Black Sea blockade means Ukrainian farmers set to leave 40m-tonne harvest in the ground

Two leading food economists predict dire escalation of food crisis triggered by Russian invasion

A bulk carrier moored at Constanta in Romania. Some Black Sea trade is rerouting through the Romanian port due to the blockade. Bloomberg
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The global food crisis triggered by the war in Ukraine that has hit the country's access to the Black Sea port system is set to be exacerbated by the approaching harvest, as farmers may choose to leave their crops in the ground to rot.

Two leading food economists told the Chatham House think tank's Second Century London Conference that exports through the Black Sea are the only means to transport enough crops to reverse the food shortages now hitting the world.

Seth Meyer, the US Department of Agriculture’s chief economist, told a panel that the country was unlikely to be able to shift more than two million tonnes overseas each month while the war continued, about a third of the prewar volumes.

Arif Husain, the chief economist of the World Food Programme, told the same panel it was prohibitively expensive to consider road or rail as an alternative to the ports, which are blockaded by Russia and defensively mined by Ukraine.

Mr Meyer said there could be new waves of Ukrainians forced to flee the country, adding to the more than seven million who have already left since the invasion on February 24.

“It may be the Ukrainian farmers leave their crops standing in the field because they've had no place to put it,” said Mr Meyer.

“They generate no income, which means next year they have no cash flow which only makes this problem worse — even to the point of causing further migration crisis out of Ukraine because those folks have no source of income.”

Germany said on Friday that Russia was “taking the world hostage” by blocking food exports from Ukraine, as western powers sought to convince the developing world they are allies rather than villains in the food crisis.

Foreign Minister Annalena Baerbock told a food summit in Berlin that Russia’s blockade of Ukrainian ports and destruction of grain silos were driving the food shortages, leaving millions of people fearing for their next meal.

Chancellor Olaf Scholz, who will lead talks on food security at the G7 summit beginning this weekend, said “those responsible are sitting in Moscow … they could quite easily take action to turn the situation around”.

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Asked if lorries could augment the railways and barges that have been used to shift around 2m tonnes a month of Ukraine's 23m stores of grains, such as wheat and sunflower, Mr Husain said up to 9,000 lorries would be needed.

“It would be prohibitive expensive to execute,” he said. “It will put a significant premium that will frankly put you out of the market for that grain on the global stage. That's why we are pushing so hard [on the blockade because] it is not a matter of pushing one million, two million tonnes out because it's not going to make a dent on world market prices.

“We have done the math, not even 3m tonnes are currently leaving Ukraine,” he said. “Through ports [Ukraine] was doing 5 to 6m tonnes per month. Our numbers are between 1.5 to 2m tonnes. If you want to move that by road and rail that would mean 9,000 trucks per day.”

The US agriculture department forecasts Ukraine can grow 40m tonnes of grains in the current harvest and Mr Meyer pointed out that Russia itself was likely to have “near record” wheat exports this year. Another crunch is that the countries that lie to Ukraine's west with infrastructure such as Romania's Constanta port are now entering their own peak agricultural commodities season and will have reduced capacity to deal with Ukraine's exports.

“I think its terribly optimistic to see we could do more than 1 to 2m tonnes of grain [a month] coming out of Ukraine at time when the countries where it would be going into are also in the middle of their own harvest,” he said.

Russia has sought to blame the food crisis on sanctions imposed over the war in Ukraine and on naval mines in the Black Sea, denying claims it is deliberately engineering a crisis to weaken western resolve.

Western officials have dismissed this as Kremlin spin, but are eager to convince developing countries to work with them rather than being tempted by Russian or Chinese overtures.

All G7 sanctions include exemptions to allow Russian food and agricultural products to get to global markets, the group’s foreign ministers said in a joint statement on Friday.

Ms Baerbock acknowledged that sanctions could lead nervous companies to pull out of transactions that were actually legitimate. She said the EU was drawing up legal guidance on that point.

But she said the effect of such self-censorship was small compared to Russian blockades of Ukrainian ports, which have left European countries turning to only partially satisfactory solutions to salvage stranded grain stocks.

“Russia is using hunger as a weapon of war and taking the world hostage in the process,” Ms Baerbock said. “Had Russia not brutally violated the UN Charter, the world would not be in this place.”

Mr Scholz said the three-day G7 talks would send a message of solidarity to people in vulnerable countries and promised to “ensure your lives are not at the mercy of cynical power plays”.

The leaders of South Africa, India, Indonesia, Argentina and Senegal have been invited to the summit in the Bavarian Alps in another move to keep the global south within the western fold.

A farmer harvests wheat near Izmail, in the Odessa region on Ukraine. AFP

Mr Scholz expressed support for a UN-led diplomatic initiative to reopen the Black Sea, which is likely to require an awkward arrangement with Russia.

In reference to that initiative, Mr Meyer said Russia must give Ukraine non-aggression assurances to allow for demining of channels to ports such as Odesa. “It doesn't mean demining the whole Black Sea, it means demining the channels with assurances to the Ukrainians and only the Russians can provide this,” he said.

Mr Husain said the global impact was frightening with food prices before the war having already reached at a 10-year high and fuel at a seven-year high, now 40 countries have food inflation of over 15 per cent year on year.

The G7 meeting this weekend is expected to make a priority of measures to reduce international freight costs. Mr Husain said the progress on reducing freight transactions costs was desperately needed.

The resulting shortages are being felt worldwide. Even in the prosperous UK, the number of households classified as food vulnerable has almost doubled this year to 7.3m.

Updated: June 24, 2022, 2:50 PM
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