Russia’s targeting Ukrainian grain exports driving up food prices

August 2, 2023

Russia’s abandonment of an agreement to allow Ukraine to export grain, and subsequent attacks on Ukrainian port cities, is driving up global food prices, including in the U.S. 

On Wednesday, Russian attacks on the Ukrainian port of Izmail, across the Danube River from Romania, destroyed buildings and halted ships that were preparing to arrive to load up Ukrainian grain. 

That attack comes as Russia has repeatedly been attacking the port city of Odesa on the Black Sea. The Black Sea port city of Mykolaiv has also been targeted by attacks.

The strikes follow Russia’s withdrawal in mid-July from the 2022 U.N.-backed Black Sea Grain Initiative, brokered by Turkey, that allowed Ukraine to ship grain to countries in Africa, the Middle East and Asia. Russian officials have said their actions are in “retribution” for a deadly explosion on the Kerch Bridge, the only direct access way from the annexed Crimean peninsula to the Russian mainland. Ukrainian forces have claimed responsibility for that attack.

Ukraine supplies 10% of the world wheat market, 15% of the corn market, and 13% of the barley market.

As a result of Russia’s targeting of the ports, Ukraine grain exports in July fell 40% from the previous month, driving up prices around the world, even in the United States. Already Wednesday, following the attack on Izmail, Chicago wheat prices jumped up 4%, though they leveled off at $6.60 a bushel, which was still a 1.2% increase.

During a Russia-Africa Summit in St. Petersburg last week, the leaders of 17 African nations pressed Russian President Vladimir Putin to revive the Black Sea Grain initiative, the loss of which will greatly impact such famine-weary nations as Somalia and Ethiopia. But the leaders left the summit with no such agreement, nor any path toward ending the Ukraine-Russia war.

Putin did promise during the summit to ship 25,000 to 50,000 tons of grain for free to each of six African nations over the next three to four months. However, that amount is a pittance compared to the 725,000 tons shipped to those nations by the U.N. World Food Program, and African leaders rebuffed Putin’s offer.

“We are not here to plead for donations for the African continent,” South African President Cyril Ramaphosa remarked, again asserting that the African leaders “would like the Black Sea initiative to be implemented and that the Black Sea should be open.”

This Tuesday, South Africa once again attempted to persuade Russia to revive the grain agreement. 

“We are also working hard to persuade the Russian side to address the Black Sea grain deal and interacting with all the relevant parties to see whether we could find a solution to ensure an opening of the Black Sea initiative,” South African Foreign Minister Naledi Pandor said in Pretoria during talks with her Japanese counterpart, Yoshimasa Hayashi.

But on Wednesday, Putin reaffirmed his stance on the initiative, telling his Turkish counterpart Tayyip Erdogan that Moscow would return to the grain deal as soon as the West met its obligations with regard to Russia’s own grain exports. Though Russia’s grain and fertilizer exports are not subject to Western sanctions, the Kremlin has asserted that restrictions on payments, logistics and insurance have obstructed shipments.

Meanwhile, the United Nations’ World Food Program has also been rattled by Russia’s actions.

Already the WFP has started reducing monthly cash to aid roughly 120,000 Syrian refugees living in Jordan, with the U.N. warning some 50,000 refugees in Jordan may eventually have to be completely cut off. 

“What we have to do now is to look elsewhere [for grain] of course,” said the WFP’s deputy director, Carl Skau, on Tuesday. “We don’t know exactly where the market will land, but there might well be an increase in food prices.”

PHOTO: Ruins of Odesa grain terminal following Russian attack

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