The Ukraine/Black Sea grain-export deal has ended almost a year after its inception following Russia’s decision on July 17 to terminate its participation in the agreement, further heightening uncertainty over global food supplies.
The pact, brokered between Ukraine and Russia in July 2022 by the United Nations (UN) and Turkey, allowed shipments of grains and other foodstuffs from Ukraine out of its Black Sea ports of Yuzhny, Odesa, and Chornomorsk to the Bosporus, without being attacked by the Russian naval blockade in the Black Sea.
Kremlin spokesperson Dmitry Peskov told reporters on July 17 that the arrangement had ceased to be in force “as of today,” and that Russia had notified Turkey and the UN that it won’t extend the deal, Interfax reported.
Moscow’s decision was not totally unexpected as it has long threatened to exit the deal (GM June 2, p. 1), last agreeing to a two-month extension in May that was due to expire on July 17 (GM May 19, p. 29). Russia also briefly paused its participation in the pact last October following an attack on it ships, although it was resumed a few days later.
Moscow has complained that parts of the Black Sea deal related to the facilitation of export shipments of Russian foodstuffs and ammonia and other fertilizer products have not been implemented.
The news of the deal’s collapse came after Russia on July 17 said Ukrainian drones damaged a key bridge linking Russia to Crimea, though Moscow later said the termination of its participation in the grain deal was unconnected to the attack.
Moscow is now cautioning against any shipments without its “security guarantees.” According to a UK Financial Times report, Russia earlier this week warned it would treat grain ships as “military targets.”
Russia has unleashed heavy drone and missile attacks since pulling out of the deal, damaging critical port infrastructure in southern Ukraine on July 20, including grain and oil terminals in Odesa and nearby Chornomorsk, destroying some 60,000 mt of grain, according to the Associated Press, citing Ukraine’s Agriculture Ministry.
Moscow has been urging all parties to the grain deal to unblock the transit of Russian ammonia so it can be exported via the ammonia pipeline that runs from Togliatti in Russia to the Ukrainian Black Sea port of Pivdennyi, formerly known as Yuzhny. Moscow is also demanding that Russia’s Agricultural Bank regain access to the international “SWIFT” payment network, which was prohibited under European Union and US sanctions.
For its part, Kyiv has said it would consider allowing Russian ammonia to transit its territory for export on the condition that the Black Sea grain deal is expanded to include more Ukrainian ports and a wider range of commodities. This week, Ukrainian President Volodymyr Zelenskyy was in talks with UN Secretary-General António Guterres to discuss restoring grain supply through the Black Sea.
World leaders have condemned Moscow for backing out of the deal, saying it threatens world food security and will lead to a further hike in prices. Additionally, the damage to Ukraine ports could take up to a year to repair even if the deal is renewed, according to Rabobank Agricultural Analyst Carlos Mera, as cited by the Financial Times.
The pact has ensured the safe passage of more than 32 million mt of crop exports from Ukraine via the Black Sea since it was signed in July 2022, helping to ease global food prices after they soared to record levels when Russia’s invasion of Ukraine forced a halt to all exports from Ukraine’s main Black Sea ports.
But the export corridor has faced repeated disruptions in recent months. Ahead of its withdrawal from the deal, Russia blocked one of the three open ports, and ship inspection times have gotten progressively longer, with fewer than one cleared per day in the first half of July.
Moreover, the volume of crop exports from Ukraine has been falling as the country’s agricultural production capacity suffers from the prolonged war. Only 2 million mt of grain were exported in June compared to a peak of 4.2 million mt last October, according to a Dow Jones report, citing UN data.