- The Black Sea grain agreement will expire on July 17.
- Russia has refused to renew the agreement, citing unfulfilled promises and challenges in its own agricultural exports as a result of Western sanctions.
Black Sea Grain Initiative
- The Initiative resulted in the lifting of Russia’s naval blockade and the reopening of three vital Ukrainian ports.
- The United Nations and Turkey mediated the agreement in July 2022, allowing cargo ships to pass between Ukrainian ports while being inspected to guarantee they were not transporting weaponry.
- The agreement has been renewed twice, but it will expire on July 17, 2023.
- The agreement established protocols for properly exporting grain from specific ports in order to address the 2022 food crisis.
- It provides a safe maritime humanitarian corridor for Ukrainian exports (especially food grains) from three of its important ports in the Black Sea, namely Chornomorsk, Odesa, and Yuzhny/Pivdennyi.
The results of this transaction
- Since the agreement was reached, around 9.8 million tonnes of grains have been shipped.
- People who had been stockpiling grain in the anticipation of selling it for a large profit due to the supply shortage were now forced to sell.
- The project has also been acknowledged for making a significant contribution to the worldwide cost of living challenge.
Why was this transaction initiated?
- Ukraine’s Position: Ukraine is a major exporter of foodgrains such as wheat and maize, and also contributes to the United Nations’ food aid programmes.
- The Russian Invasion’s Impact: Russia’s invasion and blockade of Ukrainian ports has sparked fears about global food security and rising costs.
Russia’s Opposition and Reasons for Unmet pledges:
- Russia claims that the deal’s pledges have not been fulfilled, impacting its own agricultural exports and fertilisers as a result of Western sanctions.
- Obstacles to Agricultural Exports: Despite the absence of direct limitations on agricultural products, Russia confronts difficulties with payment platforms, insurance, shipping, and logistics.
- irritation and Goodwill: Russian President expressed irritation and indicated that Russia has demonstrated goodwill by extending the agreement, but that enough is enough.
- Grain Destinations Shift: Russia says that the agreement was intended to ensure global food security, but Ukraine has primarily shipped to high- and middle-income countries, while the UN reports that food prices have cooled, helping poorer countries.
Grain Exports and Production Affected
- Russian Wheat Export Dominance: Russia continues to be the world’s leading wheat exporter, with a primary focus on the Middle East, North Africa, and Central Asia.
- Ukraine’s Grain Shipments: Grain shipments in Ukraine are expected to more than half, with production at an 11-year low.
- Shifting Markets: Due to the ease of shipment, Ukraine’s grain markets have changed from Asia and North Africa to Europe, resulting in a glut of Ukrainian grain and protests from farmers in Eastern European countries.
Source: https://www.un.org/en/black-sea-grain-initiative