UCAB (Ukrainian club of agrarian business associations) stated on Monday (1st August 2022) that Ukraine reached a milestone of sorts by exporting 3 MT of agro commodities in July 2022 via its sea ports despite Russia blocking most of its seaports post invasion (Russia invaded Ukraine in February 2022). Grain exports alone rose 21% compared to June, contributing prominently to 12% growth in agro commodities exports.
UCAB stated that Turkey and UN mediated safe passage deal between Russia and Ukraine has facilitated outflows from black sea ports Odesa, Chornomorsk and Pivdennyi but Russian blockage is very much in place in other Ukrainian ports. UCAB stated that for attainment of pre invasion level of 6 MT grain exports per month, all three black sea ports need to operate at full capacity apart from full capacity loading of alternative routes.
Russian blockade of Odesa port finally ended with first cargo ship laden with Ukrainian grain leaving port of Odesa under safe passage deal between Russia and Ukraine. Russian blockage of Ukrainian grains post invasion of Ukraine by it had triggered a food crisis across the world.
Probable Impact of Safe Passage Deal
This deal will reverse the impact of Russian blockage of Ukrainian grains post invasion of Ukraine by it. Under the safe passage deal grain and fertilizer outflows from Russia will also resume.
- About third of total global wheat production happens collectively in Russia and Ukraine. Supplies from these two countries got blocked post invasion and impact of that can be easily understood. Global food crisis was triggered, wheat prices went through the roof and vulnerable countries faced food insecurity. Once grains blocked at Ukrainian ports get freed, world will most probably get freedom from food crisis. This safe passage deal is a boon for vulnerable countries facing existential crisis.
- Many countries imposed food export bans and restrictions due to uncertainties rolled out by Ukraine-Russia war. Food prices started skyrocketing and many countries started feeling serious threat to food security of their people, and as kneejerk reaction banned or restricted food exports from their shores. Wheat, wheat flour, meslin, edible oils and wheat derivatives exports were banned or restricted by many countries. India, a minor wheat exporter banned wheat exports from its shores and subsequently restricted wheat flour export too. Hopefully safe passage deal will result in easing of curbs on outflows from many countries.
- Freeing of blocked Russian fertilizer can stave away drought in many countries. Russia is a big exporter of fertilizer and blocking of Russian fertilizer post invasion was threatening a fall in global food production. Under safe passage deal, Russian fertilizer will reach global farms and stave away food production loss.
Conclusion
Agro commodities outflow to the tune of 3 MT from Ukraine in July is nothing short of remarkable. This is good news for vulnerable countries facing food crisis. New safe passage deal between Ukraine and Russia is a ray of hope for food crisis hit world. Food grains and edible oil exports from Ukraine will pickup pace in coming days. Apart from traditional export, Ukrainian grain exporters have the option of bulk agro trade on B2B ecommerce platforms.
