What was the Black Sea grain deal?
The Black Sea grain initiative was negotiated in July 2022 between Turkey, the UN and Russia as a way of ensuring that Ukraine, one of the breadbaskets of the world, could ensure that its grain could leave its southern ports via the Bosphorus. The grain could not be exported in the quantities required using the alternative methods of road or rail through Poland or by canal and river through Romania.
Turkey was involved due to the close relationship between its president, Recep Tayyip Erdoğan, and Vladimir Putin and because under the Montreux convention signed in 1936 it oversees maritime traffic in the Bosphorus and Dardanelles straits.
What did the grain deal promise?
The initiative, one of the few diplomatic achievements since the war started, allows for commercial food and fertiliser (including ammonia) exports from three key Ukrainian ports in the Black Sea – Odesa, Chornomorsk, and Pivdennyi (formerly known as Yuzhny). Ukrainian vessels guide cargo ships into international waters of the Black Sea, avoiding mined areas. The vessels then proceed towards Istanbul along an agreed maritime humanitarian corridor. Ships heading to and from the Ukrainian ports are inspected by teams composed of Russian, Turkish, Ukrainian and UN inspectors. Alongside this memorandum, a separate deal was signed minimising the impact of sanctions on the export of Russian food and fertiliser. Both memorandums were subject to four- and then two-monthly reviews.
Did it succeed?
Despite the acute lack of trust, 33m tonnes of grain left Ukraine’s ports in the year to July. The UK says about 61% of that has gone to low- and middle-income countries, and 65% of wheat alone. The World Food Programme bought about 750,000 tonnes of Ukrainian grain that was shipped immediately to places such as Afghanistan, Ethiopia, Somalia and Sudan. Partly as a result of this, the price of grain stabilised at $800 (£620) per tonne, down from a high of $1,360.
Russia claims the proportion of the grain that went to the very poorest countries was less than 4%, but this ignores the fact that even if wealthier countries were buying the wheat, the extra supply was depressing the general price all countries were paying.
What started to go wrong?
Russia started to slow down inspections. In October 2022 there were 10 completed ship inspections a day, meaning 4.2m metric tonnes left that month, falling to seven a day in November andtwo in May, when only 1.3m metric tonnes left. The UN had the capacity to inspect as many as 40 ships a day.
Compared with March 2023, there was a 29% decrease in food exports by tonnage through the initiative in April and a 66% decrease in May. Russian ended the deal this week.
Why did it start to go wrong?
In essence, Russia felt the second part of deal allowing for greater Russian agricultural exports was not being honoured by the west. The UK says levels of Russian food exports are higher than last year and it is exporting plenty of grain and fertiliser out of Novorossiysk. But Moscow says sanctions on Russian goods exports have not been lifted clearly enough to give cautious insurers legal comfort to insure Russian ships carrying food. It also wanted sanctions lifted on its main agriculture bank. Other demands include the resumption of supplies of agricultural machinery and parts, the resumption of the Togliatti-Odesa ammonia pipeline and the unblocking of assets and the accounts of Russian companies involved in food and fertiliser exports.
Who is to blame for the situation?
The west claims Putin thought the deal was not worth preserving since it was allowing Ukrainian coffers and farmers to benefit from its grain exports. Genuine efforts were being made by the UN secretary general, António Guterres, to meet Putin’s demands.
The west acknowledges grain exports to the least developing countries were not returning at the desired rate. In the case of wheat, there had been an export drop of 11.8m tonnes in 2022 on the previous year, equivalent to the annual wheat food consumption of 175 million people, roughly the population of Bangladesh. For corn and barley, the export gap is as large as 41% and 82%, respectively, of the previous year’s level. Almost 8m tonnes of goods were shipped to China, nearly 25% of the 32.9m tonnes exported, while almost 44% of exports were shipped to high-income countries.
What happens next?
Russia’s defence ministry has in effect said any ship leaving a Ukrainian port will be a legitimate military target. Turkey, a Nato member, could threaten to confront Russia by guiding the grain exports out of the ports without Russian permission but that is a high-risk step. Putin has hinted he is willing to go back into the deal if his demands are met. But the bombing of Odesa port suggests his hint at flexibility may be designed to stem a potential loss of political support in the global south.
More likely, according to the analytics firm Smartcube, a drop in exports will lead to increased stockpiles in Ukraine and could force farmers to reduce sowing in the 2023-24 season. Russia might increase the export tax on wheat to finance its military campaign in Ukraine and, finally, shortages of fertilisers may intensify as Russia, together with Belarus, is one of the world’s largest sources of mineral fertilisers. Both these countries account for approximately 14% of the world’s fertiliser production and exports.
• This article was amended on 21 July 2023. Due to an error in the information supplied to us, an earlier version referred to the grain price as having stabilised at $800 “per bushel”, rather than per tonne.
