Blog News Events Publications Directory Community Industry Voices Media

Ukraine to increase exports to low-income countries after grain initiative criticism

Western powers are accelerating efforts to ship Ukrainian grain to countries at risk of food scarcity, following concerns that the vast majority of exports from Black Sea ports are reaching wealthier nations. 

The Black Sea Grain Initiative, which allows shipments of wheat, corn, sunflower products and other agri goods to leave Ukrainian ports safely, has been hailed by the UN for lowering and stabilising global food prices since its effective launch on August 1. 

As of press time, more than 550 vessels have cleared inspections by the initiative’s Joint Coordination Centre (JCC), which comprises representatives from Russia, Turkey, Ukraine and the UN. In total, more than 13 million tonnes of goods have already left the ports of Chornomorsk, Odesa and Yuzhny. 

AdvertisingEKA Turbo Charge Trading Systems in Weeks
AdvertisingBrady Technologoes

However, the arrangement has not been entirely plain sailing, with concerns emerging in October that Russia would withdraw its support, effectively shuttering the initiative from November onwards.  

Russian President Vladimir Putin had previously criticised the arrangement on the grounds that most grain exported was being shipped “not to the poorest developing countries but to EU countries”, as well as Turkey, and that export restrictions could be introduced. 

So far, just 15 shipments have been to countries classed as “low income”, UN data shows. Of those, six have been to Ethiopia, four to Yemen, three to Afghanistan and one to each of Somalia and Sudan. 

But a total of 410 shipments have been to EU member states, the UK and Turkey – equivalent to around 70% of all departures, or 7.5 million tonnes of grain. 

Russia eventually agreed to extend the initiative beyond November after restrictions on its ammonia exports were lifted, but Ukraine – with the backing of the EU and several western governments – has since unveiled a parallel ‘Grain From Ukraine’ programme that aims to address food scarcity specifically. 

 

Commercial concerns 

The original Black Sea agreement does not mention food scarcity, stating that its purpose is solely “to facilitate the safe navigation for the export of grain and related foodstuffs and fertilisers, including ammonia from the Ports of Odesa, Chernomorsk and Yuzhny”. 

As a result, the primary driver of where shipments have reached has been purchasing power rather than food scarcity. 

“These are predominantly commercial shipments, whereby destinations, exports of commodities, transhipments and contractual arrangements are driven by trade dynamics,” a JCC spokesperson tells GTR. 

The spokesperson adds that shipments to low-income countries have generally been facilitated by the World Food Programme. 

“Ultimately, every shipment that goes out helps stem the food crisis, stabilise food markets and bring food prices down, which is a benefit for the most vulnerable,” they say. 

However, Robert Besseling, founder of risk consultancy Pangea-Risk, says uncertainties around supply, as well as high demand from developed countries and upward pressure on prices, mean low-income countries “are potentially struggling to compete for orders at the moment”. 

“The objective of the UN deal is that Ukraine gets paid for its Black Sea grain and that trade can continue. The commercial objective therefore seems to trump the humanitarian side, unlike what is stated in the media and the war’s public relations,” he tells GTR. 

The Grain From Ukraine programme, launched in mid-November and operating within the Black Sea Grain Initiative, seeks to address these issues. It aims to send at least 60 ships to Sudan, South Sudan, Somalia, Yemen, Congo, Kenya and Nigeria over the next six months. 

Ukrainian President Volodymyr Zelenskyy says over US$180mn has been pledged by governments across the western world. 

The first vessel backed by the programme left Odesa on November 16, bringing 25,000 tonnes of wheat to Ethiopia, and was cleared by JCC inspections on November 22, UN data shows. Zelenskyy says the vessel arrived on December 3. 

A second shipment to Ethiopia left Chornomorsk on December 4. 

The post Ukraine to increase exports to low-income countries after grain initiative criticism appeared first on Global Trade Review (GTR).

Go to the Source – Ukraine to increase exports to low-income countries after grain initiative criticism