Blocked Ukrainian agricultural warehouses
Putin aims for record grain and more exports
May 12, 2022, 4:48 p.m.
Russia and Ukraine are among the top 10 grain producers in the world. With its war of aggression, Russia has left the agrarian nation of Ukraine in a dire position – with millions of tons of grain stuck in warehouses – while Putin announces record production.
Russia’s war of aggression in Ukraine has placed the two countries, which for years were among the largest grain producers in the world, in different situations in terms of the production and sale of food and raw materials – and Putin’s Russia apparently in a much better position. According to the Russian president, his country will increase its wheat exports this year despite Western sanctions due to an expected record harvest. “This could be a new record in Russian history,” Vladimir Putin told a meeting of senior business officials in Moscow ahead of the harvest season.
Thus, a cereal harvest of 130 million tonnes is expected for the current year, including 87 million tonnes of wheat. Russia harvested a record 133.5 million tonnes of grain in 2020, including 85.9 million tonnes of wheat. Last year, however, the harvest was lower. Putin did not give a specific export estimate. Russia is one of the largest grain producers and exporters in the world. It continues to export despite the logistical and payment difficulties caused by Western sanctions following the invasion of Ukraine.
The situation in Ukraine is different: according to the European Commission, millions of tons of cereals threaten to block agricultural warehouses in Ukraine and thus make international food supplies more difficult. “20 million tonnes of grain must leave Ukraine in less than three months,” EU Transport Commissioner Adina Valean said. The grain threatens to occupy the deposits which would be necessary for the next harvests. This is why the Commission has just published an action plan on how exports can be sold overland. The so-called traces of solidarity also play a role here. One of the challenges in rail transport is that Ukrainian wagons are not compatible with most of the EU rail network.
Thousands of trucks and wagons await customs clearance
Ukraine’s food exports should be given priority and EU states are also urged to staff customs and other agencies sufficiently and to “show maximum flexibility”. But is it enough?
Before the start of the war, Ukraine was one of the world’s leading grain producers. However, due to the war of Russian aggression against Ukraine, sea routes and ports are now blocked. According to the European Commission, under normal circumstances, 90% of Ukraine’s grain and oilseed exports – including sunflower and rapeseed – are shipped through the country’s Black Sea ports. According to reports, thousands of trucks and wagons are currently awaiting customs clearance on the Ukrainian side. The average waiting time is 16 days, at some borders up to 30 days.
Many countries, especially poorer ones, urgently depend on cheap wheat from Ukraine. The war in the country has already had serious effects – at least on prices – here in Germany. As the Federal Statistical Office announced today, producers of agricultural products increased their prices at record speed in the first month after the start of the war in Ukraine. They rose an average of 34.7% in March.
The prices of plant products increased particularly strongly at 42.1%, animal products a little less at 29.5%. The record price rise is partly due to cereal prices, which have been skyrocketing since July 2020: in March they were 70.2% higher than in the same month last year. “The decisive factor in the huge increase in grain prices is the shortage of supply following the war in Ukraine,” the statisticians explained. “As a result, the already tense situation in the global market with strong domestic and external demand has worsened significantly again.”
Russian exporters may face sanctions
Increased exports from more export-oriented Russia could now help to at least partially meet growing global demand – particularly if Ukrainian exports remain weak and Ukraine is unlikely to regain access to its ports of the Black Sea, pointed out the agricultural consultancy Sovecon. So to Ukraine’s economic suffering.
So far, Russian exporters have been largely successful in resolving logistics and payment issues caused by Western sanctions. Thus, wheat is shipped to the Russian side of the Black Sea and sporadically from the Sea of Azov.
The Russian president has just announced that exports will be stimulated again if the harvest is good. The record “not only allows us to easily meet our own needs, but also to increase shipments to the global market for our partners, which is important for the global food market,” he said.
According to a UN report, the war against Ukraine endangers the food security of many poor countries. States such as Afghanistan, Ethiopia, Haiti, Somalia, South Sudan, Syria and Yemen are particularly affected, according to the latest report from the Global Network against Food Crises founded by the United Nations and the EU . Last year, Somalia got more than 90% of its wheat from Russia and Ukraine, the Democratic Republic of Congo 80% and Madagascar 70%.