As ships filled with Ukrainian grain leave Odesa ports for the first time in five months, the Ukrainian ag sector is cautiously optimistic that trade will save farmers and the United Nations is hoping to see food prices drop for the neediest countries.
The Russian invasion of Ukraine that began Feb. 24 immediately cut off the flow of millions of tons of Ukrainian wheat and corn exports from the country's main Black Sea ports, and the consequences were dire.
The first ship carrying about 27,000 metric tons of corn left Odesa, U.S. and Turkish government officials said Monday. U.S. Secretary of State Antony Blinken lauded the departure but stressed that many more ships need to follow. The Ukrainian grain, he said, “needs to get out to world markets, it needs to get to places where people are in desperate need of food, it needs to get out so that prices also continue to go down, not up.”
Prices for grain rose dramatically in some of the poorest countries that were already suffering from hunger and malnutrition amid drought, the impacts of COVID and internal strife. The lack of grain flowing from Ukraine was widely considered an accelerant to rising hunger levels in Africa, the Middle East and Asia.
Meanwhile, in Ukraine, farmers lost their export markets and saw prices fall sharply. Those who didn’t see their farms bombed, burned or occupied could not get decent prices for their corn and wheat. Now, the promise of the ability to export out of three key ports in the Odesa province has farmers hoping to be able to sell their grain at a profit.
Martin Griffiths, UN Under Secretary General for Humanitarian Affairs, says hopes are high that the flow of millions more tons of grain out of Ukraine will push down food prices for poorer countries like Somalia and South Sudan.
The July 22 deal to allow the resumption of grain exports from Odesa during the war between Ukraine and Russia is both unprecedented and fragile, says Griffiths. The Russian bombing of an Odesa port less than a day after the agreement was signed was a shock that threatened to scuttle the deal entirely.
The missile attack was, he said, “a reminder that we have no time to waste” in getting grain out of Ukraine and onto the market.
“This is going to happen a lot,” he said at a press conference in Brussels last week. “This is going to be a bumpy road.”
Dmitry Polyanskiy, Russia’s representative to the United Nations, says the country will not hesitate to hit Odesa again. Russia, he said, only struck the port on July 23 because the Ukrainians were storing U.S.-supplied weapons there.
The July 22 deal established a Joint Coordination Center in Istanbul and it will be up to the Ukrainian, Russian, Turkish and UN staff to deal with any future disruptions as well as the day-to-day monitoring of ship traffic to the Odesa ports.
Turkish Rear Admiral Özcan Altunbulak said Monday that the center “has undertaken the duties and responsibilities of registering and tracking the commercial ships to be included in the initiative, creating and implementing the entry and exit plan of these ships to the ports of Ukraine.”
But the deal will only survive at the whims of Russia and Ukraine, Griffiths said. It needs to be officially renewed by all four parties every 120 days and is separate from a deal that ensures Russia’s ability to export grain and fertilizer through the Black Sea.
“If the parties don’t have an interest, they walk – don’t they?” Griffiths said
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The first ships to leave Odesa were actually loaded as part of normal commerce before the Russian invasion, but Griffiths says he’s confident that it won’t be long before new ships begin arriving to load grain. Some of those ships will be sent by the World Food Programme to pick up grain that will be donated to desperate countries.
Regardless of where that grain is going, the hope is that the mere presence of more supplies on the market will drive down prices.
While the UN hope is that trade will push global food prices down, the Ukrainian ag sector is counting on the opening of the ports to push the prices that farmers get much higher.
Farmers need to profit in order to survive and the opening of the ports in Odesa will hopefully be the key to that survival for many, says Kees Huizinga, who has been farming near Kyiv for 20 years.
“If it’s going to work out, it’s lifesaving,” Huizinga told Agri-Pulse.
The domestic market, Huizinga said, is saturated and prices are far too low. Ukraine is exporting grain through several alternative routes that bypass the major ports, but those paths are long and expensive.
Shippers who have access to those alternative routes are also offering very low prices – often a third of the crop’s value, said Huizinga, adding: “You might as well steal it.”
Many farmers don’t have the storage capacity that Huizinga has, and often they are forced to sell. The U.S., Canada and other countries have donated temporary storage solutions, but farmers there need more, according to the Ukrainian Agriculture Ministry. That’s why the United Nations Food and Agriculture Organization has announced an Aug. 5 tender to purchase storage sleeves, grain loaders and unloaders and modular granaries with awnings.
The goal, the ministry says, is providing an extra 4 million tons of storage.
Ukrainian Deputy Agriculture Secretary Taras Vysotskyi said Friday that the country is expected to harvest 18-20 million metric tons of winter wheat this summer, but the domestic demand will consume only a fifth of that.
"From the point of view of internal food security, even reduced cultivated areas are more than enough to provide Ukrainians with quality food,” Vysotskyi said. “Therefore, thanks to the unblocking of the Black Sea ports, a significant part of the food will be able to be exported."
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