Hours ago, the Ukrainian Ministry of Agriculture announced that its grain exports would drop by half in the first days of July, the first month of the new season that runs until June 2024; As it amounted to only 34 thousand tons, half the amount during the same period of 2022.
Ukrainian officials have said that Russia is effectively blocking grain shipments through Black Sea ports, and that Kiev should be prepared to export grain almost exclusively through Danube ports.
Half of Ukraine’s agricultural exports come out of the Black Sea ports, according to an agreement brokered by the United Nations and Turkey between Moscow and Kiev in July 2022, in which Russia allows Ukraine to use these ports during the war for export, while a quarter of exports pass through the Danube ports and another quarter through Ukraine’s western borders.
However, if Moscow carries out its threat not to renew the agreement, Kiev is looking to increase exports across the Danube River, but this requires deepening the Bicester Canal in the river.
Moscow justifies its threat by signing the agreement on the basis of allowing Russia to also export its agricultural products, especially fertilizers, but this clause has not been implemented by the European Union.
What if the agreement is not renewed?
Professor of Water and Land at Cairo University and strategic expert at the General Assembly of the Food Organization of the United Nations “FAO”, Nader Noureddine, explains to “Sky News Arabia” the reasons for the decline in exports and its repercussions on global food security and food prices:
• The grain export agreement between Ukraine and Russia set certain quotas for each country, and did not open exports as wide as before; Where Russia stipulated that Ukraine’s grain export would not be at all as a pressure card on the international community to respond to its demands to allow it to export fertilizers and lift sanctions against it.
• The Chicago Grain Exchange estimated what can be exported of wheat to Ukraine at 10 million tons, and from Russia at 50 million tons, but the agreement provided for giving Ukraine a larger share than Russia.
• Ukraine’s export halved in wheat, corn, oats, barley and rice; This may raise global food prices.
• On July 18, the grain agreement will expire, and if it is not renewed, prices will rise sharply; Because Russia and Ukraine produce 34% of the world’s grain exports, that is, a third.
• Contributed to raising prices before, increasing the demand for grain imports; Because countries in Africa depend to double their grain production on Russian fertilizers, which currently impose restrictions on their export; This led to a decline in grain productivity in those countries by 30-50%. This means that it is forced to enter the global stock exchange to buy grain to make up the difference.
• This crisis will benefit other grain-producing and exporting countries, such as the United States, Canada, Australia, Argentina and France at the expense of importing countries, especially the poor.
Russian threat and proposed sanctions relief
The Kremlin announced Monday that Russia is pessimistic about the prospect of renewing the grain deal; Because no progress has been made in the implementation of Russian exports.
In an indication of the possibility of showing flexibility on the part of the European Union in easing sanctions to push Moscow to renew the agreement, the Financial Times reported, on Monday, that the Union is studying a proposal for the Russian Agricultural Bank to establish a subsidiary that would allow it to return to contact with the global financial network “Swift”, which Sanctions imposed on Russia prevented its banks from communicating with it after the outbreak of the war in Ukraine in 2022.
The Russian bank did not respond to a request for comment on the Financial Times report on the existence of talks with the union in this regard.
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