Economy · August 6, 2022

Ukraine is calling for the Black Sea Grain Agreement to extend to other products

Ukraine has demanded that the deal easing the Russian blockade of its Black Sea grain exports be extended to other products such as metals after the first successful use of the route.

Taras Kachka, Ukrainian trade negotiator and deputy minister of the economy, said he was confident that the agreement between Ukraine and Russia that would allow the recovery of the grain trade would hold up and suggested that it could serve as a model for other commodities as traders and exporters ” they always test the limits “.

“This agreement is about logistics, the movement of ships across the Black Sea,” he said. “What is the difference between wheat and iron ore?”

Kachka spoke after the Razoni headed for Lebanon, which had been stranded in Odesa since Russia began its full invasion of Ukraine, made its way through Russian and Ukrainian mines at sea and authorized inspections in Turkey.

More than a dozen ships carrying grain are waiting to set sail from Ukrainian ports, while another ship is bound for the Ukrainian port of Chornomorsk.

Under the agreement brokered by the United Nations and Turkey, Russia agreed not to attack ships carrying food and fertilizers, as long as it could – together with officials from Ukraine, Russia, Turkey and the United Nations – inspect the ships in a place in the Bosphorus Strait.

Ukraine is the fifth largest exporter of wheat in the world and some vulnerable countries such as Lebanon, Syria and Somalia rely on it for most of their wheat imports.

The temporary resumption of the Black Sea trade route has raised hope that some 20 million tons of corn, corn and other grains trapped in Ukraine will reach global markets and bring income to Ukrainian farmers before the winter planting season.

Mykhailo Podolyak, a senior adviser to Ukrainian President Volodymyr Zelenskyy, said the deal is likely to last “for some time” as long as it also serves Russia’s economic interests.

“It seems to me that these [sea] the caravans for some time will go back and forth, parallel to the Russian caravans, which are also eager to ship their grain, ”he said. But she warned: “Russia will look for a way to stop all of this again. This is my pessimistic and optimistic scenario put together ”.

Podolyak and others in the Ukrainian government believe that Russia accepted this plan because its invasion of Ukraine did not go according to Moscow’s plan. Russia had planned to take the ports of Odesa and Mykolayiv to take control of export routes in the Black Sea region, Podolyak said.

Russia hailed the deal. “This is not a one-off mechanism, but a mechanism designed to ensure the export of the grain that has accumulated in these ports,” Kremlin spokesman Dmitry Peskov said Thursday. “Therefore, we hope that this mechanism will continue to work just as effectively.”

Oleg Ustenko, Zelenskyy’s economic adviser, said lifting the blockade could help avoid economic calamity. Before the war, most of Ukrainian exports passed through the Black Sea, he estimated.

However, the post-war rise in logistics costs resulting from efforts to redirect exports by rail or road made Ukrainian products uncompetitive in the global market, he added.

“This was part of the plan[by Russia]. . . to weaken the Ukrainian economy, “he told her.

The only sunflower seed product Kiev has been able to consistently export since the outbreak of the war is inedible sunflower oil, with around 300,000 tons being transported by trucks to be blended into fuels in Europe.

The country managed to export about 3 million tons of grains by road, rail and the Danube River last month, Kachka said, or less than half of the volumes exported mainly through the pre-war Black Sea. Ukraine estimates it will harvest 67 million tons of wheat this year, down from a record 86 million tons in 2021.

Even with a relaxed Black Sea blockade, Ukrainian farmers will be planting cautiously this winter, Kachka said.