The Russian-Ukrainian agreement is about to expire. What is the situation at the Ukrainian grain port？ Listen to Odessa farmers talk about grain export.
[Global Times special correspondent Wu Duoke Enron Global Times reporter Li Xiaotong] Seven ships carrying food left the Ukrainian port on the 23rd local time and sailed for other countries in Asia and Europe. After the outbreak of the Russian-Ukrainian conflict, more than 20 million tons of Ukrainian grain were stranded in Odessa Port, which once caused the global food price to soar to a record level. Thanks to the "Black Sea Grain Export Agreement", official Ukrainian data show that the country’s agricultural exports have now recovered to the level close to that before the conflict between Russia and Ukraine. However, the agreement is about to expire on November 19. In the context of the intensified conflict between Russia and Ukraine, there is suspense about whether the agreement can be renewed after its expiration. At present, what’s the situation in Ukraine’s grain transportation ports? Can the agreement be renewed? What impact will it have on global food prices? The Global Times reporter investigated this.
"A little breath"
Despite the reduction in grain production, Gourier, a grain farmer living in Odessa, a major Ukrainian grain export port city, benefited from the "Black Sea Grain Export Agreement" reached in July this year, and told the Global Times reporter that the agreement made him breathe a little. The family grain export company he runs has exported about 50 tons of grain in the last two months to solve the problem of grain storage and cash flow for several months. He said that in Odessa and other traditional Ukrainian grain export ports, ships carrying grain go to Ethiopia, Kenya and other countries almost every week.
Reuters said that since the conflict between Russia and Ukraine, Ukrainian ports have suspended the export of grain. After many mediations, Russia, Ukraine, Turkey and the United Nations reached a 120-day grain export agreement on July 22nd this year. The agreement allows Ukrainian grain to be exported through the Black Sea port, ensuring that Russian grain and fertilizer are normally exported without Western sanctions.
Port Odessa, Ukraine. (vision china)Gourier told reporters that the situation in Odessa has eased slightly in the last two days. Just two weeks ago, explosions could still be heard in the area. At present, the Ukrainian army is still strictly guarding against the sea, and the security control from the port to the urban area is very strict. Odessa is relatively calm during the day, but there are still few pedestrians on the road. Locals will intermittently store basic daily necessities, such as filling up their cars.
"The situation is still not good, especially the recent war in southern Ukraine, which not only reflects the strong counterattack of the Ukrainian army, but also makes us worry that the Russian army will increase its military counterattack." Gourier also mentioned that under the attack of Russian troops, there was a problem in Ukrainian power supply, which brought trouble to future grain storage and transportation. However, Gourier and the people around it believe that Odessa, as an important international port city, will not be easily attacked by Russian troops. In addition, there are many descendants of Russian residents there, and more people hope to call a truce as soon as possible.
Regarding the export of grain trade next year, Gourier said that no one in the same trade dared to make a bold prediction, only to harvest mature grain as soon as possible and transport it out through all safe channels. Regarding the price and profit, he believes that the international food price can’t fall back to the pre-conflict level in the short term, but in fact, Ukrainian small grain merchants never expect to make huge profits. More profit margins have always been controlled by international grain merchants, and they and their peers only want to live a stable life.
Ukraine benefits and Russia is blocked?
According to the information recently released by the Ukrainian Ministry of Agriculture, during the one and a half months from September to mid-October, Ukraine exported 10.4 million tons of cereals, beans, vegetable crops and by-products. This is 1 million tons higher than the export volume in the whole summer of 2022. In the seven and a half months since the conflict between Russia and Ukraine began, 23 million tons of agricultural products have been shipped out of Ukraine.
Has Russia benefited from the grain export agreement? Russia’s export of grain, grain and fertilizer has been restricted, and the export speed has slowed down. Statistics show that in 2021, 54 countries bought Russian wheat, while this year only 24 countries.
Turkish media reported that Vahit Kirisci, Turkey’s Minister of Agriculture and Forestry, confirmed on October 17th that 63% of the 7.5 million tons of agricultural products exported from the Black Sea port were shipped to Europe, 24% to Asia and 13% to Africa. Kirisci mentioned that only 5.6% of the food exported by Ukraine under the relevant food agreement was sent to poor countries.
Russia has repeatedly indicated that it may withdraw from the agreement. The Russian side has repeatedly complained that the West has not taken enough measures to facilitate the export of Russian grain and fertilizer. Russia said that the impact of western sanctions on logistics, payment, shipping and insurance prevented it from exporting grain and fertilizer, and relaxing these restrictions was a key part of the Black Sea Agreement. The US media analysis said that the Moscow authorities may oppose extending the agreement to allow Ukraine to export food beyond the end of November.
"After the Black Sea Grain Export Agreement expires in November, the renewal is not optimistic." Zhang Hong, a researcher at the Russian Institute of Eastern Europe and Central Asia of the Russian Academy of Social Sciences, said in an interview with the Global Times on the 26th that at present, China-Ukraine relations are still very tense, and the two sides have not reached an agreement on security, territory and food, and even gone further and further.
He believes that the resistance to the renewal of the agreement is mainly in Russia. When the Black Sea Grain Export Agreement was reached in July, the additional condition was to lift the export restrictions on Russian agricultural products and fertilizers. Judging from the implementation, the restrictions on Russia are only lifted verbally, and Russia still faces difficulties in selling grain and fertilizer. At the same time, Russia believes that most of the food exported by Ukraine through this agreement flows into developed countries, and only a small part flows to developing countries, which is of little help to alleviate the food problem in developing countries. In this regard, Russia asked for a list of Ukrainian food export destinations.
Zhang Hong believes that from Russia’s point of view, the grain export agreement should benefit both sides or even many parties. If only Uzbekistan benefits, then Russia is not interested in renewing the agreement. Russia shows that it will not renew its contract, and it also wants to put pressure on the West to fulfill its commitment to lift restrictions on Russia.
Consequences of non-renewal
Russia and Ukraine are both major grain exporters in the world. At least about 50 countries in the world import grain from Russia and Ukraine, and at least half of them rely on the grain import trade between Russia and Ukraine. According to the official statistics of Ukraine, this year, the production of corn and wheat in Ukraine has been reduced by 35%-40%. In 2022, Russia’s grain output is expected to reach 150 million tons and wheat output will reach 100 million tons. It is estimated that 50 million tons of grain will be exported this year.
UN Secretary-General antonio guterres and his team are working hard to extend the Black Sea Grain Export Agreement for one year. Zhang Hong believes that if the agreement cannot be renewed, it will have little impact on China and great impact on the world. The main destination of Ukraine’s grain export to Asia is China, and China and Ukraine have long-term commercial contracts. Once Ukraine cannot deliver the grain normally, it needs to fulfill its corresponding obligations. Most importantly, China’s food supply and security are fully guaranteed, and whether the agreement is renewed or not will have little interference with China’s food prices.
Zhang Hong believes that if the agreement cannot be renewed, it will threaten the food security of the whole world, especially developing countries. "Failure to renew the contract will definitely make the international food price rise sharply again, and the cost of food purchase will increase greatly, which will aggravate inflation. Developed countries have the ability to bear these consequences, and ultimately the hunger problem in developing countries, especially poor countries, will further deteriorate. "
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