Food insecurity returns

End of Ukraine grain deal spells trouble

The Black Sea Grain Initiative, signed with considerable fanfare last year as an attempt to insulate Ukrainian wheat export from the fallout of the Russian invasion of that country, has expired. The Russian Federation has refused to renew its participation in the deal, meaning that the Black Sea is once again largely closed to vessels carrying food grain. The reasons for this Russian action are manifold. One is that Russia itself, as a major wheat producer, has ample alternative pathways for its exports. The other is that it is expected to have a bumper harvest over the year, and will want to take full advantage of any price effects. Finally, there are geopolitical reasons that may have made sense to the Kremlin.

 
The grain deal was partially brokered and supervised by Turkiye, which has historically controlled access to the Black Sea through the Bosphorus, a strait. Istanbul had been carefully balancing its membership of the North Atlantic Treaty Organization (Nato) with outreach to Russia since the invasion. However, in recent weeks, Recep Tayyip Erdogan, freshly re-elected President, surprised observers with a series of concessions to the West and Ukraine, and those undermined this balancing act. He reneged on a deal to retain custody of Ukrainian prisoners from the Azov Regiment captured after the siege of Mariupol, sending them back to Kiev. Furthermore, he dropped objections to the admission of Sweden into Nato and even said Ukraine “deserves” membership of the security alliance — a well-known red line for Moscow.

 
Russia’s refusal to continue the grain deal will affect food availability. In the short term, it is important to note that trade had already been effectively constrained by tacit Russian non-cooperation in the deal. Inspections had ground to a stop, and Odessa port was being targeted by Russian drone attacks. The price impact of this non-cooperation had been minimal because of good wheat harvest elsewhere, including in Brazil. But in the medium to long term, this once again increases food insecurity globally. Alternative routes for Ukrainian wheat have been difficult to secure. Its East European supporters have been somewhat obstructionist about wheat imports and even transit through the bloc. Almost half the Black Sea wheat was going to Europe and Central Asia. Only 15 per cent was going to West Asia and Africa, but it was crucial for price stability in those regions and more generally. Developing economies will now face the possibility of tightening food markets of the sort that sparked political unrest and macroeconomic instability last year.

 

India, as a self-proclaimed leader of the Global South, should attempt to address this issue through its presidency of the G20 grouping. Even if that appears difficult, it should at least avoid intensifying the problem. There are concerns globally, for example, that New Delhi will block rice export as a result of domestic inflationary pressure. This might make political sense when a general election is now less than a year away. But the international ramifications may be severe, and should also be taken into consideration. The broader inflationary environment and global food security can best be addressed by pressuring the Kremlin through India’s many forms of contact with Russia into restoring the world’s access to Ukrainian wheat on humanitarian grounds.