The Russia-Ukraine grain deal that has been critical to keeping global food prices stable and preventing famine is currently in tatters. On July 17, 2023, Russia said it was pulling out of the year-old deal, which allowed shipments of grains and other foodstuffs to travel past the Russian naval blockade in the Black Sea. And to make matters worse, over the next two days Russia bombed the Ukrainian grain port of Odesa, destroying over 60,000 tons of grain.
As a result, food prices have surged, with the cost of wheat, corn and soybeans in Europe, the Middle East and elsewhere all skyrocketing.
So, what is the grain deal, and why is it so important to the global food supply chain?
Anna Nagurney is an expert on supply chains, including those involving perishable products like food, and is co-chair of the board of directors overseeing the Kyiv School of Economics in Ukraine. She explains how important Ukrainian grain is to feeding the world – and why the Black Sea is a vital route to getting it to people who need it.
What makes Ukraine such an important part of the global food supply chain?
Ukraine has been called the breadbasket of Europe and is a major supplier of wheat, barley, sunflower products and corn to Europe as well as to developing countries such as in the Middle East, Northern Africa and China.
More than 400 million people relied on foodstuffs from Ukraine before Russia invaded Ukraine in February 2022.
One key reason for that is Ukraine has approximately one-third of the world’s most fertile soil, which is known as chernozem, or black soil. And before the war, Ukraine was able to rely on its year-round access to ice-free harbors in the Black Sea to ship grains to nearby markets in the Middle East and Africa.
What happened when war broke out?
Even before the war, famine was increasing across the globe. Russia’s invasion made it a lot worse.
From 2019 to 2022, more than 122 million people were driven into hunger by a combination of the impacts of climate change, the COVID-19 pandemic and the war in Ukraine, the United Nations said in a recent report. Other researchers have suggested global hunger is the highest it’s been since at least the early 2000s.
From February to June 2022, at least 25 million tons of Ukrainian grain intended for global markets got trapped in Ukraine because of Russia’s naval blockade, causing food prices to jump.
How did the grain deal come about?
The U.N. and Turkey brokered what is officially known as the Black Sea Grain Deal with Ukraine and Russia on July 22, 2022.
The agreement allowed for the secure passage of agricultural products from Ukraine from three ports on the Black Sea, including its largest port, Odesa. While the original agreement was to last 120 days, it has been extended several times since.
Ukraine has exported more than 32 million tons of food products through the Black Sea since August 2022. The World Food Program, the world’s largest humanitarian agency, purchased 80% of its wheat from Ukraine. Ethiopia, Yemen, Afghanistan and Turkey have been the biggest recipients of humanitarian shipments.
The U.N. has estimated that the grain deal has reduced food prices by more than 23% since March 2022.
[Abridged]
Anna Nagurney, UMass Amherst
