Friday, March 29, 2024

The agreement on cereal shipments in the Black Sea will not be enough to solve all the challenges of the agri-sector in 2023

Although the agreement concerning the cereals transit in the Black sea, first negotiated between Ukraine and Russia under the aegis of Turkey, then renewed in March, has contributed to ease the pressure on cereals supply, its effects are limited and grey areas on the food security of many countries persist. The extension of this agreement provide temporary relief to the market, but Coface believes that the serious supply tensions that emerged with the start of the war in Ukraine will persist throughout 2023. 

The renewal of the agreement on the transport of cereals in the Black Sea only solves part of the agri-food sector’s problems linked to the war in Ukraine

The war in Ukraine has caused lasting disruption to the maritime flows essential to the transit of wheat in the Black Sea. Flows passing through the Bosporus strait are about 50% lower than before the war, while Russia and Ukraine account for 25% of global wheat exports. The reduction in the availability of cereals has a strong impact on certain countries that are highly dependent on imports, especially in West Africa, Central Asia, and Southeast Asia. Agricultural resources are thus a lever for Russia to put pressure on Western countries, through public opinion empathy, which is sensitive to the growing risk to food security in developing countries.Beyond the difficulties linked to shipments, the destruction of arable land, infrastructures, and equipment in Ukraine is problematic. According to the Ukrainian Grain Association (UGA), crop areas have been reduced by 25% in 2022 compared to 2021, and forecasts for 2023 are even more pessimistic. The contamination of the land due to the bombing threatens future crops, and many chemical plants or storage facilities essential to agricultural production have been destroyed. The UN Environment Programme estimates that 618 industrial sites or critical infrastructures have…

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