Russia’s withdrawal from the UN-backed deal to allow safe passage of Ukrainian grain exports is a double blow for the war against hunger.
There is, first, an immediate impact. Moscow’s decision pours uncertainty over the future of the initiative to allow shipments from three Ukrainian exports, just as they were making a meaningful contribution to the global grain market.
Since shipments resumed early in August, the total export tally under the scheme has reached nearly 9.5m tonnes, UN data how.
The 6.8m tonnes of corn and wheat shipped in September and October is equivalent to about 10% of world exports of the grains carried over a typical two-month period.
Without a Moscow safety pledge, this flow will slow to a trickle, if not stop altogether, unless some other guarantee can be arranged – which looks unlikely as it would, presumable, risk pitching Western against Russian navies.
Tactical move?
Of course, this issue could be resolved at a stroke if Russia changes its mind.
There is a possibility that this weekend’s withdrawal is some kind of bargaining ploy.
Many commentators, including GrainPriceNews, had expected Moscow to start playing wild cards, with the Ukraine grain export deal anyway due for renewal, and hence renegotiation, in less than three weeks’ time.
By pulling out, Moscow may be attempting to gain negotiating leverage, to ensure a revised deal is agreed on more favourable terms – such as a stipulation against Ukrainian corn heading for the European Union, which requires near-record imports of the grain in 2022-23.
Reputational damage
However, even if Russia does reverse its withdrawal, it will have done, further, damage to its reputation as a reliable grain exporter.
That matters when the country is the world’s top wheat shipper, with a reputation for competitive prices too.
Expect importers to limit further their exposure to such an unreliable, of well-supplied, country. Look for them instead to pay up for shipments from more predictable origins, such as Australia, Canada, the EU and US.
That means extra premium in prices, which may be welcomed by Western farmers, but is hardly a help to the 9.8% of the world’s population estimated by the United Nations FAO to be affected by hunger.
