Economy

Food prices set to soar globally as Russia ends UN brokered Grain deal with Ukraine

Published

1 year ago

July 17, 2023

Russia on Monday July 17, said it had suspended a humanitarian corridor to deliver key Ukrainian grains to global markets, hours before the agreement’s expiry.

First agreed in July 2022, the U.N.-brokered Black Sea Grain Initiative has been repeatedly elongated in the past, but Russia says the deal has restrictions that limit the full dispatch of its own grain and fertilizer exports.

The initiative was set up by the UN to stop a global food crisis, after Moscow launched a full-scale invasion of fellow key grain exporter and neighbour Ukraine.

It is set to end on Monday, July 17 at midnight, Istanbul time.

“The Black Sea agreements ceased to be valid today. As the President of the Russian Federation said earlier, the deadline is July 17. Unfortunately, the part relating to Russia in this Black Sea agreement has not been implemented so far. Therefore, its effect is terminated,” Kremlin spokesperson Dmitry Peskov said, according to Russian state news agency Tass on Monday.

Wheat prices jumped 3.5% as the news broke.

Moscow has officially notified Ankara, Kyiv, and the U.N. secretariat that it opposed extending the initiative, Tass cited Russian Foreign Ministry spokeswoman Maria Zakharova as saying

The grain pact allowed the export of commercial food and fertilizer supplies, including ammonia, from three Ukrainian ports in the Black Sea – Odesa, Chornomorsk and Pivdennyi.

Cargo ships proceed through the agreed humanitarian corridor to Istanbul.

“Russia would have you believe it is being forced to end a deal that, in fact, it benefits from – a deal designed to alleviate some of the global consequences of its war of choice,” Michael Carpenter, U.S. ambassador to the Organization for Security and Cooperation in Europe, said on July 13, estimating that over 32 million tons of grain and food reached global markets to date as a result of the deal.