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maltatoday | SUNDAY • 7 AUGUST 2022 12 OPINION Russia/Ukraine grain deal promises major benefits for poor countries... if it holds IF Russia keeps to the deal it has signed with Ukraine allow- ing for the resumption of grain exports, much needed relief will be provided to importing coun- tries, including many in Africa. The relief would be signifi- cant as Ukraine has roughly 22 million tonnes of grain (wheat, maize, sunflower seed and other grains) in silos. It has not been able to ship these to export markets because of Russia's invasion, which dis- rupted infrastructure and the attacks on vessels transporting goods. Ukraine is a notable play- er in global grain and oilseeds export market. And thus, the blockage of exports has contrib- uted to the notable increase in agricultural commodity pric- es observed since the war start- ed. The aim of the "grain deal", signed between Kyiv and Mos- cow on July 22 2022, was to change this chaotic situation. Under the agreement Rus- sia promised not to attack grain vessels in the Black Sea region. But this promise didn't last long. Less than 24 hours after the deal was signed Russian missiles struck the critical Ukrainian port of Odesa. The attack is likely to under- mine the deal, a multinational effort to avert the global food crisis. In addition, grain traders and merchants might be reluc- tant to be involved in the zone if they consider it to be too risky. This would ultimately defeat the deal. But if Russia keeps its word, the benefits will be immedi- ate. Grain prices could soften as more grain supplies become available to the world market. Overall this would be a good development for consumers, particularly those living in poor developing nations. The possible softening of pric- es would add to an already posi- tive picture of global grain pric- es, which have come off from the record levels seen in weeks following Russia's invasion of Ukraine. For example, the United Na- tion's Food and Agriculture Organisation Global Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, was down 2% in June 2022 from the previous month. This was a third monthly decline. Still, this is up 23% year on year, which means that the recent deal and possible resumption of trade would bring much-needed relief to the grains market. Nevertheless, the deal's im- pact on grain prices is likely to be marginal. Grain prices are unlikely to return to pre-war levels. A number of factors had been driving up agricultural prices in the two years prior to the con- flict. These included drought in South America, East Africa, and Indonesia and rising demand for grains in China have weighed on global grains supplies. Implications for Africa The possible price decline and increase in supply as a re- sult of deal between Russia and Ukraine is likely to benefit all importing countries and con- sumers in the medium term. This assumes that the deal holds – and that shipping lines will start taking orders and moving grains. From an African perspec- tive, the continent imports about US$80 billion worth of agricultural products a year, mainly wheat, palm oil and sun- flower seed. The annual food import bill from the sub-Sa- haran Africa region is rough- ly US$40 billion per year. Therefore, however marginal, a potential decline in the prices of these commodities would be positive for importing countries – and ultimately consumers. Importantly, Africa imports US$4 billion of agricultural products from Russia, 90% of which is wheat and 6% is sun- flower seed. The major import- ing countries are Egypt (50%), followed by Sudan, Nigeria, Tanzania, Algeria, Kenya, and South Africa. Similarly, Africa imports US$2.9 billion worth of agricul- tural products from Ukraine. About 48% of this was wheat, 31% maize, and the rest includ- ed sunflower oil, barley, and soybeans. A resumption of the trade ac- tivity would release about 22 million tonnes of grains out of Ukraine. It's also safe to assume that grain orders from Russia to var- ious markets in the world will also increase. Africa's biggest wheat import- ers would benefit the most from a resumption of shipments out of Ukraine's ports. More gen- erally, the softening in prices would benefit consumers across the world. In addition, the World Food Programme will be able to source food for donations in struggling African regions, such as East Africa, where there is a bad drought, as well as parts of Asia. One can't miss the fact that Ukrainian farmers would bene- fit too. They have been worried that, without a resumption of trade, their crops would rot in silos. The deal signals hope for some relief, and the prospect of creating space to store the new season crop. Uncertainties There's still a great deal of uncertainty around the deal in the wake of the Russian follow- ing the missile attack on Ode- sa. Multinational discussions will be a crucial determinant of whether grain trade resumes from the Black Sea. Measures will also need to be put in place to assure merchants of the safety of their cargo. The grain price dynamics and possible benefits for importing countries will all depend on these uncertain developments. Still, any success in the exports of grains from Ukraine will benefit the African countries directly through the delivery of physical supplies – or indirect- ly through possible global price softening. Wandile Sihlobo is Senior Fellow, Department of Agricultural Economics, Stellenbosch University Wandile Sihlobo Ukraine and Russia reached a deal to unblock millions of tons of grain stranded by war, in a major step toward shoring up global food supplies