Russia’s exit from grain deal puts focus on Asia’s food prices

Analysts say food prices in Asia are likely to rise but the fallout will be limited for the time being.

grain deal
Russia's exit from the Black Sea grain deal has raised concerns about global food security [File: Mehmet Emin Caliskan/Reuters]

Kuala Lumpur, Malaysia – Russia’s withdrawal from the Black Sea grain deal is expected to drive food prices higher in Asia but the impact will be muted for now, analysts say, due to reduced imports from Ukraine and increased supply from other countries.

Under the Black Sea deal, Asia received 46 percent of shipments of grains and other foodstuffs, while Western Europe and Africa took 40 percent and 12 percent, respectively.

China has been the largest single recipient of exports, according to UN figures, taking 7.7 million tonnes or nearly one-quarter of the total. China’s imports included 5.6 million tonnes of corn, 1.8 million tonnes of sunflower seed meal, 370,000 tonnes of sunflower oil and 340,000 tonnes of barley.

“30 percent of China’s corn imports come from Ukraine, and is used for food, cooking oil and animal feed,” Oksana Lesniak, head of the Asia-Pacific Bureau at the Center for Global Studies Strategy XXI in Kyiv, told Al Jazeera.

Pavlo Martyshev, a researcher at the Center for Food and Land Use Research at Kyiv School of Economics, said Asia, including China, would be better placed than regions like Africa to weather the collapse of the deal.

“The end of the grain deal will have an impact on food security in Asia due to rising prices of grains and oilseeds, as well as vegetable oils. This could push up food inflation in the region,” Martyshev told Al Jazeera.

“However, it should be noted that there will not be a physical shortage of food products. Asian countries are financially capable [unlike many African countries], so they will have sufficient food supply.”

Martyshev said China’s policy of diversifying its imports – including a 2022 agreement signed with Brazil to import corn – would ensure food security, as Brazil is currently experiencing exceptionally high harvests.

Harvesters collect wheat in the village of Zghurivka, Ukraine
Ukraine is one of the world’s biggest grain producers [File: Efrem Lukatsky/AP Photo]

Still, Martyshev said he expects global grain prices to rise over the coming months due to the collapse of the deal and other factors such as exceptional weather due to climate change.

“Currently, this impact is not noticeable because countries in the northern hemisphere are harvesting new crops, so there will be enough grain for everyone,” he said.

“Additionally, it is expected that there will be a record grain production in the world in 2023. It should be noted that the current large harvest is coincidental, as it is mainly achieved due to relatively favourable weather conditions. At present, the large harvest masks the problems of the food crisis.”

Despite being a beneficiary of the Black Sea grain deal and an ally of Russia, China has not been able to persuade Russia from pulling out of the deal.

“Russia is undermining the Chinese’s authority,” Mark Savchuk, head of the oversight committee of the National Anti-Corruption Bureau of Ukraine, told Al Jazeera.

“China should have been portrayed in this grain deal as a big, influential country that could guarantee something [food supply] for African countries.”

Yose Rizal Damuri, executive director of the Jakarta-based Center for Strategic and International Studies (CSIS), said the fallout in Southeast Asia, where wheat-based noodles account for 10-15 percent of staples, would not be “that significant” as countries had already reduced imports from Ukraine after Russia launched its invasion in February last year.

“That [indirect impact] may be more significant than the direct impact, especially with the El Nino weather cycle that may disrupt harvests in Southeast Asia,” Damuri told Al Jazeera.

Damuri added that in the event that unfavourable weather conditions affect the supply chains of other food commodities, Southeast Asia could still end up with higher inflation.

“That again depends on how it [Black Sea grain deal] affects the global food supply chain,” Damuri said.

Kyiv has painted the collapse of the deal in comparatively dire terms.

Ukrainian Foreign Minister Dmytro Kuleba has warned that Russia’s withdrawal from the Black Sea grain deal endangers the lives of millions of people around the world [File: Spencer Platt/Getty Images]

Ukraine’s Foreign Minister Dmytro Kuleba has warned that Russia’s withdrawal endangers the lives of millions of people around the world, primarily in Asia and Africa.

“By withdrawing from the grain agreement, Russia endangered the lives of millions of people around the world, primarily in Asia and Africa,” Kuleba told Al Jazeera, adding that the gain corridor had resulted in wheat, corn and other related commodities falling by 20 percent.

“After the announcement of Russia’s withdrawal from the agreement, the prices will likely go up, affecting the livelihood of millions of people across the globe, including Asia,” Kuleba said.

The UN and Turkey brokered the grain deal in July last year in an effort to avert a global food crisis by facilitating Ukrainian grain exports disrupted by the war in Ukraine.

The UN World Food Programme has credited the initiative with facilitating the shipment of more than 725,200 tonnes of grains such as corn, wheat and rapeseed to relieve hunger around the world, including in Afghanistan, Ethiopia, Kenya, Somalia, Sudan and Yemen.

Source: Al Jazeera