Russia’s exit from the Black Sea grain deal has raised concerns about global food security [File: Mehmet Emin Caliskan/Reuters]
Metropolis Desk-
Food supplies in Asia, already under stress from high temperatures brought on by the El Nino weather cycle and climate change, will be further squeezed by Russia’s cancellation of the Black Sea grain contract. But according to analysts, rather than being a sudden shock, the impact will be gradual.
The Black Sea Grain Initiative was arranged by the United Nations and Turkey in July of last year after Russia invaded Ukraine a few months earlier and drove prices to all-time highs. Wheat, corn, and sunflower oil are among the top exports from Ukraine to the rest of the globe.
According to Dmitry Peskov, the presidential spokesman for Russia, the deal will be “suspended” and Russia would not accept an extension.
As reported by the United Nations Conference on Trade and Development, the effort accounted for 60% of the entire volume of corn, wheat, and barley exported by Ukraine during the first four months after it began. In the year following the agreement’s signing, almost 33 million tons of agricultural products were exported via the Black Sea, which helped to bring down global food prices by 23% from their peak after the invasion.
In a statement on Tuesday, Japanese Foreign Minister Yoshimasa Hayashi criticized Russia’s decision to leave the deal and emphasized that “the grain export agreement has contributed to food supply and price stability in emerging and developing countries.”
Following Russia’s decision to cancel the agreement, the price of wheat and corn increased. On Wednesday, the benchmark wheat price on the Chicago futures market closed at $6.7 a bushel, an increase of 4.6% from the previous Friday. The price of corn has increased this week by 5.9% since Monday.
The cost of a bushel of wheat is still less than half of what it was in March 2022. The price of corn is still around 40% below its peak. Russia’s increased exports are beneficial for prices. The U.S. Department of Agriculture (USDA) estimates that compared to the level before the invasion, Russian wheat exports surged by 40% last year.
The president of the Natural Resource Research Institute of Japan, Akio Shibata, stated that “increasing prices will not be an immediate issue… [but] the effects will be felt gradually in the future with the drought in the U.S. and the dam break in Ukraine.”
If the situation were to worsen, a food crisis in the Middle East or North Africa would result, according to Takayumi Homma, chief economist of Sumitomo Corporation Global Research. As Asia relies more on grains supplied from the United States and Australia, Homma claimed that the embargo will not have an immediate impact on the region. However, “it [can be] [affected] indirectly in the future.”
Another issue in Asia is the El Nino weather cycle, particularly given the possibility of droughts in India and Southeast Asia.
The production of rice in Thailand, one of the top exporters worldwide, is anticipated to decrease as a result of decreased rainfall. The USDA updated its prediction for Thailand’s production for the upcoming year downward last month, bringing it to 19.7 million tons, a decrease of 800,000 tons from the month before.
Source- Al Jazeera
