WHY WERE THE DEALS NEEDED?
The poorest in the world were hit worst by the rising global food prices. The UN World Food Programme (WFP) warned in March last year that its ability to feed some 125 million people was under threat because 50 per cent of its grain came from Ukraine.
Between 2018–2020, Africa imported US$3.7 billion in wheat (32 per cent of total African wheat imports) from Russia and another US$1.4 billion from Ukraine (12 per cent of total African wheat imports), according to the United Nations.
The United Nations said last year that 36 countries count on Russia and Ukraine for more than half of their wheat imports, including some of the poorest and most vulnerable, including Lebanon, Syria, Yemen, Somalia and Democratic Republic of Congo.
Under the Black Sea grain deal, more than 625,000 tonnes of grain has so far been shipped by the WFP for aid operations in Afghanistan, Ethiopia, Kenya, Somalia and Yemen. In 2022, WFP procured more than half its global wheat grain from Ukraine.
RUSSIAN COMPLAINTS
Putin complained that Russia has been cheated by the West because its own exports still faced problems.
The United States has dismissed Russia’s grievances. US Ambassador to the UN Linda Thomas-Greenfield said last month: “It is exporting grain and fertiliser at the same levels, if not higher, than before the full scale invasion.”
Putin said Russia only agreed to the deal for the sake of countries in Africa and Latin America but that only around 3.2-3.4 per cent of the grain goes to the world’s poorest countries while 40 per cent went to prosperous countries.
According to UN data, around 3 per cent of exports under the Black Sea deal has gone to low-income countries, while high income countries get around 44 per cent and the rest to middle-income states.
The United Nations has always said the deal was a commercial enterprise and not intended to be entirely humanitarian, but that it benefited poorer countries by helping lower food prices globally.
RUSSIA’S DEMANDS
In a letter to UN officials in March, Russia spelled out the demands it wants met in exchange for its continued cooperation in the grain deal:
– Moscow wants the Russian Agricultural Bank (Rosselkhozbank) reconnected to the SWIFT payments system. The bank was cut off from SWIFT by the European Union in June last year over Russia’s invasion. An EU spokesperson has said the bloc is not considering the reinstatement of Russian banks.
As a workaround, UN officials got US bank JPMorgan Chase & Co JPM.N to start processing some Russian grain export payments with reassurances from the U.S. government.
The United Nations is also working with the African Export-Import Bank (Afreximbank) to create a platform to help process transactions for Russian exports of grain and fertiliser to Africa, the top U.N. trade official told Reuters last month.
Russia wants the resumption of its Black Sea ammonia exports via a pipeline from Russia’s Togliatti to Ukraine’s Pivdennyi port. The pipeline, which pumped up to 2.5 million tonnes of ammonia annually, was shut down by the war.
In September, Reuters reported that the UN proposed that Russian fertilizer producer Uralchem sell its ammonia to US-headquartered commodities trader Trammo once it reaches the Russia-Ukraine border via the pipeline.
Until the ammonia pipeline is restarted, Moscow has said it will limit the number of vessels allowed to travel to Pivdennyi port under the Black Sea grain deal. US data shows no ships have visited Pivdennyi port for more than a month.
Last week Russia accused Ukrainian forces of blowing up part of the pipeline, the world’s longest carrying ammonia, in Ukraine’s Kharkiv region. The regional Ukrainian governor said Russia had shelled the pipeline. Neither side provided evidence.
More than 400,000 tonnes of Russian fertiliser was also initially stranded in European Union ports after the war started, though UN officials have negotiated its release for export to Africa after Russia said it would be donated.
Russia also wants a resumption of supplies to Russia of agricultural machinery and spare parts; lifting restrictions on insurance and access to ports for Russian ships and cargo; and unblocking accounts and financial activities of Russian fertiliser companies.
RUSSIAN GRAIN, FERTILIZER EXPORTS
While exports of Russian wheat and some fertilisers have risen since the war, exports of Russian ammonia and potassium-based fertilisers have plummeted.
In the 2021-22 season, Russia exported 38.1 million tonnes of grain, including 30.7 million tonnes of wheat, while in the 2022-23 season, Putin said Russia is expected to export around 55-60 million tonnes of grain – likely to be a record.
According to the U. Department of Agriculture, Russia’s main wheat export markets are in the Middle East and Africa and exports to all regions have increased in the 2022-23 period.
While Russian exports of urea and potassium-based fertilisers diammonium and monammonium phosphate rose from Russia, exports of potassium-based fertiliser muriate of potash (MOP) fell 37 per cent in 2022, according to trade data.
Source: CNA
