What were the results of the grain deal? What is important to know

For almost a year, world food prices have been falling after a peak in March 2022, against the backdrop of the start of a special operation in Ukraine. The UN calls for an extension of the deal on the EXPORT of grain from Ukraine to contain prices, but RUSSIAdissatisfied with its implementation

On March 18, the so-called grain deal concluded in July 2022 between Russia, Ukraine, Turkey and the UN to avert the risk of a global food crisis expires. The essence of the agreements is the creation of a safe corridor for the export of Ukrainian grain across the Black Sea and the lifting of sanctions restrictions on the export of Russian food and fertilizers.

UN Secretary General António Guterres has already called for an extension of the treaty of the country participating in the deal, Ukraine, Turkey and the United States spoke for this . But the Russian authorities believe that the agreements concluded earlier do not work, since only one part of the package is being implemented - the export of Ukrainian grain. But this process is far from the declared humanitarian goals - the lion's share of grain from Ukraine goes to the European Union at dumping prices, and not to the poorest states.

About the results achieved during the time of the grain deal, about the buyers of Ukrainian grain and how the initiative affected food prices - in the material of RBC.

Context of the grain deal

The conflict between Russia and Ukraine has led to an aggravation of the issue of global food security. Both countries are among the world's largest exporters of agricultural products: in March 2022, the US Department of Agriculture estimated that Russia and Ukraine accounted for 16 and 10%, respectively, of global trade in the main food crop - wheat (for comparison: for all EU countries this share was 18%).

After the special military operation of Russia in Ukraine, which began on February 24, 2022, the export of Ukrainian grain stopped, as the ports of the Odessa region, through which grain was transported across the Black Sea to the buyer countries, were mined. Russian exporters of grain and fertilizers also faced barriers, primarily related to the limited availability of ships due to the refusal of international logistics companies to work with Russia.

In June, President of Ukraine Volodymyr Zelensky announced that 20-25 million tons of agricultural products intended for export were blocked in the country: wheat, corn, barley, sunflower oil. Against the background of the conflict in Ukraine and the impossibility of sea supplies, world prices for food and fertilizers have risen sharply. The risk of a global food crisis has been repeatedly warned by the UN and world leaders, in particular French and US Presidents Emmanuel Macron and Joe Biden . Vladimir Putin explained that Russia does not prevent the export of grain from Ukraine, because "no one interferes" with Kiev to clear mine ports for ships to pass or to export grain in other ways.

In May, the UN Secretary General said that the world food crisis cannot be prevented without fertilizers and products from Russia, Belarus and Ukraine. The role of a mediator in settling the grain issue was assumed by the UN and Turkey: at the end of July, Russia and Ukraine separately signed an agreement on an international grain deal with them.

The grain deal included two parts: the Black Sea Grain Initiative  - an agreement on the safe export of Ukrainian grain from the ports of Odessa, Chernomorsk and Yuzhny, and the removal of restrictions on the access of Russian agricultural products to the world market (this part of the deal was enshrined in a Memorandum of Understanding signed between Russia and the UN ). Representatives of the UN and Turkey have pledged to ensure that no ammunition or weapons are transported on ships with agricultural products. The agreement implied that the deal was automatically extended if there were no objections from any of the parties.

Initially, the deal was concluded for 120 days, until November 18, but after that date it was extended for the same period, until March 18.

Who is in favor of saving the grain deal

Ukraine has already sent Turkey and the UN a request to initiate negotiations on the extension of the grain deal, REUTERS reported on February 28, citing Ukrainian officials. The day before, Deputy Minister of Infrastructure of Ukraine Yuriy Vaskov announced the country's desire to extend the grain deal for at least a year (instead of another 120 days) and add an additional port - Nikolaev.

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The UN is also counting on the extension of the agreements. The organization is in talks with all parties to the grain deal, who express "their concerns and initiatives," a spokesperson for the UN coordinator for the Black Sea Grain Initiative said on March 1. The UN is also working on the issue of access to the world market for Russian fertilizers stuck in European ports, in particular in Latvia, the official representative of the UN Secretary General Stefan Dujarric said earlier. The Secretary General of the organization, António Guterres himself, spoke in favor of extending the grain deal and urged the parties to the agreement to do so.

Over the past month, statements in support of the extension of the Black Sea Grain Initiative were made by the HEAD of European diplomacy Josep Borrell, the G7 foreign ministers, representatives of Saudi Arabia and Turkey. At the G20 foreign ministers' meeting on Wednesday, March 2, participating countries called for "full, timely, improved and ongoing implementation" of the grain deal and the Russia-UN Memorandum of Understanding to reduce threats to global food security and ensure the unimpeded flow of more quantities of food and fertilizer to developing countries in need.

In early March, the US State Pedagogue called for Russia to maintain and expand the grain deal, as it leads to lower food prices for everyone. The official representative of the President of Turkey, Ibrahim Kalin, stated back in October that Ankara also received Washington's guarantees for the entry of Russian agricultural products to the markets, and called on the United States to make them public. RBC sent a request to the Turkish Foreign Ministry and the Ministry of National Defense of Turkey.

What they say in Russia

The Russian authorities have repeatedly noted that the second part of the grain deal, which concerns exports from Russia, is not being implemented. At the end of September, President Vladimir Putin called the situation around the grain deal "a complete swindle", since most of the agricultural products from Ukraine are exported to developed Western countries.

In early March, the Foreign Ministry issued a statement accusing Western countries of sabotaging the UN's "humanitarian package" agreements. The ministry recalled that the UN Secretary General's plan involved the normalization of food and fertilizer supplies from Russia and Ukraine as part of a single package - together this was intended to reduce the threat of famine and provide assistance to countries in Africa, Asia and Latin America in need. But the package of agreements signed in Istanbul does not work, because only a part of the export of Ukrainian grain is being implemented, while "outright obstacles" are being created for agricultural exports from Russia, the Foreign Ministry points out. The ministry emphasized that at the moment the grain deal is more like servicing Ukraine's commercial grain exports, since most of the production does not go to the poorest countries. Of the more than 23 million tons of grain (mainly feed corn and feed grains), the bulk, 47%, was exported to high-income countries, primarily the EU, and 34% to upper-middle-income countries. The share of deliveries to countries in need is steadily declining and is already 2.6%, the Foreign Ministry noted.

At the same time, the Ukrainian authorities "for political reasons" do not allow the resumption of ammonia supplies through the Togliatti-Odessa pipeline, despite the fact that the provisions on this are spelled out in both Istanbul agreements. Russian fertilizers in the ports of the Baltic States and the Netherlands, which were donated to the poorest countries, remain blocked: out of 262 thousand tons, only one batch of 20 thousand tons was sent to the South African state of Malawi, and it has not yet reached the recipient. “Progress in the implementation of the Russia-UN Memorandum on the normalization of our agricultural exports tends to zero,” the Foreign Ministry assessed the results of the deal.

After the publication of the statement, Foreign Ministry spokeswoman Maria Zakharova clarified that Russia is ready to continue to fulfill its part of the agreements under the grain deal if its other participants fulfill their obligations on an equal basis .

RBC turned to the office of UN Secretary General António Guterres, the Russian Foreign Ministry, and the Russian Defense Ministry for comment.

Results of the grain deal

How much grain was taken and where

According to the UN, by the beginning of March 2023, about 780 ships departed from the Ukrainian ports of Odessa, Chornomorsk and Yuzhny, which took out about 23 million tons of grain. Half of the grain cargo was corn (49%) and 27% was wheat. Of these, 60% of the volumes, according to UN statistics, were received by five countries: CHINA (4.8 million tons), Spain (3.9 million tons), Turkey (2.6 million tons), Italy (1.7 million tons) and Netherlands (1.4 million tons). In terms of regions, the picture of deliveries is as follows: 52.6% of grain went to Europe and Central Asia, 24.8% to the Asia-Pacific region, 14.3% to the Middle East and North America, and 2.6% in countries south of the Sahara.

Speaking separately about wheat, in May 2022 the Food and Agriculture Organization of the United Nations (FAO) named the countries that are most dependent on the supply of this crop from Ukraine. Lebanon, Dzhubouti and Somalia had the greatest dependence, which bought 50-60% of all imported wheat from Ukraine. Among the countries with a significant share of Ukrainian wheat in imports were Eritrea, Mauritania, Libya, Pakistan (about 40–45% of supplies), as well as Tunisia and Egypt (30–35%).

In January 2023, the Council of Europe published data, according to which the main recipients of Ukrainian wheat were developing countries (they accounted for 65% of supplies). Among the more than 600 ships with grain that left Ukrainian ports at that time, 13 ships with a cargo of more than 380 thousand tons of wheat went to Ethiopia, Yemen, Djibouti, Somalia and Afghanistan. Based on the March UN data, about 0.3% of the 23 million tons of grain exported by the Black Sea ended up in Lebanon, about 0.2% in Somalia, and about 0.03% in Djibouti.

Ukrainian grain began to be exported to the EU even before the conclusion of the Istanbul agreements by the so-called solidarity routes (by land and river routes) to neighboring countries, in particular to Poland and Romania. The influx of Ukrainian grain provided the EU with a record import for at least the last 20 years: according to the European Commission, in seven months from the beginning of the current agricultural year (started on July 1, 2022 and will last until June 30, 2023), grain imports by more than 73% exceeded the volumes imported for the same period of the previous agricultural year (26.4 against 15.2 million tons). The largest volume of imports fell on the share of feed grain (it is used as animal feed). This year, the production of corn in the EU has dropped sharply, and therefore the supply of feed wheat along with other grains is in demand in the region, the US Department of Agriculture noted.

Exports of grain from the EU from the beginning of the agricultural year to the end of February 2023, on the contrary, turned out to be 11.9% lower than the level that was on the same date last season: 28.6 million tons against 32 million tons a year earlier. The key buyers of wheat from the EU were Morocco (share 15%, the volume of supplies increased three times compared to last year - up to 3 million tons), Algeria (share 13.6%, 2.8 million tons), Nigeria (share 8. 4%, 1.7 Mt), Egypt (share 8%, 1.6 Mt) and China (share 4.9%, 1 Mt).

How the deal affected food prices

Grain, which is exported from Ukraine under the agreements, cannot remove the risks of a global food crisis, since we are talking about small volumes on the scale of the world market, said Dmitry Patrushev, head of the Ministry of Agriculture. World wheat production in the current season 2022/23, according to the February forecast of the US Department of Agriculture, will amount to 783.8 million tons - of which production in Ukraine is 21 million tons, in Russia - 92 million tons.

But the Black Sea Grain Initiative and the "solidarity routes" have contributed significantly to a significant reduction in grain prices, according to the materials of the Council of Europe. Based on the World Bank data cited by the council, after the start of Russia’s special military operation in Ukraine, wheat prices, which had already been growing noticeably during 2021, went up sharply: in March 2022, wheat rose in price by 24.5% in a month compared to the previous month and by 71.8% year-on-year, to $486.3 per ton. Corn cost $335.5 per ton in March, which is 14.6% more than in February and 36.8% more than in March 2021 ($292.6 and $245.2 per ton, respectively). Wheat prices peaked in May 2022: in that month, the price per 1 ton reached $522.3.

After the EU announced the launch of “solidarity routes” in May, wheat prices went down and by July reached $382.5 per ton, the level that was before the start of the special operation. Corn prices fell to that level by August, after the Black Sea Grain Initiative kicked off. In October 2022, when Russia announced the suspension of participation in the grain deal after the attacks on ships of the Black Sea Fleet and civilian ships in the bay of Sevastopol, there was a jump in grain prices again - prices for wheat and corn rose to $437.5 and $343.6 per ton respectively, but after the stabilization of the situation by December 2022, prices again dropped to levels close to February.

The positive impact of the grain deal on world food prices was also noted by the UN: in September 2022, the organization reported that the deal “returns the necessary grain to global markets and contributes to lower prices for staple foods around the world.” In March 2022, the FAO Food Price Index (tracks monthly changes in world prices for basic foodstuffs) rose by 12.6% month-on-month to reach 159.3, the highest since its inception in 1990. Since then, the food price index has declined for the eleventh month in a row. In February 2023, the index value was 129.8 points, which is 18.7% lower compared to the peak value in March 2022. However, FAO notes that food insecurity is worsening in many countries:

The sharp increase in agricultural imports from Ukraine has created problems for farmers from the EU countries closest to it - Poland, Romania, Bulgaria, Hungary, the Czech Republic and Slovakia, the Council of Europe said at the end of January. In particular, Poland was concerned about a sharp increase in imports of Ukrainian corn (in November 2021 it was 6 thousand tons, and for the same period in 2022 - 1.6 million tons), and Bulgaria - a 22-fold increase in imports of Ukrainian sunflower seeds (from 36, 1 thousand to 804 thousand tons in January-December 2022), which makes it difficult to sell locally produced sunflower seeds and contributes to lower prices in the domestic market. The countries demanded to urgently respond to the situation, since European farmers have already suffered from the hostilities in Ukraine, in particular from the increase in prices for fertilizers, fuel, energy, and to pay compensation to the affected farmers,