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Landmark grain deal signed in Istanbul to resume Ukraine grain exports

26 July 20226 min reading

In a major breakthrough, Russia and Ukraine signed separate accords with the UN and Turkey on 22th July to reopen Ukraine's Black Sea ports to grain exports, in an effort to ease an international food crisis caused by Russia's invasion of Ukraine.

An “unprecedented agreement” on the resumption of Ukrainian grain exports via the Black Sea amid the ongoing war is “a beacon of hope” in a world that desperately needs it, UN Secretary-General António Guterres said at the signing ceremony in Istanbul, Turkey.

Russian and Ukrainian Ministers signed the Black Sea Grain Initiative, facing each other at opposite ends of the table, while the Secretary-General and Turkish President Recep Tayyip Erdoğan sat in the centre.

Turkey has been working with the UN to broker a deal for weeks, after the Russian invasion of Ukraine on 24 February, saw a major rise in prices of grains, cooking oils, fuel and fertilizer, together with major supply chain issues across the world. Much of the grain imported by developing countries comes from Ukraine, but since the invasion, the country’s Black Sea ports have been blockaded by Russia, including the crucial hub of Odesa. The U.N. says 276 million people were severely food insecure before Russia's invasion; now officials project the number to be 345 million. It is expected that the deal will bring relief to millions who have been struggling with rising food prices as a result of the war.

“Today, there is a beacon on the Black Sea,” the UN chief said. “A beacon of hope – a beacon of possibility – a beacon of relief -- in a world that needs it more than ever.” Mr. Guterres thanked President Erdogan and his government for facilitating the talks that led to the deal. He commended the Russian and Ukrainian representatives for putting aside their differences in the common interests of humanity. “The question has not been what is good for one side or the other,” he said. “The focus has been on what matters most for the people of our world. And let there be no doubt – this is an agreement for the world.”

"We are proud of being instrumental in an initiative that will play a major role in the solution of the global food crisis that has occupied the whole world for a long time," Erdogan said. “We will contribute to preventing the danger of hunger that awaits billions of people in the world.”  He noted that by the ship traffic that will start in the coming days, "we will inaugurate a new corridor from the Black Sea to many countries in the world." The president also said the agreement has been made on all processes from the departure of the ships to their safe passage as well as arrival at the port of destination.

Ukraine is among the world’s leading grain exporters, supplying more than 45 million tonnes annually to the global market, according to the UN Food and Agriculture Organization (FAO). The Russian invasion has sparked record food and fuel prices, as well as supply chain issues, with mountains of grain stocks stuck in silos.

The UN plan, which also paves the way for Russian food and fertilizer to reach global markets, will help to stabilize spiralling food prices worldwide and stave off famine, affecting millions. In addition to stabilizing global food prices, the agreement “will bring relief for developing countries on the edge of bankruptcy and the most vulnerable people on the edge of famine,” said Mr. Guterres. “Since the war started, I have been highlighting that there is no solution to the global food crisis without ensuring full global access to Ukraine’s food products and Russian food and fertilizer.”

Mr. Guterres pledged the UN’s full commitment to the agreement, and urged all sides to do the same. “This is an unprecedented agreement between two parties engaged in bloody conflict. But that conflict continues,” he said, noting that people are dying every day as the fighting rages. “The beacon of hope on the Black Sea is shining bright today, thanks to the collective efforts of so many. In these trying and turbulent times for the region and our globe, let that beacon guide the way towards easing human suffering and securing peace.”  

DETAILS OF THE GRAIN DEAL 

  • The deal specifically allows for significant volumes of commercial food exports from three key Ukrainian ports in the Black Sea – Odessa, Chernomorsk and Yuzhny.  
  • UN chief announced the establishment of a Joint Coordination Centre to monitor implementation. It will be hosted in Istanbul and will include representatives from Ukraine, Russia and Turkey.
  • Inspection teams will monitor the onloading of grain at the three ports. Ukrainian pilot vessels will guide the ships through the Black Sea, which is mined, after which they will head out through the Bosphorus Strait along an agreed corridor.
  • Ships going into the ports also will be inspected. All commercial vessels that partake in this initiative will be subject to inspections carried out by the inspection teams in the harbours determined by Turkey, at the entrance/exit to/from the Turkish strait.
  • All activity in Ukrainian territorial waters will be carried out under Ukraine’s jurisdiction. No warships, aircraft or drones can come closer to the maritime humanitarian corridor than the distance established by the Joint Coordination Centre.
  • The treaty will be valid for 120 days from the signature date and will be automatically extended if neither side decides to terminate it.

Ukraine is one of the world’s top agricultural producers and exporters and plays a critical role in supplying oilseeds and grains to the global market. Agricultural products are Ukraine’s most important exports. In 2021 they totaled $27.8 billion, accounting for 41 percent of the country’s $68 billion in overall exports.

Ukraine is the world’s ninth-largest wheat producer and is forecasted to be the eighth-largest exporter for the 2022/23 marketing year. In 2021, Ukrainian wheat exports were valued at $5.1 billion, with Egypt, Indonesia, Turkey, Pakistan, and Bangladesh as the primary destinations.

War-induced disruptions to food exports from Russia and Ukraine expose global food markets to heightened risks of tighter availabilities, unmet import demand and higher international food prices. The war has significantly undermined Ukrainian grain exports, owing to the lack of access to Black Sea ports and the limited means of alternative transportation, such as rail, river or road transport, to compensate for the lack of seaborne shipments. Assuming these war-related disruptions persist, FAO’s tentative forecasts for 2022/23 (July/June) indicate that Ukrainian wheat exports could decline by 50 percent (or 9 million tonnes) compared to already constrained 2021/22 levels to 10 million tonnes, while those of maize exports could register a 32 percent (7 million tonnes) annual decline to 15 million tonnes.

 


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