Another Black Sea Grain Initiative renewal? Concerns raised as the deadline looms

26 Jun 2023 --- Ukraine has reignited fears that Russia will leave the negotiating table and not renew the Black Sea Grain Initiative, scheduled to expire on July 17. The deal has survived through three increasingly difficult renewals, and now that renewal looms once again, concerns are increasing that this time, it will not keep going.

Ukraine ambassador Olha Trofimsteva says that the deal, which has helped bring down global food commodity prices to their lowest level since mid-2021, will end in less than a month.

Trofimsteva says that Russia has found a way to export ammonia without depending on the Togliatti-Odessa pipeline. Russia had repeatedly negotiated for the pipeline opening without success during previous Black Sea Grain Initiative renewal talks.

Currently, exports through the Black Sea corridor are reportedly at an all-time low. In May food exports amounted to 1.3 million metric tons, compared to a peak of 4.2 million metric tons in October 2022.

The UN has called on all parties to “accelerate operations.” Russia has been accused by Ukraine in the past of slowing down inspections, undermining global food security.

Over half of the vessel inspections carried out are taking over three hours compared to 9% of the inspections in February, according to the UN.

While prospects of a deal renewal look unlikely, in the past similarly challenging negotiations ended up with a last minute deal. 

Exports through the Black Sea corridor are reportedly at an all-time low.WFP pleads for Russia and China to bolster food security
Famine is a real possibility for food-vulnerable regions of the world if the deal is not renewed, according to Cindy McCain, head of the World Food Programme.

McCain stated in the past that it will be impossible to feed Africa unless a deal is made. 

The head of the WFP also calls on China to step up its donations to the international organization she leads. Saying that last year the country donated US$11 million to the WPF, compared to the US$7.2 billion that the US donated. 

The WFP estimates it would need US$19.7 billion to target 150.5 million beneficiaries this year. However, the WFP forecasted in September that it would fundraise US$11 billion in 2023 and this goal might not even be reached since at the current funding rate, the organization will raise under US$9 billion for the year.

Russian unheard demands?
Russian foreign minister Sergey Lavrov ruled out extending the grain deal with Ukraine last week unless long-held Russian demands are fulfilled. He said that the agreement, in its current status, was only in effect for Ukrainian grain deliveries.

Russia has repeatedly called for normalizing its agricultural exports, including bank payments, transport logistics, insurance, the unfreezing of financial activities and the supply of ammonia through the Togliatti-Odessa pipeline.

“The UN is fully committed to supporting the implementation of both the Black Sea Initiative and the Memorandum of Understanding on Russian food and fertilizer exports so that exports of food and fertilizers, including ammonia, from the Russian Federation and Ukraine, reach markets around the world safely and predictably,” says Farhan Haq, deputy spokesperson of the UN Secretary-General.

“This is especially critical now as the new grain harvest begins in both Ukraine and the Russian Federation.”Famine is a real possibility for food-vulnerable regions of the world if the deal is not renewed, according to Cindy McCain, head of the World Food Programme.

While Ukraine is not optimistic about a renewal, Hungary and Poland are trying to expand the Black Sea deal by adding sea routes to it, in the “Budapest Initiative .”Some Eastern European countries have been under pressure by the large amounts of grain flowing toward the EU from Ukraine. The European Commission established in May temporarily limits imports of four types of Ukrainian crops toward Bulgaria, Hungary, Poland, Romania and Slovakia.

Ukraine and Nigeria grain terminal project deal
The Ministry of Agrarian Policy and Food of Ukraine and the international company Lagos Free Zone have agreed to cooperate on a grain terminal project in the port of Lekki, Nigeria. 

The port will be the country’s first fully automated one and a joint venture of the Nigerian and Lagos governments, a Singaporean group and a Chinese company. The deal was signed in London during a conference on Ukraine’s reconstruction. 

According to the First Deputy Minister of Agrarian Policy and Food of Ukraine, Taras Vysotskyi, the project will boost the country’s role in global food security.

“Cooperation between the Ministry of Agrarian Policy and the Lagos Free Zone Company will be aimed at creating the necessary infrastructure to ensure the continued uninterrupted supply of Ukrainian agricultural products both to Nigeria and the entire African continent. The main goal is to ensure food security in the regions that need it the most,” he underscores.

By Marc Cervera