Nikhil Kumar
Russia’s decision Monday to pull out of a critical deal that allows the export of Ukrainian grain by sea may drive up global food prices and hit hardest among the world’s poor.
Russian President Vladimir Putin’s spokesman Dmtry Peskov said the Kremlin had “suspended” its participation in the year-old agreement, which Moscow claims favors Ukraine.
“As soon as the Russian part is fulfilled, the Russian side will immediately return to the implementation of that deal,” he said, referring to Putin’s demands that in return for Russia facilitating Ukrainian exports, the West do more to help Moscow sell its agricultural products on the world markets.
The developments Monday triggered global alarm, with policymakers worrying about a fresh spike in international food prices as markets factor in a cutoff in supplies from Ukraine, a leading producer of key staples such as wheat, corn and sunflower oil. The grain deal, a rare diplomatic victory in the midst of the war, has helped bring prices down—and in turn, helped poorer nations secure the grain they need to feed their people.
Before the war, the World Food Programme (WFP), the UN agency which is a lifeline for Yemen, Somalia, Sudan and other countries ravaged by war and drought, sourced around 40 % of its grain from Ukraine. The end of the deal means the UN will have to buy grain elsewhere—almost certainly at higher costs, straining its budget and limiting what it can purchase.
Russia’s suspension of the deal will “strike a blow to people in need everywhere,” UN Secretary General Antonio Guterres told reporters in New York.
“Hundreds of millions of people face hunger and consumers are confronting a global cost-of-living crisis. They will pay the price,” he said.
Former U.S. national intelligence officer and Russia expert Fiona Hill was more pointed. “This is very deliberate on Putin’s part,” she said Monday, during a Council on Foreign Relations event on Ukraine. “He is weaponizing food, no question.”
Workers load grain at a port in Izmail, Ukraine, on April 26.AP Photo/Andrew KravchenkoRussia’s victims
This weaponization will be hardest to bear for those already struggling to survive.
The U.N.-brokered deal had reopened the supply chain for food staples from Ukraine. Before the war, the country was one of the world’s top five sources of barley, maize and wheat exports, and it dominated the market for sunflower oil.
The war led to a dramatic drop in farming inside Ukraine—and a stop to shipments via the Black Sea, the main thoroughfare for ships transporting Ukrainian food supplies to countries around the world.
The deal fixed the Black Sea problem, allowing ships to move through the sea, carrying grain on to destinations as diverse as Britain, Germany, France, Somalia, Yemen, India, China, Japan and beyond.
All told, over the past year, a total of 32.9 million metric tonnes of grain have been shipped out under the deal.
The poorest nations—where more of citizens’ budgets go to basic food supplies—benefited as the dea’l kept a lid on food prices, which are down around 23 per cent since last year’s March high. Beyond that, the world’s hungriest benefited because some 750,000 metric tons of Ukrainian grain went to the World Food Programme after the deal was signed, and those staples were sent on to Somalia, Yemen and other recipients of WFP aid.
Now those gains will be lost, as the Black Sea shipments are stopped again.
The timing is terrible. Just last week the U.N reported that 2.4 billion people didn’t have regular access to food last year, and as many as 783 million faced hunger. When the report was issued, Maximo Torero, chief economist for the Food and Agriculture Organization, said that if Russia refused to renew the grain deal, “you will have a new spike for sure” in global food prices.
That spike is already here. News of Russia’s decision drove up prices on global markets Monday morning; wheat, corn and soybean prices all rose on the news. Wheat futures—the price of wheat for future delivery—were up 4 per cent on Monday morning.
If these price rises persist, the impact could be catastrophic.
In the richer world, it will hit central bank efforts to fight inflation—and likely lead to further interest rate increases.
But the pain will be particularly acute in developing countries, where government budgets remain deeply constrained in the aftermath of the pandemic, and food prices never came down after last year’s spike. Zimbabwe, Lebanon, Egypt, Rwanda, Sierra Leone are among countries where food price inflation is already running at record levels.
Even NATO ally Turkey, a country that helped broker the grain deal, is at risk, with food price inflation already running at double digits, according to World Bank data.
“Approximately 80 % of East Africa’s grain is imported from Russia and Ukraine,” David Miliband, the head of the International Rescue Committee, said in response to Russia’s move Monday.
Ultimately, he warned, “the world’s most vulnerable will face the harshest consequences of today’s withdrawal.”
No comments:
Post a Comment