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Global Food Prices Rise with Ukraine-Russia Agreement in Doubt

Written by on November 1, 2022

The prices of wheat and corn jumped sharply in global trading Monday, after Russia’s announcement over the weekend that it could no longer “guarantee the safety” of civilian cargo ships in the Black Sea and would pull out of a deal that established a humanitarian maritime corridor there.

While shipments of grain from Ukrainian ports to the rest of the world resumed on Monday after a brief halt the previous day, experts are concerned that the breakdown of the deal could lead to future interruptions that will drive prices even higher.

The new uncertainty about grain shipments from Ukraine comes at a time when aid groups around the world, including the United Nations’ World Food Program (WFP), are warning of a massive global hunger crisis.

Threat of famine

Between 2019 and 2022, according to the WFP, the number of people suffering globally from “acute food insecurity” has more than doubled to 345 million. According to the agency, 50 million people are currently experiencing, or are on the brink of famine, the most severe assessment in the Integrated Food Security Phase Classification used by international aid agencies.

“We’re deeply disappointed by the breakdown of the initiative,” Catherine Maldonado, the food security portfolio director for Mercy Corps, a U.S.-based aid organization, told VOA. “We are tracking the food price shocks that are starting to be seen. But we’re also tracking the continued livelihood and economic shocks, as well as the projections for food availability issues all throughout this year and next year because of the ongoing global food crisis.”

Restrictions on exports from Ukraine have not by themselves caused the current food crisis. However, Maldonado said, “the food price shocks that could ripple from this could have a global impact.”

Ukrainian exports choked

Russia’s invasion of Ukraine, which began in February, temporarily shut down shipments of wheat, corn and other agricultural commodities from that country, one of the world’s largest suppliers.

In talks brokered by Turkey in August, officials from Russia, Ukraine and the United Nations agreed to create a humanitarian shipping corridor that would allow the movement of civilian cargo vessels through the Black Sea and into the Mediterranean.

Under the agreement, ships moving to and from Ukraine and Russia were jointly inspected when they reached Turkish waters to ensure they were not carrying war materiel or other contraband.

The agreement, which had been in operation through this past weekend, allowed millions of tons of grain and other foodstuffs to leave Ukrainian ports between August and October.

Russia withdraws

On Saturday, Russia said it was suspending its participation in the program because of what it characterized as Ukrainian attacks on military and civilian vessels that were involved in maintaining the security of the humanitarian corridor.

The Russian Foreign Ministry said the attacks on its ships had been launched from inside the humanitarian corridor and that as a result, Russia “cannot guarantee the safety of civilian dry cargo ships participating in the Black Sea Initiative and suspends its implementation from today for an indefinite period.”

On Sunday, the U.N.’s Black Sea Grain Initiative Joint Coordination Center (JCC), established to facilitate the agreement, said it remains in touch with all parties involved.

“The secretariat, in close cooperation with the Turkish delegation at the JCC, continues to engage all representatives to offer options on next steps regarding the JCC operations in accordance with the goals and provisions stated in the initiative,” the JCC said.

Russian officials, the JCC said, had agreed to “cooperate remotely on issues that require an immediate decision by the JCC.”

Ukraine responds

Ukrainian Foreign Minister Dmytro Kuleba on Sunday accused Russia of acting in bad faith, posting on Twitter that Russian officials had already taken steps to reduce the pace of cargo ships being allowed through the humanitarian corridor.

“By suspending its participation in the grain deal on a false pretext of explosions 220 kilometers away from the grain corridor, Russia blocks 2 million tons of grain on 176 vessels already at sea — enough to feed over 7 million people,” Kuleba wrote.

“Russia has planned this well in advance. The current queue with grain has accumulated in the Black Sea since September, when Russia started deliberately delaying the functioning of the corridor and seeking to undermine the deal. Russia took the decision to resume its hunger games long ago and now tries to justify it,” Kuleba said.

Effects on food aid

International aid organizations were already hard pressed to meet the needs of hungry people around the world before Russia invaded Ukraine in February. For several months, the war completely stopped the shipment of wheat, corn and other staples from Ukraine, badly complicating the provision of aid.

The war in Ukraine not only reduced supply but also caused massive price spikes. For example, at one point in March, wheat prices had risen by 71% from pre-invasion levels. As of last week, prices had fallen but remained about 10% higher than at the beginning of the year. On Monday, wheat surged by another 5.9% compared to closing prices on Friday.

“It all works together to create a perfect storm, unfortunately, of lack of supply of food, of course, but also then rising costs of making sure people have that food,” Jordan Teague, interim director for policy analysis and coalition building at Bread for the World, told VOA.

Teague said this forces painful choices on humanitarian organizations, which already ration the food and cash assistance they provide to needy people and families around the world and are now faced with the need to reduce them.

“Families are getting less food or less money per month,” Teague said. “Sometimes, we’ve heard of the possibility of certain areas not receiving aid at all, in service of other areas that are worse off. … Those are all options that have happened in recent years and are choices that are likely on the table now.”


By Rob Garver

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