Russia on Monday halted a revolutionary wartime deal that allows the flow of grain from Ukraine to countries in Africa, the Middle East and Asia, where famine is a growing threat and high food prices have pushed more people into poverty.
Kremlin spokesman Dmitry Peskov said Russia would suspend the Black Sea Grain Initiative until its demands to deliver its own food and fertilizer to the world are met. While Russia has complained that shipping and insurance restrictions have hampered its agricultural exports, it has shipped record amounts of wheat since last year.
“When the Russia-related part of the Black Sea agreement is implemented, Russia will immediately return to the implementation of the agreement,” Peskov said.
The suspension marks the end of a deal the UN and Turkey brokered last summer to allow food to leave the Black Sea region after Russia’s invasion of its neighbor worsened a global food crisis. The initiative is credited have helped reduce the high prices of wheat, vegetable oil and other food products.
Ukraine and Russia are major global suppliers of wheat, barley, sunflower oil and other affordable food products on which developing countries depend.
The suspension of the agreement caused wheat prices to rise 3% in Chicago operationsat $6.81 a bushel, still about half what they were last year during last year’s peaks, but fell off later that day.
Analysts expect no more than a temporary rise in world food commodity prices as places like Russia and Brazil have increased exports of wheat and corn. But food insecurity around the world is increasing as developing countries also battle climate change, conflict and economic crises.
Finding suppliers outside of Ukraine that are further away could also increase costs.
The grain agreement provided guarantees that ships will not be attacked when entering and leaving Ukrainian ports, while a separate agreement facilitated the movement of Russian food and fertilizer. While Western sanctions do not apply to agricultural shipments from Moscow, some companies may be wary of doing business with Russia.
Ukraine’s President Volodymyr Zelenskyy said he wanted to keep the initiative even without security guarantees from Russia.
“We are not afraid,” he said. “Companies that own boats contacted us. They said they are ready, if Ukraine gives it and Turkey continues to let it go, then they are all ready to continue supplying grain.”
Turkish President Recep Tayyip Erdogan said the country’s foreign minister would speak with his Russian counterpart on Monday and was hopeful the deal would be extended.
The Black Sea Grain Initiative has enabled three Ukrainian ports to export 32.9 million metric tons of grain and other food to the world, according to the Istanbul Joint Coordination Center.
Russia it has repeatedly complained that the deal greatly benefits wealthier nations. JCC data shows that 57% of Ukraine’s grain went to developing countries, with China being the main destination, which received almost a quarter of the food.
The agreement was renewed for 60 days in May, but in recent months the amount of food shipped and the number of ships leaving Ukraine have plummeted, with Russia accused of preventing additional ships from participating.
The war in Ukraine sent food prices to record highs last year and contributed to a global food crisis also linked to other conflicts, the lingering effects of the COVID-19 pandemic, droughts and other climatic factors.
The high costs of grains needed for staple foods in places like Egypt, Lebanon and Nigeria have exacerbated economic challenges and helped push millions more into poverty or food insecurity.
Rising food prices disproportionately affect people in developing countries, because they spend most of their money on food. Poorer nations that depend on imported food priced in dollars are also spending more as their currencies weaken and they are forced to import more due to climate change.
Under the agreement, prices of global food staples such as wheat and vegetable oil have fallen, but food was already expensive before the war in Ukraine and relief has not reached kitchen tables.
The end of the initiative creates “instability and uncertainty” in global food markets that could raise prices and increase food insecurity for vulnerable nations already seeing their local crops die due to climate change, said Shashwat Saraf, regional director of emergency of the International Rescue Committee for the East.
The United Nations Food and Agriculture Organization said this month that 45 countries need external food assistance, and that high local food prices are “a driver of worrying levels of hunger” in those places.
Now, it’s key to watch whether Russia “weapons” its wheat exports, said Simon Evenett, a professor of international trade and economic development at the University of St. Gallen in Switzerland.
As the world’s largest supplier of wheat right now, Russia could raise its export taxes, which would “boost world grain prices and allow Russia to finance more of its military campaign in Ukraine,” Evenett said. He noted that Moscow has already raised them slightly this month.
The grain deal has faced setbacks since it was negotiated by the UN and Turkey: Russia briefly withdrew in November before rejoining and extending the deal.
In March and May, Russia would only renew for 60 days, instead of the usual 120. The amount of grain shipped per month fell from a high of 4.2 million metric tons in October to more than 2 million metric tons in June.
Ukraine has accused Russia of preventing new ships from joining the job since late June. Joint inspections aimed at ensuring ships are only carrying grain and not weapons that could help either side have also slowed considerably.
Asked Monday if an attack on a bridge connecting the Crimean peninsula with Russia was a factor in the grain deal decision, the Kremlin spokesman said no.
Meanwhile, Russian wheat shipments reached record highs after a large harvest. It exported 45.5 million metric tons in the 2022-2023 business year, and another record 47.5 million metric tons is expected in 2023-2024, according to US Department of Agriculture estimates.
