Will Ukraine Grain Again Feed the World?

Over the last decade, the world took for granted the rivers of cheap grain that quietly flowed from the black soils of Ukraine. The country’s transition to privately run agribusinesses from collective farming allowed yields to soar. The world over, populations benefited. The World Food Program bought half its wheat from Ukraine. China bought 15 percent of its corn from Ukraine. Ukraine became the world’s largest exporter of sunflower oil, providing cooking oil to millions of Indian households. In the marketing year that ended last month, Ukraine was on track to rival America for world wheat exports. I recall covering my first Black Sea grain conference at the Kyiv Hilton. The expensive, handmade shoes of the foreign participants carried a clear message: This is where Ukraine walks on the world stage. Gathered were representatives of ABCD powers of the world grain trade — Archer Daniels Midland, Bunge, Cargill, and Dreyfus. While parts of Ukraine’s economy were of the developing world — notably the sprawling state-owned railroad — Ukraine’s Black Sea grain terminals, elevators, and silos were increasingly world class. Chinese, South Korean, and Dubai companies built their own terminals. Six months ago, all this came to a grinding halt. President Putin ordered his Black Sea fleet to move out from Sevastopol and blockade all of Ukraine’s Black Sea ports. An estimated 22 million tons of grain were bottled up. Dozens of foreign ships were trapped. Just as Germany belatedly realized its dependency on Russian gas, Middle Eastern and North African nations belatedly realized their dependency on Ukrainian wheat. With world wheat prices soaring, Egypt moved to spend $1 billion for food subsidies. The World Food Program warned that Russia’s blockage of Ukraine’s ports could push 47 million people around the world into “acute hunger.” Playing chess while the rest of the world played checkers, Mr. Putin profited handsomely. With no sanctions on Russian food exports, he earned more from his Black Sea wheat exports than last year. Similarly, he benefited from the world jump in oil and gas prices. On Friday, Russia and Ukraine signed in Turkey separate deals with the United Nations to open Ukraine’s three largest Odessa-region ports for grain exports. As early as next month, as much as 5 million tons of grain are to be exported from these ports: Chornomorsk, Odessa, and Yuzhne. This would be double the wartime volumes leaving Ukraine by truck, by rail, and by river ship down the Danube. In a separate concession to Russia, America and the EU stressed last week that sanctions do not apply to Russia’s exports of food and fertilizers. Although Russia had earned more money by exporting less food, these reassurances to shippers and maritime insurers are expected to boost Russia’s exports. Under the deal, Ukrainian pilot boats are to lead cargo ships through safe shipping channels established by Ukraine’s navy. Both countries agree to not attack civilian cargo ships or port facilities used for grain exports. Ukraine is reluctant to remove mines, fearing that this would open the door to Russian amphibious assaults. Similarly, Russia fears that “empty” cargo ships could dock at Ukrainian ports filled with military supplies. To prevent this, Russian-Ukrainian ship inspections will take place at Turkish ports. While both countries proceed cautiously, the deal will only partially put Ukraine’s food back on the world table. This year, Ukraine’s wheat planting may be as little as one-third the level of last year’s, Ukraine’s agriculture minister, Mykola Solskyi, tells the Financial Times. As a result, grain exports in the new July-June marketing year could be only 18 million tons — one-third of the 54 million tons forecast for the recently completed year. The war is taking its toll on farming. Russia now occupies about a quarter of Ukraine’s arable land, soldiers have stolen several million tons, and, through bombing, has set fire to thousands of acres of mature wheat fields. Damage to buildings and machinery total $4 billion. Roads and bridges have been blown. Without crop sales, farmers face a money drought. Fertilizer prices are up by 40 percent and diesel prices have doubled. The ink is barely dry on the Istanbul deals. Time will tell if Ukraine can get its grain out — without letting Russians in.

Will Ukraine Grain Again Feed the World?

Will Ukraine Grain Again Feed the World?

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