News From Ukraine: Russia tries to include fertilizer preferences in grain agreement

We want to take the time to check in on farmers in Ukraine amid the ongoing war in their country. Today, we are learning more about Russia’s attempts to include fertilizer preferences in their grain agreement and the effects it could have on the world market.

Latifundist Media has partnered with us to provide boots-on-the-ground coverage:

Ukraine, Turkey, and the U.N. agreed to extend the deal on the grain corridor, but Russia is trying to bargain for new preferences for itself by putting pressure on the parties to the agreement. To do this, Russia uses absurd accusations. Last week, the Russian president hinted that based on data, one of the ships carrying grain could deliver explosives used to blow up the Crimean bridge. At the same time, Russia’s permanent representative to the United Nations in Geneva announced that Russia is ready to refuse the agreement next month if its demands are not met.

What are the demands?

Russia does not voice them directly, but experts believe that Russia’s principal demand is to unblock the export of fertilizers above all ammonia. According to the Fertilizer Institute, Russia is the largest exporter of fertilizers, accounting for almost a quarter of ammonia supplies to the world market, 23 percent.

Why is ammonia important?

It is a key component of the production of nitrogen fertilizers. The price of ammonia depends largely on the price of natural gas. Sky-high prices as a result of reduced supplies from Russia have forced European companies to limit fertilizer production. This is causing a deficit.

How are ammonia and the grain deal related? Business Development Director at VVM, Mr. Serhii Ruban explained how.

“The Baltic and the Black Sea ports were the two main channels of supply of Russian ammonia to the world market. Until 2014, the main terminal of supply was the Ukrainian port of Pivdennyi. It was connected to the Togliatti – Odesa ammonia pipeline,” said Ruban.

In 2021, Russians exported 4.4 million tons of this gas - half of these volumes through the ammonia pipeline. Transit was suspended on February 24th.

“The Russians seek to unblock this pipeline at any cost. At the moment, the functioning of this ammonia pipeline, even in the case of a positive decision to resume the export of Russian ammonia, is questionable. Since part of the ammonia pipeline runs through the territory where hostilities and constant shelling are taking place,” Ruban said.

The UN wants to assist in unblocking the pipeline. A new agreement is currently being discussed by a UN task force, led by Rebeca Grynspan, a Costa Rica economist who has the UN Conference on Trade and Development.

“Russia, as the world’s largest exporter of fertilizer, plays a crucial role in ensuring sufficient food production next year,” George Fominyen, spokesman for the World Food Programme. But as Russian propaganda likes to put it, it’s not all that simple.

“There is a great danger of launching this gas pipeline. Since ammonia is an environmentally hazardous gas, and damage to ammonia tanks can lead to a large number of casualties, I do not think that the Ukrainian government will resume exports of Russian ammonia through Ukrainian territory,” said Ruban.

This question is still open, as well as when the invaders will withdraw from the Ukrainian territory.

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