FAO’s plan to ensure export of vital grains and rescue upcoming harvest in Ukraine

05 Jul 2022 --- Japan has brought to the table a project to raise Ukrainian grain storage capacity and prevent massive losses of cereals as polyethylene grain sleeves mobile silos will be used, together with various modular storage containers, to store the precious wheat and stop it from rotting.

The continued Russian invasion of Ukraine has led to the loss of 14.1 million metric tons of storage capacity, with 60.9 million tons in total currently available.

Japan will fund the project to the tune of US$17 million, with the current effort being centered on saving the ongoing July-August harvest.

EU efforts to liberate the grain by land are progressing, albeit extremely slowly.

According to the Food and Agriculture Organization of the United Nations (FAO), Ukraine exported 322,000 metric tons in March, 970,000 in April, 1.2 million in May and over 1 million in June.

Before the war, between five to six million metric tons of wheat were exported each month by sea route, a far more efficient transport system.

According to the European Commission (EC), up to 20 million metric tons of grain remains trapped in the war-torn country.

Before the war, around five metric tons of wheat were exported each month by sea route.Turkey corridor stalemate
A true impasse has blocked the only real solution to liberating grain on a functional scale, which is via sea routes.

Ukrainian seaports are entrenched with defensive water landmines around the most important ports, such as Odesa. Ukrainian authorities fear that demining the sea routes would lead to a promptly Russian naval invasion.

However, without removing the mines, a maritime corridor is proving difficult to arrange.

Turkish authorities, desperate for some kind of positive development, such as the liberation of the food corridor, that will help rein in the country’ 78.6% overall inflation rate, which is over 100% for food (data from the Turkish Statistical Institute) are showing more optimism regarding a corridor deal.

A spokesperson for the Turkish president, Ibrahim Kalin, says that a deal could be struck in the coming weeks for ships to start transiting through de-mined waters.

In the same vein, Italian Prime Minister Mario Draghi says that a deal that would not require Ukraine to remove the mines only needs to be approved by Putin.

According to Draghi, UN Secretary-General, Antonio Gutteres, used the words “moment of truth” when talking about the food corridors. 

“The situation must be cleared quickly to store the new crop,” highlighted the Prime Minister Draghi.

EU efforts insufficient
The EU efforts to liberate Ukrainian grain are still millions of metric tons away from achieving its objective of  freeing the over 18 million metric tons of last year’s harvested cereal and oilseeds, which are still waiting for immediate export.

“Alternative rail and river routes cannot make up for the lost exports through maritime transportation and bottlenecks along new, potential supply chains that have yet to be resolved,” explains FAO. 

“This season Ukraine is expecting to harvest up to 60 million metric tons of grain. But the lack of export does not allow for the opening of available storage space for the new harvest, since 30% of the available capacity of granaries still remain filled with last year’s harvest.” 

The new Japanese funded project will help with the storage deficit and also provide technical support for the Ukraine government to operationalize alternative transport routes.

In total FAO has supported 75,000 farmers with emergency agricultural support. As prices for farmers have spiked “with an average increase of 40% to 45% in the price of seed, plant protection agents, fertilizers and fuel.”Ukraine exported 322,000 metric tons of wheat in March, 970,000 in April, 1.2 million in May and over 1 million in June.

With a quarter of farmers not having access to fertilizers. This added to a lower spring crop harvest, of about 19.4% less than in 2021, will yield a bad production for next year. 

Exporting around the world
Last year Ukraine supplied more than 45 million metric tons of grain to global markets, according to the Ministry of Agrarian Policy and Food of Ukraine.  

“Ukraine’s farmers are feeding themselves, their communities and millions more people around the world,” says Rein Paulsen, Director of the FAO office of emergencies and resilience.  

“Ensuring they can continue production, safely store and access alternative markets to sell their produce is vital to secure food availability, protect livelihoods, strengthen food security within Ukraine and ensure other import-dependent countries have a steady and sufficient supply of grain at a manageable cost.” 

The UN went even further this May and highlighted that Russian food and fertilizers must have too unrestricted access to world markets.

However, alleged foul play by Russia, which might be stealing Ukrainian grain, according to Ukraine authorities, could complicate the access of Russian produce in the market, as the origin of the grain could be unclear.

By Marc Cervera