Huge relief after Black Sea grain deal extended for 120 days

Huge relief after Black Sea grain deal extended for 120 days
Russia has extended the Black Sea Grain deal by 120 days, to the huge relief of countries far beyond Ukraine. / bne IntelliNews
By Dominic Culverwell in London November 17, 2022

The Black Sea Grain Initiative has been extended for another 120 days following a tense few weeks, Interfax Ukraine reported on November 17.

Ukraine, Russia and Turkey all signed the deal in Istanbul, which will be effective from November 19. There had been some concerns that Russia would refuse to extend the initiative after suspending the agreement last month before rejoining in November.

"I welcome the agreement by all parties to continue the Black Sea Grain Initiative to facilitate the safe navigation of export of grain, foodstuffs and fertilisers from Ukraine," said UN Secretary-General Antonio Guterres in a statement on the UN website.

The UN-backed deal was first signed on July 22 with an initial term of 120 days. It allowed the export of Ukrainian grain from three ports, easing the global food crisis which had been escalated by Russia’s Black Sea blockade. Since August 1, Ukraine has exported 11mn tonnes of agricultural products to over 38 countries.

With the agreement stabilising global food security and bringing in important revenue for Ukraine, the Ukrainian government is keen to extend the deal for a year and open up two more ports; Mykolaiv and Olvia.

"The world market does not have the ability to replace Ukrainian foodstuffs in the near future. At the same time, it is possible to increase the volume of our food for the world," Ukrainian Infrastructure Minister Oleksandr Kubrakov said.

Tensions flared after Russia warned it wouldn’t extend the deal last month and accused the European Union of hogging grain instead of fairly distributing exports to the Global South. Moreover, Russian Foreign Minister Sergey Lavrov also said that the US and Europe have mostly failed to free Russian food and fertiliser exports from sanctions, despite these being part of the agreement.

However, sources close to the talks told the Financial Times that an agreement had been reached, allowing Russia to get paid for its own exports of fertilisers and other agricultural exports and that an important pipeline carrying ammonia from Russia to Western Europe has been reopened. Therefore experts believed Russia would likely extend the initiative. 

"The United Nations is also fully committed to removing the remaining obstacles to exporting food and fertilisers from the Russian Federation," Guterres confirmed.

The news will come as a big relief to the global community and stave off threats of another food crisis for the time being. Chicago wheat futures prices jumped by nearly 6% and corn futures by nearly 3% after Russia initially suspended the deal in October following a drone attack on its Black Sea fleet.

"The Black Sea Grain Initiative continues to demonstrate the importance of discreet diplomacy in the context of finding multilateral solutions," Guterres said.

Related Content