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The Financial Express

What is Black Sea Grain Initiative and why does it matter

| Updated: September 19, 2022 11:08:46


What is Black Sea Grain Initiative and why does it matter

Since Russia's invasion of Ukraine, exports of grain from Ukraine, as well as food and fertilisers from Russia, have been hit hard.

The disruption in supplies pushed soaring prices even higher and contributed to a global food crisis. The Black Sea Grain Initiative, brokered by the UN and Turkiye, was set up to reintroduce vital food and fertiliser exports from Ukraine to the rest of the world, according to UNB.

Ukraine, one of the world's largest grain exporters, normally supplies around 45 million tonnes of grain to the global market every year but, following Russia's invasion of the country, in late February 2022, mountains of grains built up in silos, with ships unable to secure safe passage to and from Ukrainian ports, and land routes unable to compensate.

This contributed to a surge in the price of staple foods around the world. Combined with increases in the cost of energy, developing countries were pushed to the brink of debt default and increasing numbers of people found themselves on the brink of starvation.

On 22 July, the UN, Russian, Turkiye and Ukraine agreed on the Black Sea Grain Initiative, at a signing ceremony in Istanbul.

The deal allowed exports of grain, other foodstuffs, and fertilisers, including ammonia, to resume through a safe maritime humanitarian corridor from three key Ukrainian ports - Chornomorsk, Odesa, and Yuzhny/Pivdennyi.

To implement the deal, a Joint Coordination Centre (JCC) was set up in Istanbul, comprising senior representatives from Russia, Turkiye, Ukraine, and the UN.

According to procedures issued by the JCC, vessels wishing to participate in the initiative will undergo inspection off Istanbul to ensure they are empty of cargo, then sail through the maritime humanitarian corridor to Ukrainian ports to load.

The corridor is established by the JCC and monitored 24/7 to ensure the safe passage of vessels. Vessels on the return journey will also be inspected at the inspection area off Istanbul.

Shipments monitored by the initiative began leaving on August 1. By the end of the month, over 100 ships, laden with more than one million tonnes of grain and other foodstuffs, had left Ukraine.

By mid-September the JCC reported that some three million tonnes had left Ukraine, signalling positive progress. It is hoped that, eventually, up to five million tonnes will be exported monthly.

According to the UN, 51 per cent of the cargo so far (as of mid-September) has been corn, 25 per cent wheat, 11 per cent sunflower products, 6.0 per cent rapeseed, 5.0 per cent barley, 1.0 per cent soya beans, and 1.0 per cent other foodstuffs.

A 25 per cent of the cargo has gone to low and lower-middle income countries - Egypt (8.0 per cent), India and Iran (4.0 per cent each), Bangladesh, Kenya and Sudan (2.0 per cent each), Lebanon, Yemen, Somalia, Djibouti (1.0 per cent each), and Tunisia (less than 1.0 per cent).

Around 25 per cent of grain has gone to upper-middle income countries - including Turkiye, China and Bulgaria; and 50 per cent to high-income countries like Spain, Netherlands, Italy, South Korea, Romania, Germany, France, Greece, Ireland, and Israel.

At a press briefing in mid-September, Rebeca Grynspan, the secretary-general of the UN trade agency, known as UNCTAD, and Amir Abdulla, the UN coordinator for the Black Sea Grain Initiative, welcomed the fact prices came down five months in a row: the Food Price Index dropped nearly 14 per cent from its peak in March of this year.

Abdulla said falling prices meant that those who had been hoarding grain, in the hope of selling at a greater profit, were now selling, which meant that there is now more food supply in the markets, leading to further price drops.

Grynspan, who is also coordinator of the UN global Task Team set up to help support countries deal with the triple economic shocks worsened by the effects of the war in Ukraine, pointed out that this is making a huge difference in the global cost of living crisis.

Globally, a record 345 million people in more than 80 countries are now facing a food crisis, while up to 50 million people in 45 countries are at risk of being pushed into famine without humanitarian support.

In August, WFP Executive Director David Beasley declared getting the Black Sea Ports open to be "the single most important thing we can do right now to help the world's hungry."

"While this would not, on its own, stop world hunger, bringing Ukrainian grain back on global markets would improve the chance of preventing the global food crisis from spiralling even further," he added.

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