Ukraine’s breadbasket is (almost) open for business again

A top United Nations official said a first batch of grain from a Ukrainian Black Sea port could ship out as soon as Friday, one of the first such shipments since Russia launched its invasion of Ukraine in February. The expected shipment is a crucial test case for a rare diplomatic deal in the midst of the war in Ukraine to alleviate the global food crisis.

UN aid chief Martin Griffiths said a grain shipment was poised to embark from one of Ukraine's Black Sea ports, but he cautioned that "the devil was in the details" and the UN had to help hash out precise coordinates for a safe passage out of Ukraine's war-torn coast. 

Whether Ukraine can safely export its grain has significant consequences for global food markets. Ukraine supplies more than 40 percent of the world's sunflower oil, nearly 20 percent of the world's corn exports, and 10 percent of the global wheat export supply—much of which has been trapped in the country's siloes due to the Russian blockade. Russia, meanwhile, facing new waves of crushing international sanctions in reprisal for launching the war in Ukraine earlier this year, has struggled to secure buyers for its major fertilizer exports, straining the global food market even further. The UN World Food Program estimates that the global food crisis fueled by Russia's invasion of Ukraine will push some 47 million people worldwide into "acute hunger" if it continues unabated.

US Secretary of State Antony Blinken, speaking to media on Friday, said he spoke by phone to Russian Foreign Minister Sergey Lavrov and urged him to uphold the commitments of the deal on grain shipments. "The entire world … is looking for an end to the blockade of the Odesa port by Russia that has denied so many people the food that they need and depend on," Blinken said.

The tenuous grain shipments deal, which Russia and Ukraine agreed to late last week in talks brokered by the UN and Turkey, represents the first diplomatic breakthrough in the five-month-long war and offers the first glimmer of hope for humanitarian officials scrambling to address the global food crisis. If successful, the agreement is also expected to ease pressure on Ukrainian farmers, many of whom were receiving unusually low prices for their crops and were on the brink of bankruptcy, according to the International Food Policy Research Institute (IFPRI). 

"This has been one of the big problems since the beginning of the war," said Joseph Glauber, a senior research fellow at IFPRI and former chief economist at the US Department of Agriculture. "Any sort of movement to reopen these ports would be a boon to the world." 

The first cargo ship—the Turkish-registered Polarnet, docked at the Ukrainian port of Chornomorsk—was on Friday awaiting word on whether it had a safe passage out of the port and through the Black Sea. If successful, officials said another 17 ships with some 660,000 tons of cargo could follow shortly after. 

Getting a ship out of port is easier said than done, however. Any ship would have to pass through the gauntlet of a heavily militarized and mined web of Ukraine's Black Sea coast. Commercial shipping companies and their insurers need guaranteed safe passage for the shipping route to become viable. Completely removing mines from around Ukrainian ports could take up to four months, international maritime officials have said, and that's only possible if there's no fighting or strikes near the ports themselves that could interrupt demining operations. 

"There's just still incredible uncertainty. You are in the middle of a war," Glauber said. "The real question to me is whether or not shipping companies are going to feel comfortable moving in there."

Then there's the question of whether Russia will keep its word and refrain from targeting commercial shipping vessels or stepping up strikes on Ukrainian port cities. Kyiv has accused Moscow of facilitating the shipment of stolen Ukrainian barley to its Middle Eastern ally Syria on a Syrian cargo ship that is sanctioned by the United States.

And a day after Russia and Ukraine signed the deal, Russian forces launched a strike on the key Ukrainian port city of Odesa. Western officials also believe that Russia's next major objective in the war will be to try to capture Odesa as soon as early next year. 

"There is nothing that protects the commercial vessels except for the goodwill we're expecting from Russia, which cannot always be counted on," said Ozgur Unluhisarcikli, director of the German Marshall Fund think tank's office in Ankara, Turkey. "The parts about creating a mine-free corridor are also quite vague in the agreement."

Still, UN officials and experts tracking the deal remain hopeful that, if everything goes to plan, it can help ease pressures in a market already strained by the COVID-19 pandemic.

"It is a very minimalistic agreement, but to a large extent it is likely viable because none of the parties has interest in collapsing the arrangement," Unluhisarcikli said. Ukraine gets sorely needed economic lifelines from the export deals and clears its warehouses for the upcoming harvest. Russia, meanwhile, can use the deal to fend off mounting criticism that it is directly responsible for the global food crisis, particularly from developing countries it is trying to curry favor with to fend off Western efforts to completely isolate Moscow on the international stage.  

"Let there be no doubt—this is an agreement for the world," UN Secretary-General António Guterres said in a statement last week. "It will help stabilize global food prices which were already at record levels even before the war—a true nightmare for developing countries."

Top UN officials also have few other options, at least in the short term, than banking on the grain deal. African countries faced a painful 45 percent spike in wheat prices after Russia invaded Ukraine, according to the African Development Bank. In Egypt and Sudan, which are heavily dependent on grain imports, soaring food prices have fueled new waves of food insecurity and unrest. Conflict-torn Yemen imports more than 40 percent of its wheat from Ukraine and was already grappling with looming famine before war broke out in Eastern Europe. 

The news of the deal alone was enough to quell some unrest in the commodities markets, even before any grain shipped out of Ukraine. On the heels of the news about the deal, global wheat prices dropped 5 percent. "It at least provides us with some breathing space for now," Unluhisarcikli said.

A big looming question is whether the grain deal has staying power. The deal, if Russia adheres to it, lasts 120 days, and it's unclear whether the UN could negotiate an extension—or whether the war could evolve and battle lines change in a way that renders a new grain deal untenable. 

"Fall is when farmers would normally be planting wheat, and the question is: How much wheat will they be planting if they can't get very good prices for the wheat right now?" Glauber said. "We'll just have to see. And so much is going to hang on how well this agreement works."

Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. Twitter: @RobbieGramer

Christina Lu is an editorial fellow at Foreign Policy. Twitter: @christinafei

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.