UN Secretary-General Antonio Guterres this week sent a letter to Putin offering to facilitate transactions through the agricultural bank, a spokesman said.
Russia’s “claim that its agricultural sector is suffering is contradicted by the reality” that production and exports have been rising since before the war, Welsh said.
Russia exported a record 45.5 million metric tons of wheat in the 2022-2023 marketing year, with another all-time high of 47.5 million metric tons expected in 2023-2024, according to estimates from the US Department of Agriculture.
WHO IS AFFECTED?
The International Rescue Committee calls the grain deal “a lifeline for the 79 countries and 349 million people on the front lines of food insecurity”.
East Africa, for example, has experienced both severe droughts and floods, destroying crops for 2.2 million people who depend on agriculture for their livelihoods, said regional director Shashwat Saraf. of group emergencies for East Africa.
“It is essential that the agreement be extended for a longer term to create some predictability and stability,” he said in a statement.
Countries that depend on imported food, from Lebanon to Egypt, would have to find suppliers outside the Black Sea region, which would increase costs because they are further afield, analysts say.
This would compound costs for countries that have also seen their currencies weaken and their debt levels rise because they pay for food shipments in dollars.
For low-income countries and people, food “will be less affordable” if the grains deal is not renewed, World Food Program chief economist Arif Husain told reporters.
WHAT ABOUT UKRAINE?
Ukraine’s economy depends on agriculture and before the war 75% of its grain exports passed through the Black Sea.
It can send its food by land or river across Europe, so as not to be cut off from world markets if the grain deal ends, but these routes have less capacity than sea shipments and have sparked the anger of farmers in neighboring countries.
Nevertheless, the Ukrainian Grain Association wants to send more grain via the Danube to neighboring Romanian Black Sea ports, saying it is possible to double monthly exports along this route to 4 million metric tons.
Wheat shipments from Ukraine have fallen more than 40% from their pre-war average, with the USDA expecting 10.5 million metric tons to be exported during the year coming.
Ukraine has accused Russia of slowing ship inspections and preventing new vessels from joining the initiative, which has led to its food exports falling to a peak of 4.2 million metric tons. in October to 2 million in June.
WHAT ELSE AFFECTS THE FOOD SUPPLY?
The fallout from the pandemic, economic crises, drought and other climatic factors are affecting people’s ability to eat their fill.
There are 45 countries in need of food aid, the Food and Agriculture Organization of the United Nations said in a July report. High domestic food prices are fueling hunger in most of these countries, including Haiti, Ukraine, Venezuela, and several countries in Africa and Asia.
While drought may also be a problem for major grain suppliers, analysts see other countries producing enough grain to offset Ukraine’s losses.
In addition to huge exports from Russia, Europe and Argentina are increasing their wheat shipments, while Brazil had a record year for corn.
“These markets are adapting and producers are adapting – and wheat and corn markets have adapted very, very quickly,” said Peter Meyer, head of grain analytics at S&P Global Commodity Insights.
AP journalist Edith M. Lederer at the United Nations contributed.
See AP’s full coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine and the food crisis at https://apnews.com/hub/food-crisis.