Ukraine calls for Black Sea grain deal to extend to other products

Ukraine has called for the deal that relaxes Russia’s blockade of its Black Sea grain exports to be extended to other products such as metals after the first successful use of the route.

Taras Kachka, Ukraine’s trade negotiator and deputy economy minister, said he was hopeful the agreement between Ukraine and Russia allowing the resumption of grain traffic would hold and suggested that it could serve as a template for other commodities because traders and exporters “always test the limits”.

“This agreement is about logistics, about the movement of vessels through the Black Sea,” he said. “What’s the difference between grain and iron ore?”

Kachka spoke after the Lebanon-bound Razoni, which had been stuck in Odesa since Russia started its full invasion of Ukraine, had made its way through Russian and Ukrainian mines laid at sea and cleared inspections in Turkey.

More than a dozen ships carrying grain are waiting to set sail from Ukrainian ports, while another ship is heading to the Ukrainian port of Chornomorsk.

Under the deal brokered by the UN and Turkey, Russia agreed not to attack ships carrying food and fertilisers so long as it could — together with officials from Ukraine, Russia, Turkey and the UN — inspect the vessels at a location in the Bosphorus strait.

Ukraine is the world’s fifth-largest wheat exporter and some vulnerable countries such a Lebanon, Syria and Somalia rely on it for the majority of their wheat imports.

The tentative resumption of the Black Sea trade route has raised hopes that some 20mn tonnes of wheat, corn and other grains trapped in Ukraine could make their way to global markets and bring revenues to Ukrainian farmers ahead of the winter planting season.

Mykhailo Podolyak, a senior adviser to Ukrainian president Volodymyr Zelenskyy, said the deal would probably hold “for some time” as long as it served the economic interests of Russia too.

“It seems to me that these [sea] caravans will for some time go back and forth, in parallel with Russian caravans, who are also keen to ship their grain,” he said. But he warned: “Russia will seek some way to block this all again. This is my pessimistic and optimistic scenario cobbled together.”

Podolyak and others in the Ukrainian government believe that Russia agreed to this plan because its invasion of Ukraine had not gone according to Moscow’s schedule. Russia had planned to take the ports of Odesa and Mykolayiv to seize control of the export routes in the Black Sea region, Podolyak said.

Russia has hailed the deal. “This is not a one-time mechanism but a mechanism that is designed to ensure the export of the grain that has accumulated in these ports,” Kremlin spokesman Dmitry Peskov said on Thursday. “Therefore, we hope that this mechanism will continue to work just as effectively.”

Oleg Ustenko, economic adviser to Zelenskyy, said the lifting of the blockade could help avert economic calamity. Before the war, the majority of Ukrainian exports transited through the Black Sea, he estimated.

However, the postwar increase in logistics costs stemming from efforts to redirect exports via rail or road has made Ukrainian products uncompetitive on the global market, he added.

“This was part of the plan [by Russia] . . . to weaken the Ukrainian economy,” he said.

The only sunflower seed product Kyiv has been able to export consistently since war broke out is non-edible grade sunflower oil, with about 300,000 tonnes transported by lorries to be mixed into fuels in Europe.

The country managed to export about 3mn tonnes of grains via road, rail and the river Danube last month, Kachka said, or less than half of volumes exported mostly through the Black Sea before the war. Ukraine estimates it will harvest 67mn tonnes of grain this year, down from a record 86mn tonnes in 2021.

Even with a relaxed Black Sea blockade, Ukrainian farmers will be planting prudently this winter, said Kachka.

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