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Ukraine grain deal: Why is Russia pulling out? Ukraine grain deal: What has happened to food prices since it ended?
(about 16 hours later)
A grain ship in the port of Chornomorsk on Ukraine's Black Sea coastA grain ship in the port of Chornomorsk on Ukraine's Black Sea coast
Russia has refused to renew a deal with Ukraine which allowed it to export grain through the Black Sea. Wheat prices around the world have soared after Russia's refusal to renew its grain deal with Ukraine.
The deal enabled Ukraine to supply world markets with over 32 million tonnes of food products. It will now need to find alternative routes for its exports. The arrangement allowed ships to sail through the Black Sea to export millions of tonnes of grain to the rest of the world.
What was the grain deal?What was the grain deal?
When Russia invaded Ukraine in February 2022, its navy blockaded the country's Black Sea ports. When Russia invaded Ukraine in February 2022, its navy blockaded the country's Black Sea ports, trapping 20 million tonnes of grain which were meant for export.
The Ukraine grain deal let cargo ships pass safely along a corridor in the Black Sea 310 nautical miles long and three nautical miles wide, to and from the Ukrainian ports of Odesa, Chornomorsk and Yuzhny/Pivdennyi. This caused world food prices to soar, and threatened to create shortages in Middle Eastern and African countries which imported significant amounts of food from Ukraine.
The deal was brokered in July 2022 by Turkey and the UN. In July 2022, a deal was struck between Russia and Ukraine - brokered by Turkey and the UN - allowing cargo ships to sail along a corridor in the Black Sea 310 nautical miles long and three nautical miles wide.
The corridor ran to and from the Ukrainian ports of Odesa, Chornomorsk and Yuzhny/Pivdennyi.
It also allowed the Russian navy to check ships for weapons at the Bosphorus Strait, at the entrance to the Black Sea.It also allowed the Russian navy to check ships for weapons at the Bosphorus Strait, at the entrance to the Black Sea.
Why is the grain deal important? Almost 33 million tonnes of grain were shipped from Ukraine under the deal, and world food prices declined by roughly 20% as a result, according to the UN's Food and Agriculture Organization.
Ukraine is one of the world's largest exporters of sunflower, maize, wheat and barley. Where did Ukraine's grain go?
Russia's blockade meant some 20 million tonnes of grain became trapped in its Black Sea ports. This caused world food prices to soar. According to the UN's Joint Coordination Centre, 57% of the foodstuffs exported from Ukraine over the past year went to developing countries and 43% to developed countries.
It also threatened to cause food shortages in several African and Middle Eastern countries which relied heavily on imports of Ukrainian grain. The biggest recipients were China, Spain, Turkey and Italy.
When the deal was signed and grain shipments restarted, world food prices declined by roughly 20%, according to the UN's Food and Agriculture Organization. Russia cited Ukraine's failure to export more grain to poorer countries as one of the reasons it pulled out of the deal.
Why has Russia refused to renew the grain deal? However, the UN says that Ukraine has supplied 725,000 tonnes of grain to the World Food Programme (WFP), which was sent as humanitarian aid to Afghanistan, Djibouti, Ethiopia, Kenya, Somalia, Sudan and Yemen.
The EU says that over the past year, Ukraine supplied the WFP with more than 80% of all its grain, compared to 50% before the war.
The US ambassador to the UN, Linda Thomas-Greenfield, called Russia's cancellation of the grain deal an "act of cruelty".
It is estimated that more than 50 million people across Somalia, Kenya, Ethiopia and South Sudan are currently in need of food aid because of successive years of failed rains.
Russia's grain deal exit stab in the back - Kenya
What has happened to food prices since the grain deal ended?
The grain deal expired on 17 July.
Since then, Russia has launched a series of air attacks on Ukraine's ports, destroying an estimated 60,000 tonnes of grain.
Watch: Footage shows the impact of attack on Odesa grain terminals
Watch: Footage shows the impact of attack on Odesa grain terminals
The Russian defence ministry also said it would regard all cargo ships in the Black Sea bound for Ukraine as potential military targets.
Ukraine is one of world's biggest suppliers of crops such as sunflower oil, barley, maize and wheat.
The ending of the deal has already had a severe effect on international food markets, with wheat prices rising sharply on both European and US wholesale markets.
Why did Russia refuse to renew the grain deal?
When the UN brokered the deal, it told Russia it would help it increase its exports of grain and fertilisers.When the UN brokered the deal, it told Russia it would help it increase its exports of grain and fertilisers.
Although Western countries have imposed no sanctions on Russia's agricultural products, Russia says the sanctions they did impose have deterred shipping firms, international banks and insurers from dealing with its producers. Although Western countries have imposed no sanctions on Russia's agricultural products, Russia says the broader restrictions which are in place have deterred shipping firms, international banks and insurers from dealing with its producers.
What sanctions are being imposed on Russia?
Russia asked for its state-owned agricultural bank, Rosselkhozbank, to be reconnected to the Swift fast payment system (from which all Russian banks were barred in June 2022).Russia asked for its state-owned agricultural bank, Rosselkhozbank, to be reconnected to the Swift fast payment system (from which all Russian banks were barred in June 2022).
The UN suggested that Russia set up a subsidiary of the bank, which would be allowed to use Swift - but Russia refused that option, saying it would take too long. The UN suggested that Russia set up a subsidiary of the bank, which would be allowed to use Swift - but Russia rejected the plan.
Other suggested schemes, such as processing payments for food and fertiliser through the US bank JPMorgan Chase, or through the African Export-Import Bank, also fell through. Other proposed schemes, such as processing payments for food and fertiliser through the US bank JPMorgan Chase, or through the African Export-Import Bank, also fell through.
Russia says it will rejoin the deal if its conditions are met.Russia says it will rejoin the deal if its conditions are met.
Turkey's President Recep Tayyip Erdogan says he will try to persuade Russia's President Vladimir Putin to rejoin it when they meet in early August. Can Ukraine export its grain another way?
What other export routes are there for Ukrainian grain? The Ukrainian Grain Association has a plan to export grain through Europe, via its Danube River ports.
The EU has an existing plan for distributing Ukrainian grain which cannot be shipped through the Black Sea. However, less grain could be exported this way, and it would be cost more and take longer.
It says it can be transported across Ukraine's border with Poland and taken to ports on the Baltic Sea, or by rail and barge to the Romanian port of Constanta. The EU drew up a plan in early 2022 for distributing Ukrainian grain if it cannot be shipped through the Black Sea.
Since the start of the war, Ukraine has been sending about 10% of its grain exports across its land border with Poland. However, there are likely to be logjams if it exports more grain via this route. It said grain could be transported across Ukraine's border with Poland and taken to ports on the Baltic Sea, or to the Romanian port of Constanta.
Ukraine's railways have a different gauge to those in the rest of Europe, which means that every trainload of grain has to be transferred from one set of wagons to another at the border. However, Ukraine's railways have a different gauge to those in the rest of Europe, which means that every trainload of grain has to be transferred from one set of wagons to another at the border.
Also, the rail network in Eastern Europe does not have the capacity to transport to the Baltic ports and Constanta even the relatively low volumes of grain that Ukraine has been exporting by land up until now. In addition, the rail network in Eastern Europe does not have the capacity to transport even the relatively low volumes of grain that Ukraine has previously been exporting by land.
A lot of grain has stayed in countries such as Poland, Hungary, Romania, Bulgaria and Slovakia rather than being transported any further. It has glutted their markets and caused local food prices to crash.
To protect farmers' incomes in these countries, the EU has agreed to restrict Ukraine's food exports there until 15 September.
Where have Ukraine's food exports gone?
The UN says that of all the food products Ukraine has exported under the grain deal over the past year:
47% have gone to "high-income countries" including Spain, Italy and the Netherlands
26% have gone to "upper-middle income countries" such as Turkey and China
27% have gone to "low and lower-middle income countries" such as Egypt, Kenya and Sudan
Russia says that Ukraine's failure to export more grain to poorer countries is one of the reasons it pulled out of the deal.
However, the UN says that under the grain deal, Ukraine has shipped 625,000 tonnes of food as humanitarian aid to Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen.
In 2022, more than half of the grain bought by the UN's World Food Programme came from Ukraine.
Pictures provide evidence of Russian grain theft
Related TopicsRelated Topics
Russia-Ukraine warRussia-Ukraine war
TurkeyTurkey
FoodFood