Black Sea Grain Deal At Risk: Potential Impacts On Global Food Prices And Shipping Industry

Russia and Ukraine signed an UN-backed deal in July 2022, allowing the export of millions of tons of grain from Black Sea ports. The deal is set to expire on 18 March 2023, unless renewed. Ukraine’s president and the UN Secretary-General have urged the renewal of the deal, but reports suggest Russia may not renew its participation.

Black Sea Grain Deal’s Importance

Before the war, Ukraine and Russia were responsible for about 30% of the global wheat trade. The Black Sea grain deal has enabled the export of 23 million tons of grain from Ukrainian ports since its implementation. The shipments of wheat, maize, oil seeds, and barley have reduced the global wheat price by approximately 30% since June 2022.

Calls For Deal Renewal 

Ukraine’s President, Volodymyr Zelenskiy and the UN Secretary-General, António Guterres, have called for the extension of the Black Sea grain deal. Guterres has emphasized the critical importance of the deal in lowering the global cost of food and offering critical relief to people affected by the war.

Concerns Over Deal Non-Renewal

Reports suggest that Russia may not renew its participation in the Black Sea grain deal, prompting concerns over potential risks to supplies and the impact on global grain prices. If the agreement is not renewed, it could also affect Ukraine’s summer wheat harvest.

Impact On Global Food Prices

Grain traders are concerned about the impact on global food prices if the Black Sea grain deal is not renewed. The successful shipments of much-needed wheat, maize, oil seeds, and barley from the Black Sea to countries reliant on grain imports have reduced the global wheat price by about 30% since its peak in June 2022.

Shipping Industry Concerns

Representatives of the shipping sector have commended how well the Black Sea grain corridor has run during the past seven months. However, they are concerned about the impact of the non-renewal of the deal on shipping companies, as vessels may not travel to the Black Sea, and companies may struggle to obtain insurance.

UN’s Help Needed

Around 60 ships have been stuck at Ukrainian ports since the start of the conflict, and the International Chamber of Shipping, the International Maritime Organization and about 30 other industry groups are calling on the UN to help free them. These vessels are not suitable for transporting grain and have not been able to leave the country through the shipping corridor.

Insight

The renewal of the Black Sea grain deal is critical to ensuring the stability of global food prices and supporting people affected by the war. The shipping industry and grain traders have expressed their concerns over the non-renewal of the deal, and the UN’s assistance is needed to free ships stuck at Ukrainian ports.

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