Explained: Why Russia Suspended The Black Sea Grain Deal And How It Will Affect Food Supplies

Black Sea Grain Deal: With Russia suspending a deal that allowed export of grain from Ukraine, we decode for you the reasons behind the move and how will it affect global food supplies.

As part of the deal, ships carrying foodgrains were given a safe corridor from three Ukrainian ports

Source : Getty

Russia has suspended an important deal that allowed the export of grain from war-torn Ukraine by sea -- a move that threatens to jack up food prices worldwide and push millions into hunger. While announcing its withdrawal from the pact on Monday, the Russian Foreign Ministry said it was also removing guarantees for safe navigation in the Black Sea.

Global food supplies took a beating when Russia and Ukraine, among the world's top grain exporters, entered into a war in February 2022. To combat the global food crisis, the worst the world has seen since World War II, the United Nations and Turkey brokered the Black Sea Grain Initiative between Ukraine and Russia in July 2022.

What is the Black Sea grain deal? What effect will it have on global food supplies? Why did Russia pull out of the deal? Read on as we decode the whole gamut of issues in play and its implications.

So, What Is The Black Sea Grain Initiative?

Ukraine, known as the "breadbasket of the world", is among the world's biggest exporter of sunflower oil and foodgrains, such as wheat and corn. It is also a major contributor to the UN's food aid programmes. 

When Russia invaded Ukraine, it blockaded its ports. The move pushed up food prices and the threat of famine in lower-income countries. Middle Eastern and African countries rely heavily on Ukrainian grain.

India, the world's biggest importer of edible oil, too was affected as prices of edible oils soared. 

To arrest the looming crisis, the UN and Turkey on July 22, 2022, brokered a deal between Russia and Ukraine under which ships carrying foodgrains would be given a safe corridor from three Ukrainian ports -- Odesa, Yuzhny and Chornomorsk -- on the Black Sea.

In return, a memorandum of understanding was inked at the same time under which UN agreed to help Russia get its food and fertilizer exports to foreign markets.

As part of the deal, which has been renewed three times, cargo ships were inspected before they arrived in Ukraine by Russian, Ukrainian and Turkish officials, to make sure that weapons were not being smuggled into Ukraine.

Ukrainian farmers load mixed wheat and barley grains after harvesting at a grain terminal in Odesa (Getty)

What Did The Grain Deal Achieve? 

As per the United Nations data, since August 2022, the deal has allowed the export of almost 33 million metric tonnes of food through Ukrainian ports, AP reported. More than half of the exports have been to developing countries. 

Prices of staples like wheat, which hit record highs after the Russian invasion, cooled after the deal came into effect. 

Moreover, the World Food Programme shipped more than 7,25,000 tonnes of foodgrain to support humanitarian operations in Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen, CNN reported.

Why Did Russia Pull Out Of The Grain Deal?

While there are several underlying reasons behind Russia pulling the plug on the deal, Russian President Vladimir Putin last week had said the main purpose of the pact -- to supply grain to countries in need -- had "not been realised", CNN reported.

In a statement, the Russian Foreign Ministry cited continued Ukrainian "provocations and attacks against Russian civilian and military facilities" in the Black Sea area. It also said that the United Nations and the West had not resolved Russian points.

"Only upon receipt of concrete results, and not promises and assurances, will Russia be ready to consider restoring the 'deal'," NYT quoted the Russian Foreign Ministry as saying.

The complaint by Russia is not recent. For several months, Moscow has been complaining that crippling Western sanctions have restricted the sale of its own agricultural products, and sought assurances that would facilitate its exports of grain and fertilisers.

In 2022-23 year, Russia exported a record 45.5 million metric tonnes of wheat, AP reported.

Moreover, Russia has also demanded an end to sanctions on the Russian Agricultural Bank. It has also sought resumption of its ammonia exports through a pipeline to the Ukrainian port of Odesa.

While a section of media reported that Russia's decision was related to Ukraine's Monday attack on a bridge linking the annexed Crimean peninsula to the Russian mainland, Kremlin spokesperson Dmitry Peskov denied such claims.

"These are absolutely unrelated events," CNN quoted Peskov as saying.

How Will The Move Affect Global Food Supplies?

The millions of tonnes of foodgrains from Ukraine are a "lifeline for the 79 countries and 349 million people on the frontlines of food insecurity," according to the International Rescue Committee, AP reported.

The suspension of the deal will result in increase in prices and impact affordability for households.

The immediate impact will be felt by countries like Lebanon and Egypt who depend on imported food. They are likely to see a rise in prices until they find new suppliers.

US wheat and corn futures slumped after earlier hitting two-week highs following Russia's announcement, Reuters reported.

What Are The Options Now For Ukraine To Export Grain?

The immediate fallout will be ship owners not risking in allowing their vessels to enter a war zone without Russia's agreement.

Apart from the Black Sea routes, Ukraine has been exporting grain through eastern European Union countries since the war began. However, the road has not been without logistical challenges, including different rail gauges.

Moreover, the export of Ukrainian grain through the eastern EU has singed farmers in the region. Local farmers have complained that the move has left them without a market for their crops, impacting their income.