The light of hope now shines in the Black Sea

Agreements on the opening of Ukrainian ports for grain transport have been signed. They are expected to ease the dreaded food crisis, which grain freezes have been warned will lead to especially in the Middle East and Africa.

On Friday, Ukraine and Russia signed separate but identical agreements on the matter with the UN and Turkey in Istanbul. Ukraine announced in advance that it would not sign any documents together with Russia.

The signatories are the Minister of Infrastructure of Ukraine Oleksandr Kubrakov and the Russian Minister of Defense Sergei Shoigu.

The signing took place in a tense atmosphere.

The UK and Russian ministers did not agree to sit at the same table, and the flags of the countries were switched so that they could not be seen next to each other.

The UN Secretary General who participated in the treaty negotiations António Guterres said the deal did not come easily. However, he thanked Russia and Ukraine for their efforts for the common good, which, according to him, the agreement represents.

– The light of hope, opportunity and relief that the world needs now more than ever shines in the Black Sea, Guterres said.

According to him, the agreement provides relief to the global food shortage and rising food prices.

Ukraine is one of the world’s largest exporters of wheat, corn and sunflower oil. In recent years, it has exported 50–60 million tons of grain alone per year.

The agreements concern Odessa and its two neighboring ports. They will initially be valid for 120 days, which is believed to be enough to unload 25 million tons of stuck grain from Ukraine.

However, the situation will not be resolved simply by opening the ports, says the grain representative of MTK, the Confederation of Agricultural and Forestry Producers Max Schulman.

About five million tons of mainly wheat are stored in Black Sea ports, but the rest of the grain has to be delivered to ships from different parts of the inland, and that is not without problems.

– Tracks have been bombed and bridges destroyed. That brings its own challenges, says Schulman.

According to him, the pressure to also develop railway, road and barge transport will continue to be strong, even if the ports are opened. It is also driven by mistrust about whether Russia will keep its part of the agreement.

While the parties are reopening sea transport, a new harvest is being reaped in Ukraine. According to Max Schulman, MTK’s grain representative, half of the country’s autumn crops have already been harvested by the end of next week.

– The sowing has been surprisingly successful. Before the war, there was a warm period, when the autumn crops received spring fertilization and have grown well. A normal harvest can be expected from the fall grain, even though large areas have been left behind by the war, Schulmann estimates.

Ukrainian farmer Rahmon Mirzoyev says in an interview with news agency AFP that his harvest is even better than normal.

However, it leads to problems: the warehouses are starting to be full and domestic prices have collapsed.

– There is no place to put the grain and no one to sell it to, says Mirzoyev.

He is excitedly waiting for the agreement on the opening of exports, but is skeptical about its realization.

Specialist investigator Csaba Jansik The Natural Resources Center considers the agreement to be a great relief, as the huge drought is currently also affecting a large part of Central Europe. The lack of rain and the hot season affect corn and sunflower in particular, the yield of which can even be halved.

The flip side of the easing of the food crisis can be the impact on the market, says MTK’s Max Schulman. The price level of grains has been falling all the time that the negotiations on opening the ports have been held.

The cut in the harvest forecast smoothed out the decline slightly, but the release of a large amount of grain to the market can make a big mark on the primary production of the rest of Europe.

– The agreement is of course a good thing, but it can be a really tight spot for initial production, where the costs are now high, says Schulmann.

In Ukraine, export income would improve the farmers’ opportunities to invest in the next autumn sowings, the time of which is just around the corner.

– The work has to be done in the fall, but there are huge problems with finances and cash flow. Farmers have to wonder if they have money for fertilizers or fuel. If they get money now, investing in autumn sowing will be easier, says Luke’s Csaba Jansik.

MTK’s Max Schulman also considers the next harvest to be the biggest challenge and believes that farmers will invest more in autumn oilseeds instead of grain. The price level of oilseeds is better and they require less storage space.

Another problem is the harvest of spring cereals and oil crops, which is about to start: for example, sunflowers have to be dried, which requires gas. At the moment, I don’t want to find that.

A center to be established in Istanbul, with representatives of Ukraine, Russia, Turkey and the UN, will begin to monitor the flow of grain shipments by sea. Investing in Istanbul is a helping hand for Turkey, which acted as a mediator in the matter.

It takes three to four weeks to set up the center, so the grain starts moving in the second half of August at the earliest.

According to the news agency AFP, the most difficult questions to solve have been the inspection of ships. Russia has demanded the right to inspect incoming ships so that they do not carry weapons, but only grain and fertilizers. Ukraine, on the other hand, does not want Russians to board the ships.

According to a UN source, the inspections would be too difficult to carry out in the open sea. Instead, the four parties would monitor the ships in a Turkish port on their return journey. It is still unclear who will be allowed to board the Ukrainian ships.

Ukrainian ships escort grain ships as long as they pass through the country’s territorial waters. Russia and Ukraine have committed not to attack the ships.

Ukraine, on the other hand, wants international guarantees that Russia will not use the grain transport security corridor to attack Odessa. The country has also accused Russia of stealing grain and bombing fields.

There are mines in front of the Black Sea ports, the removal of which would take too long, according to the sources of the AFP news agency, and would make it difficult to solve the food crisis. That is why the ships are piloted by Ukrainians who know the safe routes.

During his visit to the Middle East at the beginning of the week, Russian President Vladimir Putin said that Russia will not agree to the agreement if sanctions are not lifted regarding Russian grain. On Wednesday, the EU made an exception that allows the export of Russian grain and fertilizers. The US Treasury Department has also announced that the restrictions do not apply to Russian fertilizers and other agricultural products.