Black Sea Grain Initiative

(MainsGS2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.)

Context:

In a move that allayed concerns about yet another disruption to global food supply chains, Russia recently re-joined the Black Sea Grain deal.

Through mediation:

The Black Sea Grain deal endeavours to tackle escalating food prices emanating from supply chain disruptions because of Russian actions in the world’s ‘breadbasket’.
The Russian Federation believes that the guarantees it has received currently appear sufficient, and resumes the implementation of the agreement.
The Russian leader praised Turkey’s mediation efforts to get the deal back on track as well as Turkish President Recep Tayyip Erdogan’s “neutrality in the conflict as a whole” and his efforts at “ensuring the interest of the poorest countries.”

About Black Sea Grain Initiative:

The deal, brokered by the United Nations (UN) and Turkey, was signed in Istanbul on July 27 this year.
Initially stipulated for a period of 120 days, with an option to extend or terminate thereafter in November, the deal was to provide for a safe maritime humanitarian corridor for Ukrainian exports (particularly for food grains) from three of its key ports, namely, Chornomorsk, Odessa and Yuzhny/Pivdennyi.
The central idea was to calm markets by ensuring an adequate supply of grains, thereby limiting food price inflation.

Specific features:

The deal put in place a Joint Coordination Centre (JCC), comprising senior representatives from Russia, Turkey, Ukraine and the UN for oversight and coordination.
All commercial ships are required to register directly with the JCC to ensure appropriate monitoring, inspection and safe passage.
Inbound and outbound ships (to the designated corridor) transit as per a schedule accorded by the JCC post-inspection. This is done so as to ensure there is no unauthorised cargo or personnel onboard.
Following this, they are allowed to sail onwards to Ukrainian ports for loading through the designated corridor.
All ships, once inside the Ukrainian territorial waters, are subject to the nation’s authority and responsibility.
Moreover, in order to avoid provocations and untoward incidents, it is mandated that monitoring be done remotely.
No military ships or unmanned aerial vehicles can approach the corridor closer than a pre-decided distance agreed upon by the JCC. This too would require consultation with the parties and authorisation of the JCC.

Facilitate food export:

Ukraine is among the largest exporters of wheat, maize, rapeseed, sunflower seeds and sunflower oil, globally.
Its access to the deep-sea ports in the Black Sea enables it to directly approach Russia and Europe along with grain importers from the Middle East and North Africa.
Russia’s action in the East European country has now disturbed this route, earlier used to ship 75% of its agricultural exports – precisely what the initiative sought to address.

Ease food inflation:

As per the UN Office for Coordination of Humanitarian Affairs, approximately 9.8 million tonnes of grains have been shipped since the initiative was commenced.
The UN Food and Agricultural Organisation’s (FAO) Food Price Index, which assesses the monthly change in international prices of a basket of food commodities, fell for the sixth consecutive month in a row this October.
Following the fifth consecutive month of decline, the supply situation in markets was seen to be easing, with the potential for further price drops.
People hoarding the grain in the hope of selling it for a sizable profit owing to the supply crunch were now obligated to sell.
The initiative has also been credited for having made a “huge difference” to the global cost of living crisis.

Suspension of the deal:

The deal’s suspension was expected to re-introduce the price pressures on grain prices, especially that of wheat, with inventory being at historical lows.
It could particularly impact countries in the Middle East and Africa such as Egypt, Turkey, Lebanon, Sudan and Yemen which have benefitted from the resumption and are particularly dependent on Russian and Ukrainian exports.
As for domestic challenges, the researchers observe that storage facilities in Ukraine are already at capacity even as farmers turn to harvest the crops planted in spring. This, combined with restricted export opportunities, implies lower prices for farmers even as shortfalls spur prices globally.

Conclusion:

The deal provides for a safe humanitarian corridor for the export of Ukrainian grains through the Black Sea, to tackle rising food prices due to the geopolitical conflict grappling the ‘breadbasket’