Russia’s decision to withdraw from a deal facilitating the export of Ukrainian grain has escalated concerns about global food supply.
Why it matters: On July 17, Russia backed out from an agreement put in place since July 2022, aiding the export of Ukraine’s grain, a significant contributor to global food supply.
* The Kenyan government deemed it as a “stab in the back” for drought-stricken nations, and U.N. Secretary General Antonio Guterres stated it would harm people in need globally.
* This move resulted in fluctuations in grain prices, with Chicago wheat futures briefly spiking 3% before dropping and then jumping 9% following an announcement by Russia on potential military cargo on ships bound for Ukrainian ports.
Background: The Ukraine grain crisis started with Russia’s invasion in March 2022, leading to a global food security crisis due to the naval blockade imposed on Ukrainian ports and stranding grain exports.
* Ukraine was a major exporter of grain and sunflower oil, supplying to hundreds of millions in low-resource countries.
* In July 2022, the Black Sea Grain Initiative was negotiated by Turkey and the U.N., which allowed cargo ships to safely exit Ukrainian ports, leading to the shipment of over 725,000 tons of wheat to Afghanistan, Yemen, and east Africa.
Impact outlook: The deal’s suspension, coupled with increasing export costs, reduces storage capacity and ongoing war conditions, has resulted in a drop in Ukrainian production by 35-40%.
* The global food system was already strained due to regional conflicts and climate crisis, and this development further intensifies the situation.
* Of major concern is the Horn of Africa, suffering from the worst drought in 40 years, which led to around 40,000 deaths in Somalia last year due to malnutrition.
Expert reactions: Joseph Glauber, senior research fellow at the International Food Policy Research Institute, and other international aid charities emphasize this setback should be viewed in the wider context of already poor access to food for needy countries.
* Ukrainian President Volodymyr Zelenskyy suggested the arrangement can continue even without Russian participation, but security guarantees for grain-carrying ships are unclear.
* Glauber warns that while last year was helped by bumper harvests in Canada, Australia, India and Brazil, stocks worldwide are still not replenishing at significant levels to absorb another big exporting region experiencing a serious drought.
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