LONDON, April 14, 2010 (Reuters) – The Kremlin said the outlook for an extension beyond May 18 was “not very good,” raising concerns about what would happen following a deal to allow safe exports of wartime grain from some Ukrainian Black Sea ports. A maritime corridor supported by the United Nations.
The agreement helped address a global food crisis that UN officials say has worsened in Europe’s deadliest war since World War II.
Arrived in July last year, it created a protected transit corridor to allow exports from three ports in Ukraine, a major producer of grains and oilseeds, to continue.
Here are some issues:
What is exported?
With the agreement to create a safe port, Ukraine was able to export 27.7 million tons of agricultural products, including 13.9 million tons of corn and 7.5 million tons of wheat.
This represents 60% of Ukraine’s corn exports and 56% of wheat exports in the 2022/23 season.
Other exports include sunflower seeds, sunflower oil, sunflower meal and barley.
The leading destinations are China (6.3 million tonnes), Spain (4.8 million) and Turkey (3 million).
For a full list of export countries and sizes:
https://www.un.org/am/black-sea-grain-initiative/vessel-movements
Why did Russia withdraw from the agreement?
Russia has said there will be no extension unless the West removes barriers to Russian grain and fertilizer exports, including reconnecting the Russian Agricultural Bank (Rosselkhozbank) to the SWIFT payment system.
Other demands include the resumption of supplies of agricultural machinery and parts, the lifting of restrictions on insurance and reinsurance, the resumption of the Togliatti-Odessa ammonia pipeline, and the freezing of assets and accounts of Russian companies exporting food and fertilizer.
There is little sign that the West has agreed to these demands.
Can the corridor work without Russia?
Ukraine’s ports were closed before the deal was reached in July last year, and it is unclear whether grain shipments will be possible if Russia withdraws.
Already high insurance rates are likely to rise and ship owners are reluctant to let their ships enter a war zone without Russia’s consent.
Among the risks that insurers can consider is the presence of Russian naval vessels in the waters of the Black Sea and floating sea mines.
Corridor is needed if Ukrainian crops are reduced?
Ukraine’s grain exports are expected in the 2023/24 season after the war, when farmers are expected to sow corn and wheat.
Favorable growing conditions, however, can limit the rate of decline.
The International Grains Council has predicted that Ukraine’s corn crop will drop to 21 million tons, compared to last season’s 27 million, and exports are expected to drop 15 million tons to 20.5 million.
Ukraine’s wheat production is forecast to fall to 20.2 million tonnes in 2022/23 from 25.2 million, and exports are forecast to reach 11 million against 14.5 million in the previous season.
Exporting those quantities of grain through the Eastern European Union is logistically difficult and expensive, especially for crops grown in the eastern regions of Ukraine, which have long and difficult journeys to reach the border.
Can Ukraine send more grain by land?
Since the start of the conflict, Ukraine has been exporting large quantities of grain to Eastern European Union countries, particularly Hungary, Poland and Romania.
However, there were many logistical challenges, including different rail gauges.
Ukraine’s railway network is on a 1,520 mm gauge with other post-Soviet countries. Countries in the Eastern European Union use the 1,435 mm gauge, so it is not possible to run trains from one network to another without interruption.
Another issue is that the flow of Ukrainian grain through the Eastern European Union is causing conflict among local farmers, who have lost the market for their crops by reducing local supplies and buying from mills.
Poland temporarily banned Ukrainian grain imports last week to minimize the impact on prices, although it will still be allowed to transit the country.
Romanian farmers also blocked traffic and border checks with tractors and trucks.
Ukrainian farmers have rejected claims that other areas of export are reducing profitability. However, the arguments could be strengthened if Ukraine were to export large volumes to Eastern Europe.
Has the corridor eased the food crisis?
Exports from major exporter Ukraine have declined and played a role in the global food price crisis.
Other factors include climate extremes and the consequences of the Covid-19 pandemic.
If the corridor were to be closed, it would lead to a jump in global grain prices at a time when many countries are facing sharp increases in food and fuel prices.
The UN’s World Food Program said this month that food insecurity is at an all-time high.
Reporting by Nigel Hunt and Jonathan Saul; Edited by Barbara Lewis
Our standards: The Thomson Reuters Trust Principles.
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