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FutureStarrUkraine's Grain Exports Reach Record High in February
Ukraine is a major global grain exporter and grower, currently the seventh-largest wheat producer globally. Additionally, they produce corn, barley and other foodstuffs.
In July, Russia lifted a blockade on three Ukrainian Black Sea ports that had held onto about 20 million tonnes of grain in storage silos. This allowed ships to export it and helped lower global grain prices; however, backlogs remain.
Ukraine's grain exports totaled 5.2 million tonnes in February, up from 5.05 million the previous month. So far this 2022/23 season, overall grain exports are down 28.7%, the agriculture ministry reported on Monday.
Ukraine is one of the world's leading grain growers and exporters, sending over 45 million tonnes to global markets annually. But Russian invasion of Ukraine in February 2022 temporarily disrupted deliveries and caused prices for staple foods to soar - especially in countries already facing conflict and economic hardship.
In July 2022, the UN secured an agreement that created a safe maritime humanitarian corridor in the Black Sea for grain shipments from three Ukrainian ports: Odesa, Chornomorsk and Yuzhny/Pivdennyi. This decision helped avert a humanitarian catastrophe, stabilize global food prices and boost Ukraine's agricultural sector.
Following the deal, grain and food prices have fallen 7.90 percent since March 2022. While it appears to have made it easier for people to leave Ukraine, it remains uncertain whether these benefits are reaching those most in need.
This poses a grave problem, as Ukraine's grain production and infrastructure have historically been major players on global markets. Prior to the conflict, Ukraine was an important exporter of corn and wheat.
The conflict has also drastically reduced Ukraine's barley, sunflower oil and other oilseed production. Together with wheat, these products accounted for 42% of their exports - their loss having a major impact on world prices.
Ukraine reported record grain exports in February, despite the blockade of its Black Sea ports. It shipped 5.2 million tonnes during the month compared to 4.07 million tonnes last year.
This is the highest monthly export volume since Russia invaded Ukraine in February, but still far below Ukraine's historic average of 45 million tonnes per year. According to the United Nations, this decrease in grain volumes poses a major risk for global food security worldwide.
Due to this global food price boom, grain prices have surged across global markets - particularly the EU and China, where they are highly influential factors for consumer purchasing decisions. This has caused an increase in global hunger and raised the likelihood of food shortages in many countries, particularly Asia.
Meanwhile, the European Union has developed a crisis response plan to build resilience against Russia's use of the grain deal as leverage in the conflict. It will focus on finding alternative methods of enabling Ukraine's grain exports and improving land transport infrastructure to avoid disruption.
Grain exports have become a lifeline to Ukraine's struggling economy and helped alleviate food shortages around the world. Yet it is essential that an effective solution be found in order to avoid disruption.
Before a solution is found, the United States, Turkey and Europe must find other means of facilitating grain exports without further disrupting global economic activity. This includes exploring alternative routes to the Black Sea and investing in land transport infrastructure that will enable Ukraine's large stores of grain to be transported across both sides of the border.
The return of grain trade under the Grain Deal is important for Ukraine and beyond, yet its current state cannot be sustained long-term. A comprehensive solution must be found in order to address this problem over time.
Ukraine's grain exports hit a record low in February, down almost 27% from the prior season's level due to Russia's invasion that severely disrupted agriculture production and infrastructure that once contributed significantly to world markets. So far this marketing year, Ukrainian agriculture ministry data shows that grain exports totaled 31.8 million tonnes compared with 43.5 million tonnes during the same period last season.
The decrease in wheat volumes, combined with growing international opposition to Russian state-owned grain operators, are impacting wheat prices. The USDA's most recent wheat production forecast shows that production will be slightly above normal but still well below historical levels (FAO, 2022).
In addition to Russia's blockade of Ukrainian ports, crop exports have been hindered by logistical difficulties. Ports on the Black Sea and Danube have become inaccessible due to conflict or Russian occupation, while alternative transport routes are limited in cost and capacity due to shortages.
As a result, Ukrainian producers have worked diligently to export grain out of Ukraine by road and rail. While these measures have helped ease global food price pressures, they don't necessarily restore Ukraine to its pre-war export levels of 4-5 million tonnes per month.
However, the reopening of Ukrainian ports under the Black Sea Grain Initiative is an important step towards restoring Ukraine to its former trading role. This agreement permits grain exports from three Ukraine ports through a secure and humanitarian corridor to Turkey, which then ships the cargoes out to other parts of the world.
This agreement marks a major accomplishment, yet there remain numerous challenges ahead. Ukraine needs to find a way of implementing the grain initiative at scale, which means persuading commercial ships and insurance companies to reduce their rates, conduct regular inspections, and create guidelines to guide them all.
Ukraine's grain exports hit a new high in February, according to Agriculture Ministry data. This amount compares with the 5.8 million tonnes of grains farmers have so far exported this 2022/23 season.
Data showed that exports of corn were up 2.3% year-on-year, while those for sorghum and barley saw increases of 5.9% and 2.7%, respectively. These gains were further bolstered by Russian grain purchases.
Meanwhile, the UN World Food Programme (WFP) purchased 120,000 metric tons of wheat to supply humanitarian food aid to drought-stricken countries in Africa and Yemen. This was the first purchase under a deal reached with Russia and Turkiye to resume grain shipments through Ukrainian ports through the Black Sea.
The Black Sea deal offers Ukrainian farmers the opportunity to harvest at a higher rate and sell their grains at market prices, helping alleviate their immediate economic crisis while offering encouragement to plant in the fall and next spring.
However, it remains uncertain if this agreement will provide long-term relief. It's too soon to tell if it can avert another global food crisis, especially as Ukraine's ongoing conflict continues to make exporting grain from there more challenging.
While this grain deal is an important step forward, it won't be enough to prevent hunger from worsening in the coming months. If the conflict in Ukraine continues to depress grain and oilseed exports from Ukrainian farms, it could prolong a global famine that already has had devastating effects on millions of lives.
Ukraine has seen its grain exports decline 27% so far this 2022-23 season due to Russian invasion, which is impacting agricultural production and infrastructure that once contributed significantly to world markets. As long as this conflict persists, prices will likely remain affected by Ukraine's trade flows.
Ukraine has a bumper crop of wheat and corn, yet the government has limited exports to protect domestic demand from recent price spikes. Furthermore, government taxes and logistic issues caused by the war have kept more grain at home than usual.
While this has helped keep global usage rates unchanged, food availability in certain parts of the world - particularly conflict-affected regions - remains an issue. Ukraine can help alleviate this by resuming grain shipments to other countries.
Ukraine has signed a UN-backed deal that will enable ships with 25,000 tons of grain or oilseed cargoes to leave the Black Sea via Ukrainian ports, starting on August 1. The initiative is meant to reduce prices and boost liquidity in the global grain market.
At a press briefing held in mid-September, the UN's coordinator for this initiative reported that over 100 ships carrying more than one million tonnes of grain and other foodstuffs have left Ukraine thus far this season. Furthermore, two UN-chartered vessels carrying WFP purchased wheat have already left Ukraine, with another expected to follow soon after.
Although this deal may not prevent famine in conflict-affected areas, it will at least stabilize the grain market and bring prices down as the conflict drags on. Although a positive step, it remains uncertain how long this agreement will last or whether Russia will allow more grain cargoes through the Black Sea safely.