Before the ink was dry on the Black Sea Grain Initiative that Ukraine and Russia signed with the United Nations and Turkey in Istanbul last Friday, Russia carried out a missile attack, hitting the major port of Odesa on Saturday.
It is not a great start, says Stephen Flynn, one of the world’s leading experts on critical infrastructure and supply chain resilience and professor of political science at Northeastern’s College of Social Sciences and Humanities. Building trust is not only key for Ukrainians and Russians, but also for the shipping intermediaries willing to take the risk coming into the Black Sea and working with Ukrainians, he says.
“The bottom line is the actual execution of this agreement is going to take a lot of trust and some considerable levels of complexity and, if the Russians aren’t in a posture, which is really trying to make sure it works, it’s going to be a rough ride ahead,” Flynn says.
Russia might be trying to spin food shortages as an outcome caused by the West, Flynn says, as Russian diplomats are meeting with the foreign ministers in Africa.
“They’re trying to come up with a narrative that basically says the reason why your people have been actually starving is because the West caused this,” he says.
The Black Sea Grain Initiative aimed to restore a vital supply of grains and fertilizers to some of the most vulnerable populations in the world.
The urgency of the food crisis caused by Russia’s invasion of Ukraine has not received as much attention as the impact of the invasion on energy supplies, Flynn says.
“The disruption that the war in Ukraine has done to the world’s global food supply system creates this huge humanitarian crisis from a standpoint of so many vulnerable populations, but also it is one of probably the most significant global security challenges, because food shortages almost always can lead to civil unrest,” Flynn says.
Russia and Ukraine have been the bread basket of the world and Europe in particular throughout history, because they both were blessed by Mother Nature with ideal climate conditions for growing grains on a large scale, Flynn says. Together Russia and Ukraine produce one-third of the world’s grain, which is for many the staple of the diet, especially in less developed countries.
Strained maritime exports of the Ukrainian and Russian grains, such as wheat and corn, sunflower oils and fertilizers have put about 47 million people at risk of acute starvation in addition to approximately 350 million people that live with acute food insecurity when they can’t get enough calories each day to stay healthy or be able to make a living.
“These are in places like Somalia, Ethiopia, South Sudan, Yemen, Afghanistan … places, which are already suffering from civil unrest and dealing with insurgencies,” Flynn says.
Globalization has encouraged and rewarded efficient supply systems where storing extra inventory becomes costly.
“The system got incredibly efficient, and it allowed us to move these huge volumes,” Flynn says.
About 6 million metric tons of grains would have typically been moving out of Ukraine each month. Now the Ukrainian grain exports have dropped to about 2 million metric tons a month.
Even if countries had some stockpile to give them a little breathing room between shipments, that has been eaten up pretty quickly, Flynn says.
The backlog of Ukrainian grains stranded at the ports is estimated at about 22 million metric tons. With another harvest approaching, the expectations are that another 65 million metric tons are on their way to feed into the markets in 2023, Flynn says.
“There is simply no place right now to store them,” he says. “[The agreement] is just the beginning to get that machinery back up and running again that will allow this truly lifesaving commodity to be able to move again.”
He believes Ukraine has so many fields that the attempts of Russians reportedly trying to purposefully target the crop and setting it on fire won’t affect the 2022 harvest significantly.
“The real issue here is that the Russians have targeted all the key transportation infrastructure needed to get that crop from the fields onto ships that would take them to global markets,” Flynn says.
Grain supplies have to flow by maritime, Flynn says, as this has always been the most affordable way. Export from Ukraine by trains on land or barges by the Danube River is only incremental and limited. It takes trucks and trains to get grains to storage facilities in ports and onto ships and much of this infrastructure has been affected by the war.
“Working around some of those infrastructure issues is going to be significant and will add both cost and delay,” Flynn says.
Given the current cost of fuel, it is unlikely that the grain prices will go down to February 2022 level, before Russia invaded Ukraine, anytime soon, Flynn says, which will further affect the more impoverished nations.
“I really give enormous credit to the U.N. and the Turks,” Flynn said. “They came up with a fairly elegant way to manage this.”
Each country signed a separate agreement with the U.N. and Turkey on July 22 as the mediators avoided the hurdle of persuading the two fighting sides to agree with each other.
Russia benefits from the agreement because it will now be able to boost its export of grains and fertilizers as well. Although sanctions against Russia imposed by the U.S. and Europe for its invasion of Ukraine did not affect the export of Russian grain and fertilizers directly, Flynn says, the financial infrastructure that accompanies the supply chain infrastructure froze up. The international companies, who provide ships, warehouses and other services were apprehensive to make business deals with Russia and break the rules.
Under the Black Sea Grain Initiative, the ships will have to stop in Turkish ports, be inspected and unloaded/reloaded. A Joint Coordination Centre will monitor the implementation.
The longer and more cumbersome process will lead to further costs, Flynn says, but it is still cheaper than any other land transportation-based alternatives.
The ships carrying grain will have to navigate minefields in the Black Sea.
“You can see it going sideways very quickly, if something happens along the way, and we are talking about global shipping, which is a private sector that has to be willing to essentially go into war zones; insurance and other issues will all have to be addressed,” Flynn says.
At the same time energy and food products are a major source of revenue, and history has previously seen “sometimes some strange bedfellows” cooperating to keep systems going like in the case of piracy impacting the Red Sea and agreements in the Persian Gulf associated with moving goods while Iran is under sanctions, Flynn says.
Moving grain and fertilizers will benefit the Russian economy and can potentially prolong the war.
“But the effects of not doing it, especially the corrosive impact on impoverished countries, would have been too great,” Flynn says.
For media inquiries, please contact firstname.lastname@example.org.