Is life on the line?, "Global Food Security Lifeline" Food | Black Sea | Global

On the morning of July 17 local time, a grain carrier "Samson" flying Türkiye's flag slowly left the port of Odessa - because Russia had not formally agreed to the extension of the Black Sea Food Agreement at the last moment, which meant that it became the "last ship" allowed to pass under the agreement.

After three extensions, the Black Sea Grain Export Agreement officially expired on July 18, 2023. In recent days, whether the agreement can be extended has become a focus of attention from multiple parties. How important is this agreement for global food market security and the Ukraine crisis? Against the backdrop of the ongoing crisis, where will the agreement go?

Putin: "The West has done nothing"

All parties urgently seek consensus on their actions

The decision by Russia not to extend the Black Sea grain export agreement actually foreshadows it.

Since the implementation of the agreement in July 2022, the Russian side has repeatedly expressed dissatisfaction with the implementation of certain clauses related to Russia in the agreement. The Russian side's considerations mainly focus on the following aspects:

1. the export of Russian agricultural products and fertilizers is still difficult.

In fact, the Russian Business Advisory News Agency disclosed on July 15 that since the implementation of this agreement, no ship has performed the task of transporting fertilizer from Russia.

The 2. goal of reducing hunger in Africa has not been met.

According to United Nations statistics, more than 31 million tons of food have been exported under the agreement, but according to Russian statistics, only 976000 tons of food have actually been shipped to poor African countries.

3. Western countries "lied to Russia".

With regard to the agreement, Russian President Vladimir Putin said that "the West has done nothing" on freight, insurance and the re-connection of the Agricultural Bank of Russia to the Global Interbank Financial Communications Association, and Russia has been "deceived once again".

In order to continue the agreement, all parties have urgently responded and sought to reach a consensus on the pace.

According to Reuters, on July 11th, UN Secretary General Guterres wrote to Putin proposing to extend the agreement for a few more months, allowing the EU time to integrate a branch of the Russian Agricultural Bank into the SWIFT system to handle payment activities related to food and fertilizer exports. But the Russian side did not respond to this.

President Erdogan of Türkiye said that Turkey is cooperating with Moscow and Kiev to seek to extend the validity of the agreement to two years. Erdogan stated on the 14th that Russia has agreed to extend the Black Sea food export agreement. "We are preparing to welcome Putin's visit in August and reach an agreement on extending the Black Sea food corridor." However, the Kremlin immediately clarified that no agreement was reached with Turkey on this issue.

Analysis suggests that Russia, which does not see a positive outlook in renewing the agreement, is currently unmoved. Putin stated in an interview on the 13th that none of Russia's demands under the agreement have been met.

"What I want to emphasize is that nothing has been done, nothing has been done. This is all unilateral," Putin said. "We will consider what to do."

"The lifeline of global food security"

How important is the agreement?

Nearly 70% of Ukraine's land area is black soil, with innate high-quality resources, making it one of the world's largest food exporting countries.

This country, known as the "granary of Europe," typically supplies approximately 45 million tons of grain to the global market every year. The United Nations World Food Programme claims that food from Ukraine feeds approximately 400 million people worldwide.

However, in February 2022, with the outbreak of the Ukrainian crisis, ports such as the Black Sea were sealed off, food shipping was halted, and exports from both Russia and Ukraine sharply decreased, leading to a shortage of food supply in some countries and a continuous increase in food prices.

In order to alleviate this situation, under the mediation of the United Nations and Türkiye, Russia and Ukraine, after months of negotiations, finally signed the agreement on the export of food from the Black Sea, opening up a safe maritime channel for the export of food.

How important is this food transport agreement, referred to by UN Secretary General Guterres as the "hope of the Black Sea"?

Name: Black Sea Grain Export Agreement

Signing date: July 22, 2022

Signed at: Istanbul, Türkiye

Signatories: representatives of Russia, Türkiye, Ukraine and the United Nations

Validity period: 120 days

Three renewal dates: November 2022, March 2023, May 2023

Main content: Grain, food, and fertilizers exported from three ports including Odessa to Ukraine via the Black Sea are coordinated by the Joint Coordination Center located in Istanbul for shipping. Meanwhile, Russia has signed a three-year memorandum of understanding with the United Nations on the normalization of Russian food and fertilizer exports. The two documents are a package agreement.

The official website of the United Nations points out that at a time when about 258 million people in 58 countries are facing hunger, this package of agreements can be called the "lifeline of global food security".

Does Russia have an "optional solution"?

Putin made a clear statement

"The timing of this extension is crucial as the harvest season is about to begin. We hope that the agreement can be extended, and if it cannot be extended, the prices of grain commodities will soar," said Maximo Torrero Cullen, Chief Economist of the Food and Agriculture Organization of the United Nations.

He stated that the measure of allowing food to leave Ukrainian ports has enabled the transportation of 32 million tons of food, most of which is to meet the needs of developing countries and food aid from the World Food Programme.

According to data from the United Nations, the Ukrainian Ministry of Agriculture, and customs, Ukraine exported 50.6 million tons of grain worth 9.8 billion US dollars from August 2022 to June 2023. If the agreement cannot be smoothly extended, Ukraine's monthly losses will reach up to 500 million US dollars.

"Given recent events, it can be inferred that this agreement will not be extended to the next period as Russia is not satisfied with the way its provisions are applied in practice," Russian foreign policy expert Hassan Erel said in an interview with Russian satellite news agency.

Hajimulad Berkharov, Associate Professor of the International Economic Security Program at the Institute of World Economics and Business at the People's Friendship University of Russia, also stated that the "food agreement" needs to be renegotiated and its conditions must be fulfilled simultaneously. "It should consist of a section that specifies in detail the conditions for all participants' participation."

Berkharov said that if not extended, the inflation process of domestic currencies in developing countries will accelerate in the absence of food resources, and the social and political situation may deteriorate. At that time, population will migrate on a large scale and flow into more developed countries.

Will Russia return to the Black Sea Grain Export Agreement in the future? Putin recently reiterated that Russia will only extend the agreement once all commitments have been fulfilled. "One option is not to extend the agreement first and then have other countries fulfill their commitments, but to fulfill the commitments first and then we can participate in the agreement."