Russia has pulled out of a deal to allow millions of tons of Ukrainian grain to be exported. Ukraine is one of the world’s major grain producers so what does this mean for the world?What happened with the grain deal?
In a deal brokered by Turkey, Russia and Ukraine had agreed on a deal that saw Ukraine export its grain via the Black Sea. The agreement allowed ships to travel without being attacked on specific routes from Ukraine to the Bosphorus.
On the weekend, Russia said it would suspend participation because Ukraine and the UK had allegedly attacked the Russian Black Sea fleet with drones. Moscow said the attacks affected civilian ships in the grain corridors as well as a minesweeping ship.
Both Ukraine and the UK have dismissed the allegations and say that Russia staged the attack. Despite Moscow withdrawing from the deal, grain vessels are to continue to use the corridors. Whether Russia will let them pass, is not yet clear.
What role does Ukraine play in global food security?
Ukraine is one of the world’s major grain producers. The country mainly grows and exports wheat, corn and barley. According to the European Commission, Ukraine accounts for 10% of the world wheat market, 15% of the corn market, and 13% of the barley market. With more than 50% of world trade, it is also the main player on the sunflower oil market.
Ranked in first and second place respectively, corn and wheat are also the world’s most widely grown cereals. A major exporter like Ukraine dropping out can have serious consequences for global food security.
Who are the largest producers of wheat, corn and barley?
According to statistics by the US Department of Agriculture, Ukraine was the world’s seventh-largest producer of wheat in 2021/22 with 33 million tons. Only Australia, the United States, Russia, India and China produced more — with the EU actually ranked first place if you count the union’s member states together.
Ukraine ranks sixth on the corn market. From mid-2021 to mid-2022, only Argentina, the EU, Brazil, China and especially the US grew more corn. The most barley is grown in the EU, followed by Australia, Russia and Ukraine.
Who mainly imports these grains?
The largest wheat importers in 2020, according to the Observatory of Economic Complexity (OEC), a visualization site for international trade data, were Egypt ($5.2 billion), China ($3.47 billion), Turkey ($2.44 billion), Nigeria ($2.15 billion) and Indonesia ($2.08 billion). Egypt was also the biggest buyer of wheat specifically from Ukraine, statistics show.
When it comes to corn, the most recent OEC figures available were from 2018, with top importers Mexico ($3.14 billion), Japan ($2.94 billion), South Korea ($1.92 billion), Vietnam ($1.85 billion), and Spain ($1.72 billion). Major buyers of corn from Ukraine included the Netherlands, Spain, and China.
Leading barley-importing countries in 2020 included China ($1.77 billion), Saudi Arabia ($1.38 billion), the Netherlands ($512 million), Belgium ($369 million), and Germany ($307 million). China was the largest buyer of Ukrainian barley.
How does Russia’s war in Ukraine affect the global grain market?
Grain deliveries were initially suspended as a result of Russia’s blockade of Ukrainian ports, fueling fears of shortages worldwide and price hikes. By mid-May, export prices for wheat and corn had skyrocketed to unprecedented heights. That has had far-reaching consequences, particularly in Africa, the Middle East and Asia, according to the UN, — countries where the coronavirus pandemic and its fallout had already exacerbated the food situation.
In the meantime, pressure on the grain market has lessened somewhat. The UN’s Food and Agriculture Organization (FAO) estimates that, despite the Ukraine war, the 2022 global grain harvest will likely be only marginally smaller than in 2021. It remains to be seen whether Russia’s suspension of the grain export deal will affect the global market.
What did the agreement between Ukraine and Russia mean for exports?
As part of the agreement reached in Turkey, the 20-25 million tons of grain currently blocked in Ukraine could finally be exported. Exports of Russian grain and fertilizer — restricted as a result of the sanctions against Russia — were also facilitated.
The agreement also provided for secure corridors in the Black Sea between Ukraine and the Bosporus; ships in the area and ports involved would not be attacked. A control center in Istanbul, headed by the United Nations and staffed by representatives from Russia, Ukraine and Turkey was to monitor the grain exports.
The agreement between Ukraine and Russia was important for global food security. Grain remains urgently needed on the world market, especially in Asia and Africa. In the wake of Russia’s war of aggression in Ukraine, the United Nations had warned of the biggest food crisis in decades.
This article has been translated from written in German. It was originally published on July 27 and updated on November 1 to reflect Russia’s withdrawal from the grain deal.
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