‘Hundreds of millions face hunger’: Why Russia scrapping Ukraine grain deal puts everyone in a precarious position

After Ukraine’s traumatized people and its occupied land, one of the great victims of Russia’s war has been the fruit of that land, the grains that help feed the world.

With the cancellation of an agreement that allowed Ukrainian corn, wheat and oils to be shipped to the world along the front lines of the war zone, Ukraine is once again in critical condition.

But the impacts could be felt around the world, from starvation and critical food shortages in poor countries to price hikes here at home.

Canadian farmers may be the immediate — and unintended — beneficiaries of their war-weary Ukrainian counterparts’ troubles, but a reduction in supply from one of the world’s major grain suppliers leaves all the globe with a narrow buffer in case of drought, transportation problems, or other unforeseen and uncontrollable emergencies.

“Our producers are going to fill that supply, but if we have anything that happens between now and harvest, that would also create a further situation,” said Brenna Mahoney of the Keystone Agricultural Producers, a non-profit representing Manitoba farmers.

“We’re all at the behest of weather and other delays in transport.”

Anxieties over inflation and rising food prices already have the world on edge. Moscow’s decision to scrap the year-old agreement, which permitted 33 million tonnes of Ukrainian grains to get to international buyers, is already playing on those fears, with a sharp jump Monday in commodities markets.

“If there is a production shortfall somewhere, that could be a source of concern because we don’t have the stocks we would normally have,” explained the International Food Policy Research Institute’s Joseph Glauber, a former chief economist with the U.S. Department of Agriculture.

The Black Sea Initiative, as it was known, allowed inspections of cargo travelling to and from three ports in the area of Odesa, in southern Ukraine, and ensured safe passage for ships through a heavily mined section of the Black Sea.

Moscow complained that Ukraine was sending its grains to market for commercial profit whereas the intent of the agreement was to respond to humanitarian crises.

The United Nations said in a statement the deal “does not stipulate where exports should go” and noted that increasing the global supply of grains helps to calm markets and keep food prices in check.

Additionally, it said that the UN’s World Food Program, which ensures supplies to Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen, got 80 per cent of its wheat grain from Ukraine.

“Ultimately, participation in these agreements is a choice. But struggling people everywhere and developing countries don’t have a choice,” said UN Secretary-General António Guterres.

“Hundreds of millions of people face hunger and consumers are confronting a global cost-of-living crisis. They will pay the price.”

Ukraine, whose economy has already been battered by nearly a year-and-a-half of war, will also pay a steep price.

Prior to the grain deal, it had been seeking alternative routes to get harvested crops to market. Transporting grains by truck was costly. Train shipments were complicated because of the difference in track size, or gauge, between Ukraine and Europe.

And despite standing behind Ukraine’s military, Poland, Hungary, Slovakia, Romania and Bulgaria recently banned imports of cheaper Ukrainian wheat, corn, rapeseed and sunflower seed after domestic farmers complained that it was cutting into their own profits.

It’s a harsh reminder that farmers are fierce competitors, even if it is Russian President Vladimir Putin who is sowing the discord between the allied countries.

“It’s devastating in a global marketplace where people are relying on Ukrainian production, which makes up a significant amount of agricultural capacity globally,” said Mahoney, who noted that some areas of the world, particularly in Africa, are more reliant on the type of wheat produced in Ukraine.　

“Without them being able to provide that … they are falling short on their ability to feed the population. On one hand, it’s an opportunity for Canadian production. On the other hand, this isn’t sustainable and it’s not something that we like to see.”

Ukraine is reportedly exploring the possibility of transporting its grain to a Black Sea port in Romania, though there are questions about capacity. Another option involves raising a domestic fund to cover shipping companies that are willing to run a war-zone gauntlet to transport Ukraine’s grain.

Risky as it may sound, it’s not without precedent, said Glauber.

“Look at the Gulf War. The U.S. provided war-risk insurance to oil freighters and ships that were going in and supplying the military,” he said.

Politico, citing Mykola Gorbachov, president of the Ukrainian Grain Association, reported that the state insurance fund being proposed would be valued at $500 million.

“If Russia attacks, the state will just cover all expenses,” Gorbachov said.

Simple as that sounds, Glauber said additional costs that are covered by governments will likely be passed on to producers, one way or another.

“It’s going to make it more expensive than it normally would be to ship out through Odesa,” he said.

The ideal solution — short of an end to the war — would be to convince or compel Russia to adhere to the agreement, but Moscow’s demands make that unlikely.

It wants to see a Russian agricultural bank reconnected to the SWIFT international bank transfer system. It also wants renewed access to agricultural machinery and parts; an end to sanctions against Russian food and fertilizer transportation companies; and the reopening of a pipeline that carries ammonia to Ukrainian shipping ports.

Ukrainian President Volodymyr Zelenskyy proposed in a video address to continue shipping grain from Ukraine, with the presence and involvement of the UN and Turkey acting as a shield against Russian attack.

“Ukraine, the UN and Turkey can jointly ensure the operation of the food corridor and the inspection of vessels,” he said, arguing that it would be providing a vital service to the entire world, but particularly to countries in Africa and Asia.

“Everyone who supports it will become a saviour of life in a huge territory from Morocco to China, from Indonesia to Lebanon.”

Shaming Russia, or gathering together a coalition that seeks to compel Moscow to do the right thing, may have worked a year ago, when it first agreed to the grain deal.

But that was “an anomaly,” said Glauber. In general, war machines do not halt for the niceties of global trade, nor has Putin shown much concern thus far in the conflict for the hisses and boos of his detractors.

And with Russia’s invasion stalled, with talk of mutinous insurrection by Russia’s Wagner mercenaries, with Monday’s strike on a bridge that connects Russia to annexed Crimea, Putin may feel the need to push back.

Choking Ukraine economically may be a greater motivator for the Russian president than the risk that innocent victims, far from the front lines, end up starving from lack of food.

“From a strategic point of view,” said Glauber, “that may be the ultimate thing that trumps anything else.”

Allan Woods is a Montreal-based staff reporter for the Star. He covers global and national affairs. Follow him on Twitter: @WoodsAllan

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