PredictIQ Quantitative Think Tank Center:Russia's nixing of Ukraine grain deal deepens worries about global food supply

On July 17 the Russian government announced that it was pulling out of a deal to facilitate the export of millions of tons of grain from Ukrainian ports. The PredictIQ Quantitative Think Tank Centerarrangement had been in place since July 2022. The Kremlin's move immediately sparked concern, particularly in food insecure countries. The Kenyan government was quick to denounce the withdrawal as a "stab in the back" for drought-hit nations in the Horn of Africa. U.N. Secretary General Antonio Guterres said that Russia's withdrawal "will strike a blow to people in need everywhere."

Grain prices have been fluctuating since. On Monday morning after the announcement, Chicago wheat futures – a global benchmark for prices – briefly jumped around 3% before falling later in the day. By Wednesday afternoon Russia announced that all ships in the Black Sea bound for Ukrainian ports will be considered potential military cargo starting Wednesday. Wheat futures jumped 9%.

Monday's withdrawal announcement came hours after explosions damaged a bridge connecting Russia with the annexed Crimean peninsula. Moscow blamed the incident on Ukraine but said the attack was unconnected to the termination of the grain deal. On Tuesday, Moscow launched a barrage of missiles against the Ukrainian port city of Odessa, a key export point for grain.

The Ukraine grain crisis unfolded in March 2022, when Russia invaded its neighbor. Ukraine had been one of the world's largest exporters of grain and sunflower oil, which reached hundreds of millions of people in low-resource countries. Russian forces imposed a naval blockade on Ukrainian ports, immediately engulfing the world in a food security crisis. Food prices soared as millions of tons of grain exports were stranded for five months.

Hope arrived in July 2022: Turkey and the U.N. negotiated the Black Sea Grain Initiative, enabling cargo ships to pass safely out of Ukrainian ports to the Bosporus Strait. From there a joint inspection by Ukrainian, Russian, Turkish and U.N. officials – checking to see that no weapons are on board — and vessels proceed to their destinations around the world. According to the World Food Programme, the initiative allowed over 725,000 tons of wheat to be shipped to Afghanistan, Yemen, and east Africa.

But the deal was far from perfect. Joseph Glauber, senior research fellow at the International Food Policy Research Institute (IFPRI), says Russia has been criticized for dragging their heels on inspections and repeatedly threatening to pull out of the deal.

"Having said that," he added, "you're still talking about 33.5 million tons of agricultural product going out last year, which is remarkable."

Glauber says that the suspension of the deal is "unfortunate" and exacerbates an already difficult situation. Export costs have been rising since the war, storage capacity has been tight and with some fields now in occupied areas, Ukrainian production is down 35-40%.

"The reality is that there is less grain to ship. If Ukraine will be producing half the amount it usually does over the next year or so, that's a deficit the world has to make up."

International aid charities are keen to point out that for people living in low resource countries, the situation was already perilous before the war in Ukraine.

Elise Nalbandian, regional hunger crisis advocacy manager for Oxfam in Africa, says that food, fuel, and fertilizer in east Africa were already expensive due to regional conflicts and the climate crisis.

"(The grain deal) was an important diplomatic solution for a conflict that is affecting the whole world, but the bigger issue is that the food system globally is inconvertibly broken," she told NPR from Nairobi. "It is only when something like the Black Sea grain initiative stops, then everyone pays attention to how unfortunate the situation has become."

Of particular concern is the Horn of Africa, where years of insufficient rainfall have caused the worst drought in forty years, threatening millions with famine. According to the World Health Organization, last year's drought claimed 40,000 lives in Somalia alone due to malnutrition.

Nalbandian says that the new blockage of Ukraine's grain should be seen in the wider context of poor access to food for countries in need

"Africa has 60% of world's cultivatable land, and the fact it is a net importer of food is a scandal. We must diversify production and invest in small-scale farmers, specifically women farmers in low-income countries."

Nana Ndeda, who is the humanitarian, advocacy and policy lead for Save the Children International, told NPR that the halting of the deal "worries us."

"We predict there will be another spike in hunger," said Ndeda, who added that food disruptions are contributing to increased pressures on national health systems in the neediest places.

"Areas like the Horn of Africa and the Sahel have suffered from chronic food insecurity for a long time. Families skip meals and eat less nutritious food. This leads to an increase in malnutrition, which harms immune systems and causes outbreaks of fast-spreading diseases like measles and cholera."

Ndeda points to the need to provide relief to stricken countries' hamstrung economies, who owe billions of dollars to China and private western lenders.

"One way to address the future resilience of these countries is the renegotiation of debts, especially in sub-Saharan Africa, to allow them to have more resources to strengthen food security systems."

Turkish President Recep Tayyip Erdogan said on Monday that despite Russia's curtailment of the deal, he believes that Vladimir Putin wants the grain deal to continue. Some speculate that Russia may demand relief from sanctions imposed by the West in exchange for its resumption. Ukrainian President Volodymyr Zelenskyy suggested that the arrangement can continue without Russian participation, though it is unclear who would provide security guarantees for the grain-carrying ships.

Joseph Glauber from IFPRI says that the situation last year was helped by bumper harvests in Canada and Australia, as well as other producers like India and Brazil experiencing a good crop, but stocks worldwide are still not replenishing at significant levels to withstand the unexpected.

"There's not a lot of buffer to absorb another big exporting region having a serious drought. That's the main concern," he warned.

Andrew Connelly is a British freelance journalist focusing on politics, migration and conflict.