Russia Cancels Grain Deal with Ukraine, Raising Concerns over Food Prices

This article was last updated on July 17, 2023

Canada: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…
USA: Oye! Times readers Get FREE $30 to spend on Amazon, Walmart…

Russia Cancels Grain Deal with Ukraine

Russia has announced that it will withdraw from a grain deal with Ukraine, a move that could have significant implications for global food prices. The deal, which involved exports through the Black Sea, allowed Russia and Ukraine to maintain their positions as major grain exporters. The cancellation of the deal raises concerns about potential food shortages, particularly in poorer countries.

The Importance of the Grain Deal

Russia and Ukraine are two of the largest grain exporters in the world. The continuation of this deal was crucial for ensuring a stable supply of grain, which in turn helps keep food prices affordable. With the deal no longer in place, the price of grain may increase, leading to higher food prices globally. This could have a particularly devastating effect on lower-income countries in Africa, where the cost of grain imports is already a challenge. Major food shortages may occur as a result.

The grain deal, which also involved Turkey and the United Nations, was originally set to expire on Monday. However, it had already been extended multiple times since May. The United Nations had previously assured Russia that it would retain access to the export market, which was crucial in keeping Russia invested in the deal. However, Moscow now claims that there are obstacles preventing the export of grain and fertilizer.

Western sanctions have also made trade more difficult for Russia, although the West does not have direct control over Russian food exports. For instance, Russian banks being disconnected from the international SWIFT payment system has posed challenges for agricultural companies engaged in trade. Therefore, meeting Russia’s demands for the deal becomes even more crucial.

‘The Incident on Crimean Bridge is Unrelated’

The Russian union of grain exporters, Rusgrain, has stated that its members intend to continue exporting affordable grain, reassuring the market that all previous contracts will be honored. The Kremlin has also emphasized that the decision to cancel the grain deal is unrelated to the deadly incident that occurred on the Crimean bridge. Putin had reportedly made up his mind prior to learning of the incident, which resulted in two fatalities. The details and those responsible for the incident remain unclear.

Ukraine is a major producer of grain, and the grain deal allowed the country to export its products through the Black Sea. The cancellation of the deal could lead to a disruption in grain supply, potentially triggering a rise in food prices. This would have significant consequences for global food security.

Conclusion

The cancellation of the grain deal between Russia and Ukraine raises concerns about the stability of global food prices. As two major grain exporters, the continued partnership between Russia and Ukraine was crucial in ensuring a steady supply of affordable grain. The cancellation of the deal may lead to higher food prices and potential shortages, particularly impacting poorer countries in Africa. The international community will need to closely monitor the situation and take appropriate measures to mitigate any adverse effects on global food security.