Russia and Ukraine Agree to Resume Grain Exports
The Russia-Ukraine war has damaged critical infrastructure for grain exports, forcing both countries to agree to resume grain exports. Come take a look at our article to learn more.
The war between Russia and Ukraine has disrupted transport and destroyed infrastructure critical for exporting grain. In Ukraine, approximately 22 million tonnes of grain (wheat, maize, sunflower seed, and other grains) were stored in silos for export.
The grain deal between Ukraine and Russia sought to relieve the situation. On July 22, the two nations signed an agreement in which Russia agreed not to attack grain ships in the Black Sea. Regrettably, the Russian military soon fired a missile at the Ukrainian port of Oddessa, a vital grain facility.
The attack served as a reminder that there is still risk in operating in the area. Traders can lose products, shippers may lose vessels, employees can be in danger, and insurers may not be willing to cover any operations in the area.
Ukraine and Global Food Supplies
Ukraine is a significant source of global grain and oilseed supplies. Ukraine was responsible for 4 million tons of grains (wheat, maize, and barley) per month and 430,000 tons of sunflower oil in global exports in 2021. The blockage from the war is one of the reasons global prices rose and contributed to higher inflation. Despite Ukraine's efforts to use alternative routes, like rail and Barge to Romania or through Poland, the shipments were still only a third of normal levels. The alternative routes were inadequate and more expensive for Ukrainian suppliers.
Ukraine is a key supplier to the Middle East and African regions, and food price increases are causing problems in low-income countries. For example, Yemen imports a million tonnes of wheat from Ukraine; after the blockade, flour and bread prices rose by 42 and 25 percent, respectively, while Syria, another wheat importer, saw its bread prices double.
The Grain Corridor
The agreement establishes a corridor from three Ukrainian ports, including Odesa, to the Istanbul strait. The corridor's size is 310 nautical miles long and three nautical miles wide. Ukrainian vessels will guide ships through mines that Ukrainian forces laid, to and from the ports. At the request of Russia, Turkey will inspect the cargo for weapons. The agreement also allows Russia to export grain and fertilizer through the Black Sea. The deal will last for 120 days, with an option to extend.
Thanks to the deal, grain exports increased from 3 million tonnes in July to 4 million in August. According to the Ukrainian Agricultural Ministry, 33 cargo ships carrying around 719,549 tonnes of foodstuff have left the country after signing the deal. Another 18 are loading and waiting for clearance to leave the ports.
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