On Sunday, the Turkish ship TQ Samsun departed from the port of Odesa in Ukraine, transporting 23,500 metric tons of corn and 15,300 metric tons of rapeseed to the Netherlands as part of the Black Sea grain deal. While Canada and the U.S. are not major receivers of grain shipments from the Black Sea, experts are warning Canadians to pay attention to the market’s reaction.
On Monday, Russia withdrew from the grain deal, which allowed the passage of ships from Ukrainian ports on the Black Sea carrying food grain shipments. Russia’s decision, according to Kremlin spokesperson Dmitry Peskov, is in response to the country’s demands to have its own food and fertilizer exports recognized. Despite complaining about shipping and insurance restrictions, Russia has shipped record amounts of wheat.
The Black Sea grain deal, brokered by Turkey and the United Nations, was a significant breakthrough for Ukraine, allowing them to export 32.8 million metric tons of grain. More than half of this export went to developing nations, providing crucial food assistance in areas affected by Russia’s invasion. The deal also helped lower the prices of wheat, vegetable oil, and other food commodities.
Russia’s demands include the reconnection of its agricultural bank, Rosselkhozbank, to the SWIFT international payment network. However, United Nations Secretary-General António Guterres has offered alternative solutions, such as allowing the U.S.-based bank JPMorgan Chase to process Russian food grain payments. Despite these efforts, Russia has suspended the Black Sea Grain Initiative, disappointing Guterres.
Ukrainian President Volodymyr Zelenskyy has stated that the deal must continue without Russian participation, emphasizing Ukraine’s role as a food source for millions of people globally. While the impact of the grain deal suspension will be felt in developing countries across Africa and Western Asia, data from the United Nations Black Sea Initiative Joint Coordination Centre reveals that food shipments from the Black Sea were intended for destinations worldwide, including China, Spain, Turkey, and Italy.
The suspension of the deal raises concerns about the ripple effects on food prices, food donation drives, and inequity in Canada, according to Oxfam Canada. However, it also presents an opportunity to rethink global food production and the reliance on a few breadbaskets. Experts warn that the end of the Black Sea grain deal will worsen global hunger, as highlighted in the UN’s annual report on food security and nutrition. Projections show that the number of chronically undernourished people could increase significantly due to the war in Ukraine.
In terms of its impact on Canadians, concerns arise regarding global food supply systems and potential food inflation if markets react negatively. Ukraine’s reduced exports may also affect aid to the Horn of Africa, where food insecurity, civil conflict, and climate change-related shocks are prevalent. This situation may require increased aid and assistance from Canada and Western countries to prevent a humanitarian crisis in the region.
Overall, the suspension of the Black Sea grain deal has significant implications for global food security and requires careful monitoring of market reactions and potential interventions to address the resulting challenges.
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