Russia Pulls Out of Grain Agreement
On Monday, the Kremlin announced that Russia will not extend its grain agreement with Ukraine. This news has sparked concerns about the availability of food and the potential impact on food prices in the region. The agreement, negotiated by the UN and Turkey, is crucial for the stability of the grain market and has been extended multiple times since it’s original signing in July 2022.
Consequences of a Break in the Agreement
The consequences of a break in this agreement are difficult to foresee. Lars-Erik Lundkvist, economic policy expert at the National Association of Farmers, said: “So far, it has always been resolved at the last second. But should there be a break in the agreement, the entire grain market will be troubled. The prices would definitely move upwards”.
Possible Impact on Food Prices
If there is an interruption in the agreement, Ukrainian grain which is usually exported to Africa would be diverted northwards to Europe in order to offset potential losses due to reduced crop yields caused by war-related disruptions. This could cause a price reduction effect on markets in countries like Poland which are not accustomed to receiving large amounts of grain unplanned.
Efforts to Extend the Agreement
Turkey’s President Recep Tayyip Erdogan said earlier in the week that he had reached an agreement with Vladimir Putin to extend the agreement but it appears Russia is seeking assurances that obstacles to its export of fertilizers are removed before it agrees to extend it further. UN Secretary-General António Guterres has said he is prepared to work for this goal but it remains unclear whether an extension will be reached in time.
The Future of the Black Sea Cereals Initiative
The Black Sea Cereals Initiative has been a crucial lifeline for both Ukraine and Russia since its inception in July 2022 and its continuation will be necessary for both countries’ grain exports – and possibly for global food security – to stay afloat.
