Collapse of 'lifeline' Ukraine grain deal could reignite food crisis

A possible collapse of the Black Sea grain deal could reignite a global food shortage that has been dampened by the rare accord between Russia and Ukraine, officials fear.

The deal that gives cargo ships safe passage from Ukrainian ports expires on Monday, with Moscow reluctant to extend it.

The war between two of the world’s top agricultural exporters was blamed for rocketing food and fertiliser prices before the UN and Turkey stepped in to broker the deal last July.

Russian Foreign Minister Sergei Lavrov said on Thursday that he had not heard any new proposals on the Black Sea grain export deal, which is set to expire on Monday. The UN’s World Food Programme says 45 countries on three continents have been able to import food because of the pact. It also allows both sides in the war to inspect ships in corridors free of mines between Ukraine and Turkey.

Antonio Guterres, the UN’s Secretary General, has written to Russian President Vladimir Putin hinting that restrictions could be eased on a Kremlin-owned bank in return for a new deal.

Frederick Lee-Ohlsson, the head of the WFP’s Brussels office, who has previously led negotiations on authorising UN aid to Syria, said global food security was at a “critical juncture”.

If there is no renewal “we will not be sitting and feeling relatively reassured as we may do today”, Mr Lee-Ohlsson said after a new UN report found world hunger did not rise in 2022.

“The global food prices that you remember a year ago in March 2022, after the war in Ukraine started, have dropped more than 23 per cent. That is really making the Black Sea initiative a lifeline,” he said.

If sea lanes are blocked, Ukraine could export food by road or rail but these routes cannot handle the same volume of grain as the ports of Odesa, Chornomorsk and Pivdenny.

The land routes, which the EU calls “solidarity lanes”, also come with practical problems such as railways which are wider in Ukraine than in friendly neighbouring countries.

“The solidarity lanes will not function without the Black Sea grain initiative. That has to be in parallel,” said Leonard Mizzi, the head of an EU unit on international partnerships in agriculture, who said he was hoping for a deal.

Moscow signalled its doubts over the deal by agreeing only to 60-day extensions in March and May, having previously approved it for 120 days at a time.

Russia’s main complaint is that it is struggling to sell its agricultural goods despite assurances from the UN. The Kremlin blames this on sanctions – while western governments counter that their restrictions do not apply to food.

Another Russian complaint is that some of the grain goes to rich countries despite the deal being billed as a lifeline for poorer nations. However, the UN said in March that the developing world received the largest share of exports including the “lion’s share” of wheat under the pact.

Kremlin spokesman Dmitry Peskov said last week that Moscow saw “no particular grounds to renew this deal” because the part on Russian produce “has not been performed up to now”.

Addressing this grievance, the UN’s Mr Guterres offered in his letter to Mr Putin to “harmonise” the Russian part of the pact with the deal on exporting Ukrainian grain.

“The objective is to remove hurdles affecting financial transactions through the Russian Agricultural Bank, a major concern expressed by the Russian Federation,” Mr Guterres’s office said.

The bank was partially sanctioned by the US and cut off from the global payments system Swift after Russia invaded Ukraine.

Ukraine, once known as the breadbasket of the Soviet Union, is one of the world’s most fertile countries. The two warring countries are among the world’s top exporters of wheat, maize, rapeseed and sunflower oil.

The new report by the UN’s Food and Agriculture Organisation said a rise in food prices was “one of the main impacts of the war”.

“Although global food commodity prices were rising steadily even before the war, the added uncertainty induced by the war contributed to a surge in food prices,” it said.

The price level dropped from a record high in March 2022 but “remained much higher than before the pandemic”, the report said.

Global hunger remained “relatively unchanged” compared to 2021. However, by 2030 the number of chronically undernourished people could be 23 million higher than if the war in Ukraine had not happened, it said.