Moscow will feed the hungry with wheat even after leaving the grain deal

Turkey expects to work out specific proposals for the resumption of the grain deal in time for the planned visit of Russian President Vladimir Putin (dates not announced). Meanwhile, the Kremlin has repeatedly stated that the country will return to the implementation of the details of the agreement if all requirements are met. The West, obviously, does not consider such a scenario, and no one intends to look for compromises.

Instead of a constructive dialogue, accusations are pouring down on Russia like from a cornucopia. So, for example, the head of the European Union’s foreign policy department, Josep Borrell, made a loud statement that the Kremlin wants to “plant” countries in need of food on Russian grain for selfish purposes. Experts told MK what prospects await the frozen Black Sea initiative.

It is clear that the West does not want to comply with Russia’s conditions on the grain deal. If one of the domestic banks is returned to the SWIFT system, supplies of agricultural machinery and spare parts are resumed, restrictions on insurance and a ban on access to ports are lifted, as well as the operation of the Togliatti-Odessa ammonia pipeline is restored and the foreign assets of Russian agricultural companies are unblocked, then what will remain of the sanctions? Given that the price ceiling for oil, de facto, did not work, then the EU and the US will have no leverage on the Russian economy at all.

Of course, they cannot allow this. “The countries of Africa… Who cares about them in the West at all? – says a private investor, financial analyst Fedor Sidorov. – It is important to recall that while the Black Sea initiative was still in effect, the collective West was not very eager to help the starving countries. A significant share of exports from Ukraine (more than 70%) went to rich countries. At the same time, less than 3% fell to the share of Ethiopia, Sudan, Somalia and a number of other poorest states.”

Meanwhile, earlier Vladimir Putin noted that Western politicians turned the humanitarian initiative into a means of political blackmail and a way to enrich transnational companies. Whereas the gratuitous aid promised by Russia will be very useful. The West fears that in this way Russia will form “new dependent ties” – but this is only partly true, Sidorov is convinced. “Yes, Russia will form new trade relations, but, unlike enlightened Europe, it will do this on a humanistic basis, and not for the purpose of political pressure on anyone. Now India is going to buy 9 million tons from Russia. grains. Egypt, Türkiye and many other states are showing interest. Given all this, I believe that next year the volume of Russian grain exports will only grow – and the West may join the trade or look for other suppliers.”

Why do Western countries refuse to comply with Russia’s conditions for the resumption of the grain deal, while at the same time accusing the Russian Federation of trying to leave countries in need without food? It would seem that fulfill the conditions and the supply of grain will continue. It’s all about political considerations, says Arkady Zlochevsky, head of the Russian Grain Union (RGU).

“The essence of the deal is not in grain deliveries, but in regard to the current statements of the same Borell. This is this “conscious banter,” the expert believes. “The problem is not the supply of wheat to the poorest countries. This is an overblown hysteria pursuing political goals. In the economic sense, there is no problem. More than enough resources. All the problems that happened in principle in the historical context, for example, famine, were tied to two factors that had nothing to do with the world grain balance or wheat shortages. The first factor is the lack of money from countries in need. Second, the lack of infrastructure to deliver the grain. Therefore, in these states, the population is starving. There has never been any other reason. What Borell says, for example, is a clear fraud.”

If we talk about world grain prices, they did not fly into the stratosphere after Russia’s withdrawal from the agreement, as international partners predicted. “There was a surge in prices, but it was short-lived, as I previously assumed,” continues the head of the RGU. “Then everything rolled back. For the past six days, prices have been falling both on the stock exchanges and in the cash market.”

Roughly speaking, according to Zlochevsky, nothing cardinal happened. You can compare prices. For example, before Russia pulled out of the deal, wheat was trading at $252-253. The price immediately after the completion of the contract rose to $286. Now the cost has already dropped to $263. this is far from the $450 we saw during the pandemic. Meanwhile, there are enough resources in the world. Speaking exclusively about Russia, this season we can reach the same export volumes as before. If we talk about the poorest countries, domestic farmers have supplied and are increasing supplies to Mozambique (245 thousand tons last season), Senegal (312 thousand tons), Tunisia (408 thousand tons), South Africa (521 thousand tons) , Tanzania (628 thousand tons). We increased deliveries to Bangladesh by 5.8 times to 1 million 855 thousand tons, and to Sudan by 2.2 times to 1 million 604 thousand tons.

Now the total export potential is estimated at 57 million tons. Experts note that the pace of deliveries to other countries is much higher than last year (in July by 30-40%). And they don’t fall. If the export quotas are in the proper volume, then Russian exporters will either reach the last year’s figures, or exceed them and step over 60-65 million tons.

“It all depends on the harvest. According to analysts’ forecasts, 130-140 million tons will be harvested. And it will be received against the backdrop of an absolute record for carry-over stocks – at least 12-15 million tons, or even over 20 million tons. In total, these resources will be enough to ship more, as well as cover our own needs (domestic consumption is about 83 million tons),” emphasizes Arkady Zlochevsky.

Help “MK”: The agreement on the export of grain from Ukrainian ports was signed by Russia, Ukraine, Turkey and the UN in July 2022. It was extended several times, but at the next approval of the deal in May 2023, the Russian Foreign Ministry named five conditions necessary for this. Among them were the connection of Rosselkhozbank to the SWIFT system, the supply of spare parts for agricultural machinery, the unblocking of transport logistics and insurance, the resuscitation of the Togliatti-Odessa ammonia pipeline and the “defrosting” of the assets of Russian companies. The requirements were not met. The Kremlin said that on July 18, the Black Sea initiative ceases to function, the joint coordination center in Istanbul will be disbanded.