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Details 14:09 25 May 2022

russia's food blackmail: why world community can't do without Ukrainian products and how to re-establish exports from Ukraine

Spoiler: there is a solution. Ukrainian products will have new ways and prospects in the world's market.

What is the problem?

russia is trying to fill the deficit by robbing Ukrainian farmers and entrepreneurs because it lacks resources because of sanctions

On April 27, russia's Krasnodar territory legislative assembly published the decision on the "export of surplus last year's and this year's harvest from the Kherson region farmers" on the Internet. A few hours after the publication, the russian authorities removed the press release about the takeover of grain from Ukraine's territory from the official website, but, as they say, the screenshots don't burn. The local russian committee's chairperson, Vladislav Zyryanov, stated that colleagues from other russian regions could successfully implement such a venture in the future. Hence, the russians started stealing grain not only from the South of Ukraine: the Luhansk Regional Military Administration reported that the russians had taken out or destroyed three-year grain stocks for the region.

Продовольчий шантаж росії: чому світ не справляється без наших продуктів та як наново налагодити експорт з України

Screenshot from Volodymyr Viatrovych's video "Hunger as a weapon. Russia is exporting grain from Ukraine again."

Of course, we don't have any "surplus" of grain. Last marketing year, Ukraine became the second-largest exporter of grain globally, the Deputy Minister of Trade, Agriculture and Agriculture, Taras Kachka, said during the 52nd session of the International Grains Council. In the 2021-2022 marketing year, as of February 21, Ukraine has already exported 42.6 million tons of grain.

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russia is not only stealing Ukrainian grain for lack of its own; it is deliberately making it impossible to export grain from Ukraine, provoking mass famines in many countries around the world

Due to the blockade by enemy warships, there is no access to Ukrainian ports; there have already been cases when russia deliberately shot at merchant ships heading for loading.

Ukrainian granaries contain about 25 million tons of grain; they are packed. Our leading importers—Egypt, Turkey, Indonesia, Spain, the Netherlands, Iran, Pakistan, Libya, Yemen, and Tunisia—are in dire need of these supplies. The United Nations World Food Program (WFP) stressed that 44 million people worldwide were gradually approaching famine. One of the countries most affected by russia's actions is Yemen, which buys about a third of its wheat in Ukraine and russia and is already facing the threat of mass starvation. Rising world prices and market turbulence, combined with significant supply disruptions, have led to a rapid decline in the country's food stocks. HSA Group, the country's largest wheat importer, warns that Yemen faces food and global supply chain problems on a scale never before seen. The United Nations estimates that more than 17.4 million people in Yemen are suffering from food shortages, and 1.6 million are facing "extreme hunger" in the coming months.

Problems with grain exports from Ukraine will lead to famine in countries that cannot afford to buy costly grain (i.e., not Ukrainian) and rising inflation in developed countries

According to FAO Director-General (Food and Agriculture Organization) Qu Dongyu, all factors lead to a rise in food prices and disruptions in exports of feed, fuel, and fertilizers from Ukraine and russia. The WFP's CEO David Beasley has the same opinion, which he emphasized on Twitter:

"If ports in the Odesa region do not open up immediately, two things will happen: first, we will have agricultural collapse across Ukraine. Second, famines will be looming all over the world. Food needs to move, ports must reopen, and this needs to happen NOW," the executive director of the World Food Program wrote:

The global sunflower oil shortage has already begun

Most sunflower oil in the UK comes from Ukraine. Some retailers in Britain are already restricting the sale of sunflower oil "per person," as russia's war against Ukraine has disrupted supplies. For example, the most prominent British supermarket chain Tesco allows each customer to buy three bottles of sunflower oil. Tesco says the restriction is a temporary measure "to make the product available to everyone." In other supermarket chains, Waitrose and Morrisons, the number is limited to two bottles. Some chains also restrict the sale of olive and rapeseed oil. However, some networks, including Sainsbury's and Asda, haven't limited the amount of oil their customers can buy.

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The shortage affected not only supermarkets; due to lack of resources, the entire chain of cafes is under threat. Traditional British cafes' fish & chips—fish and potatoes fried in batter—are threatened with closure due to lack of sunflower oil. The chain's restaurants acquired from Ukraine almost half of all oil and most of their flour, which has risen in price significantly since the full-scale war began.

What is the solution?

The UN addressed the problem

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UN Secretary-General Antonio Guterres is in talks with russia, Turkey, and other countries to open Ukrainian grain exports and prevent global food shortages. The Wall Street Journal reports, citing diplomats, that Guterres asked Moscow to allow some supplies of Ukrainian grain in exchange for measures to facilitate the export of potash fertilizers from russia and Belarus. But diplomats say russia does not appear to be in serious talks on the deal. An article in the Wall Street Journal states that countries will continue to pressure russia to allow at least limited grain supplies; as an option,  they consider the accompaniment by courts under the banner of an international organization or country, neutral or friendly to Moscow. Turkey is ready to participate in the agreement by demining the Black Sea and managing the shipping. The russian and Ukrainian missions to the UN, and the Turkish embassy in Washington, declined to comment.

The EU promises to liberalize trade and simplify transport links

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EU High Representative Josep Borrell stated this at a press conference; he pointed out that the EU had an action plan. First, the goal is to empty the storage facilities from grain that Ukraine hasn't exported yet. The EU wants to introduce the so-called "solidarity corridors" for trains, and only after that to help Ukraine with grain production.

As for liberalization, the European Commission has officially proposed to suspend for a year the collection of import duties on Ukrainian exports to EU countries (including industrial duties, agricultural duties, and quotas, an entry price system, anti-dumping and protective duties). However, it's not a final decision; it must be agreed upon by all EU member states and approved by the European Parliament and the European Council. Kyiv hopes it will happen in the coming weeks.

Romania and Poland will partly handle "solidarity corridors"

The Romanian Ministry of Transport has announced a tender to repair a railway line between the village of Giurgiulești (Moldova) and the port of Galaţi to transport goods from Ukraine. The repair of this railway line will take 60 days after signing the contract; the tender was to end on April 19, so in July, the corridor should start working according to the ideal scenario.

With this route, Ukraine will be able to ship and receive cargo through Moldova and the port of Galaţi. Thus, the Danube port will become one of the key ports in the region for the transportation of goods and raw materials.

Ukraine and Poland will set up a joint logistics company to increase the volume of Ukrainian rail transport to the EU and world markets via Europe.

Until the railway corridors are ready, the Baltic countries can help us. But we will have to negotiate with Belarus.

Ukraine's trade representative, Taras Kachka, emphasizes that the Baltic ports of Lithuania, Latvia, and Estonia have the most significant capacity to transport commodities. The compatibility of railways in this direction technically simplifies transportation. Minister of Agrarian Policy of Ukraine Mykola Solskyi noted that Klaipeda and three ports in Latvia were currently the most promising. They're much more potent than the Polish ones (such an alternative also exists) and have a more developed infrastructure. However, nothing is perfect, as we will have to agree on a railway connection through Belarus, says Kachka.

The UK is also taking action

At the end of April, the United Kingdom reduced all duties on Ukrainian exports to zero and will abolish all quotas under the free trade agreement. The duty was abolished on the primary goods of Ukrainian exports, including barley, honey, canned tomatoes, and poultry. London is sure that such a step will help Ukrainian businesses and manufacturers in a difficult moment.

However, whether the liberalization will work is still unknown, as Ukrainian producers haven't been able to meet the existing import quotas provided for in the agreement, which will now be temporarily "zeroed"; the issue of non-recognition of the equivalence of the Ukrainian system of sanitary and veterinary supervision over the production of beef, pork, etc., remains open.

The United States is proposing $11 billion to tackle the food crisis

The White House is working with Congress to approve a global package to respond to the food security threat to provide $11 billion over the next three years.

Canada is ready to provide ships for the export of Ukrainian grain

Canadian Foreign Minister Melanie Joly said her country, another major exporter of agricultural products, was prepared to send vessels to European ports to export Ukrainian grain to those who need it.

"We need to make sure the grain is sent to the world. If that doesn't happen, millions of people will starve," Joy said.

As we see, the world is suffering from russian aggression, which has affected many of the strongest economies. The sooner the logistical and bureaucratic issues are resolved, the better, but we hope victory is much closer.

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