Reopening of the Black Sea grain corridor brings hope for the food crisis

This week, the world fixed its eyes on the voyage of the Razoni. The Sierra Leonean merchant vessel has slowly and carefully traversed the Ukrainian waters of the Black Sea, arriving at Istanbul, crossing the Bosphorus Straits and entering the Aegean Sea and the Mediterranean. It is the first grain ship to weigh anchor in the Odessa port since Vladimir Putin ordered the invasion of Ukraine last February. On July 22, Kiev and Moscow had agreed, with the mediation of the United Nations and Turkey, to allow transportation of Ukrainian grain through the Black Sea. The Razoni was the first to test the naval corridor. Other ships are now following in its wake.

There is a lot at play. For Ukraine, this means reopening the main exportation route for agricultural goods, allowing it to sort out its public finances battered by the war. For Ukrainian farmers, the disembarking of over 20 million tons of blockaded grain will make space for the new harvest. And it will also be “a relief for developing countries that are on the brink of bankruptcy and for the most vulnerable population on the brink of famine,” according to United Nations Secretary-General António Guterres.

Lebanon, where the Razoni arrived on Tuesday with 26,000 tons of corn, is one of the countries hoping for relief. According to the UN, eight of every 10 Lebanese live in poverty, after years of political instability and a deepening economic crisis. The explosion in the Beirut port two years ago destroyed two 120,000-ton silos that stored grain for moments of scarcity.

A significant amount of Lebanon’s food supply comes from Ukraine: a quarter of the wheat, a third of the corn and more than half of the sunflower oil. The Russian invasion and the subsequent blockade of the Black Sea ports, where 75% of Ukrainian exports are shipped, has caused a severe blow to the Levantine country. Lebanese economist Roy Badaro believes that the reopening of the grain corridor will “help” the country, “as the supply will increase.” Lebanon’s annual corn and wheat imports each require 20 shipments of the size of the Razoni. Badaro criticizes the distribution strategy, however: “Instead of helping the poor, the Lebanese government subsidizes companies that dominate the production monopolies, who are practically a mafia, so that rich and poor buy bread at the same subsidized price,” he says. “So we have 5% or 10% of the population who can buy anything, including caviar, and at least 40% can’t even afford to buy bread.”

Choosing between food and medicine

The situation is also pressing in Syria, Palestine, Yemen and Somalia. Sudan, Egypt, Libya and Tunisia are also facing food scarcity. They have all faced conflicts or political instability in the last decade, and they have been affected by the ongoing droughts. They depend heavily on Russian and Ukrainian grain imports.

“The situation in the Near East is very serious. In countries like Syria and Lebanon, we have documented cases of families who have to skip meals or choose between buying food or medicine,” says Samah Hadid, from the Norwegian Council for Refugees. “Millions of people, not only in the Near East, but also in other vulnerable regions of the world, are counting on the restarting of Ukrainian grain imports to survive.” Before the war, Ukraine produced food for some 400 million people. It exported a third of its product to Europe and the rest to Africa and Asia. Since last February 24, its exports to the latter two continents have been reduced to zero.

Can the Black Sea corridor alleviate the situation? In addition to bringing grain to needy countries, the release of the grain blocked by the war should put downward pressure on global food prices. Since the negotiations were made public, the prices of wheat and corn have fallen to the levels of February, although an analysis by the think tank International Crisis Group attributes part of the decline to fears of a new global recession.

“Before the war, food prices were already rising alarmingly. What is most needed now is to stabilize markets and prices, which are still very volatile and are still at record highs in the Middle East and North Africa,” explains Abeer Etefa, spokesperson for the World Food Program (WFP) for the region. The rise in food prices is making its aid programs difficult for the UN agency, as costs have risen by 44%. The WFP estimates that some 276 million people were facing acute hunger at the beginning of the year and that, due to the consequences of the conflict in Ukraine, this figure will increase by another 47 million during 2022. “Opening the Black Sea ports is a very positive step, and it should be followed by the rapid implementation of the corridor,” Etefa says.

The insurance problem

In total, a dozen ships have left Ukraine loaded with more than 375,000 tons of corn, soybeans, sunflower oil and sunflower meal. After the Razoni, a three-ship convoy departed on Friday. The Istanbul Joint Coordination Center (JCC), which includes Russia, Ukraine, Turkey and the UN, described the vessels as a “second test” to “allow more efficient transit and guarantee the safety of ships.” Since Sunday, departures have continued, at a rate of between two and four ships a day.

In the designated grain ports – Odessa, Chornomorsk and Yuzhne – 16 bulk carriers are ready to leave. Since these are merchant ships that were trapped in Ukraine at the outbreak of the war, they will go to the ports assigned to them before the conflict. Those that have set sail after the Razoni are heading for ports in Turkey, Ireland, the United Kingdom, Italy, China and South Korea. A source from the Coordination Center explains to EL PAÍS that it is “necessary” for these ships to leave “to free up space.”

The first commercial ship to enter Ukrainian Black Sea ports since the beginning of the Russian invasion was the Fulmar S, a 14,000-ton freighter operated by a Turkish shipping company. It passed inspection in Istanbul on Friday and docked in Chornomorsk on Sunday. These inspections, required by Russia, are intended to prevent ships from bringing weapons to Ukraine or carrying any product not covered by the July 22 agreement, which only allows food and fertilizer. The UN has announced that it will charter a ship to transport 30,000 tons of grain through the corridor, but apart from that ship, the exports will depend on private initiative, the CCC source acknowledged. This poses a problem: the price of navigation insurance in the Black Sea has multiplied by up to 200 because of the war. It is not a problem for freighters leaving Ukraine – which have their pre-war premiums in force – but it is an obstacle for those arriving.

The UN has negotiated an insurance fund of almost €50 million with Lloyd’s of London. But a European ship owner interested in sending its freighters to Ukraine explains that this line is only available to secure the cargo and not the vessels or the crews. “We have been looking for several days, and no company has wanted to insure our ships. For them to start insuring, Lloyd’s should first publish instructions on how to proceed, but that has not happened yet,” says the shipowner, who requested anonymity.

Once the corridor is fully operational, expected in the coming weeks, it will transport three million tons of grain per month. But the agreement will only last for 120 days, which will not give enough time to remove all the grain blocked in the Ukrainian silos. The mechanism can be extended, but it would require the agreement of all the parties.

Kyiv has expressed doubts about the Kremlin’s willingness to respect the corridor: just a day after signing the deal, Russia bombed the port of Odessa. However, Moscow also has an interest in it. Although the agreement signed by Russia with Turkey and the UN is secret, due to the public statements of those involved, it is assumed that it includes facilities for the export of fertilizers. Two days before the signing in Istanbul, the EU modified its list of sanctions, allowing some Russian banks to use their frozen funds in Europe to trade these products. The agreement is key not only for Moscow, but also for farmers around the planet. Up to 20% of fertilizers are of Russian production, and without their use, harvests may be reduced by half.

Professor Ray Offenheiser, director of the US Pulte Institute for Global Development and former president of Oxfam America, warns that even with the corridor running, the situation remains extremely serious. Data from the Ukrainian Cereal Association warns that this year’s harvest will decrease by 35% to 69 million tons of grain. The occupation of Ukrainian territory by Russian forces has reduced the area of arable land by about 20%, which will diminish future harvests. “The question is whether other markets can fill that deficit quickly,” says Offenheiser. “We have global inflation, extremely high oil prices, which makes everything more expensive, including food shipping, and, in addition, supply chain problems. It’s a perfect storm,” he warns, “a situation not very different from the one experienced during the food crisis of 2008. Then, riots were registered in 38 countries.”