Sep 8, 2022
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It’s time to end the grain deal!

The opening of a grain corridor from Ukraine brought benefits only to Ukraine and Turkey

Russian Permanent Representative to the UN Vasily Nebenzya announced the failure of the “product deal” in the matter of supplies from Russia. “The part of the ‘grocery deal’ concerning the export of Russian food and fertilizer is not working – not a single Russian ship has yet been able to export grain for export.”

On July 22, two agreements were signed simultaneously in Istanbul – the Initiative for the Safe Transportation of Grain and Food from Ukraine, the parties to which were Russia, Turkey and Ukraine, with the assurance of the UN, and the Russian-UN Memorandum on the promotion of Russian agricultural products and fertilizers to world markets. Both agreements are part of the same “package of measures” proposed by UN Secretary General António Guterres “to reduce threats to global food security”.

At the end of August, the Russian Foreign Ministry announced that the routes of dry cargo ships with grain that go to sea from Ukrainian ports “do not correspond to the previously set goal of helping countries in Africa and Asia in need.”

By that time, 39 ships left the Black Sea ports of Ukraine, which took out a total of more than 800 thousand tons of food, mainly corn, sunflower seeds and oil, rapeseed, sunflower meal, beet pulp and soybeans. The share of wheat was less than 15%.

Of the nearly four dozen ships, 16 came to Turkey, four to Italy, three to South Korea, two each to Romania, China, Egypt, Israel and the Netherlands, and one each to Ireland, Iran, Greece, Libya and Germany.

At the same time, so far only one ship, chartered by the UN World Food Program, with 23,000 tons of wheat on board, went to Djibouti with further transportation of cargo to Ethiopia. “This does not correlate well with the goals and objectives of the Black Sea Initiative declared by the UN leadership to feed the needy in the poor and developing countries of Africa and Asia,” the Russian Foreign Ministry said in a statement.

The US Department of State, on its official website, welcomed the arrival of this single vessel (dry cargo Brave Commander) with grain for starving Africa, showing the usual hypocrisy of American diplomacy.

Russian President Vladimir Putin, in his speech at the Eastern Economic Forum, said that “only two out of eighty-seven ships” were loaded under the UN World Food Program.

“And 60,000 tons of food out of 2 million tons were exported to them. (…) I would like to say that just as many European countries have acted as colonialists in recent decades and centuries, they continue to act today. Once again, they simply deceived developing countries and continue to deceive,” the president said.

“Obviously, with this approach, the scale of food problems in the world will only increase, unfortunately. That can lead to an unprecedented humanitarian catastrophe. Maybe we should think about how to limit the direction of the export of grain and commercial food along this route? I will definitely consult on this issue with the President of Turkey, Mr. Erdogan,” Putin said.

Within the framework of the Istanbul agreements, all restrictions on the export of Russian agricultural products to world markets were to be lifted.

However, hidden US and EU sanctions in the areas of finance, insurance and logistics continue to impede Russian grain exports, despite a memorandum of understanding signed with the UN in late July on the export of Russian agricultural products. “In general, this memorandum remained on paper, – says the general director of the analytical company “ProZerno” Vladimir Petrichenko. – In general, our trust in the UN is only undermined and worsened over time.” According to him, the opening of the grain corridor from Ukraine brought benefits only to Ukraine and Turkey, while “mirror measures should have been provided to Russia, but this did not happen.”

According to the Russian Foreign Ministry, due to Western sanctions, eight million tons of Russian fertilizers and raw materials, sufficient to produce food for 100 million people, remain blocked at transshipment terminals. “Despite statements made by Washington and Brussels that anti-Russian sanctions do not apply to food and fertilizers, the blocking obstacles that have arisen as a result of their imposition on banking, insurance and cargo transportation still remain”.

“Hidden sanctions on grain exports have a devastating effect not only on the business of small players, but also on recognized market leaders, making it difficult for Russian wheat and other agricultural products to reach countries in need,” – said the chairman of the board of the Union of Grain Exporters Eduard Zernin.

According to market participants, Russian exporters of agricultural products “facing informal sanctions and restrictions, which makes it much more difficult to operate in international markets.” Russian export volumes today “seriously behind those needed to export the expected record harvest, as well as large carry-overs from last season”.

Russian Foreign Minister Sergei Lavrov said: “Our Western colleagues are not doing what we were promised by the UN Secretary General, namely, they are not making a decision to exclude logistical sanctions that prevent free access of Russian grain and fertilizers to world markets”.

Meanwhile, the grain harvest in Russia in 2022, according to the forecast of the Institute for Agricultural Market Studies (IKAR), can reach a record 145 million tons. And because of the hidden US and EU sanctions that have not disappeared, the export of Russian wheat in July-August fell to 5.9 million tons – “this is the lowest since the 2017/18 season and 27% less than last year’s volume.”

Russian grain producers note that the decline in export earnings “endangers the implementation of their investment programs by agricultural companies”.

This year, the Russian Federation may update last year’s record for increasing pork production in live weight by 400,000 tons. This was reported by Interfax with reference to data from a study of the pork market conducted by the National Rating Agency (NRA). Nevertheless, industry analysts call the increase in spending on some goods and services for the industry due to sanctions a serious problem.

The well-known Russian agrarian expert Ivan Lizan notes that due to difficulties with exports, a crisis of grain overproduction has emerged in Russia. “Since the West does not remove restrictions on grain exports, this means that it still wants to inflict maximum economic damage on Russia, but at the same time it buys feed wheat and corn from Ukraine to feed its livestock,” – writes the expert. According to him, due to Western sanctions, farmers will not receive the money they spent on the purchase of agricultural machinery, supporting domestic agricultural engineering.

“It’s time to end the grain deal: Ukrainian grain volumes don’t make much of a difference on the world market, but the very fact of their presence there has a stupefying effect on the exchanges and shows the West that Russia can be deceived,” Lizan says.

The head of the Russian state also said this: “The grain deal concluded in Istanbul turned out to be “another impudent deception” – almost all the food exported from Ukraine went to the EU countries, and Russia and the poorest countries, “as people say, were simply thrown away” … It is obvious that with this approach the scale of food problems in the world will only increase, <...> which could lead to an unprecedented humanitarian catastrophe.”

Photo: REUTERS/Stringer

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