The Ukraine Report: Ukraine is developing export alternatives as the grain deal inches toward expiration date
On July 17th, another phase of the grain deal comes to an end.
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Currently, the grain corridor is operating at its minimum capacity. Since late June, the Russians have in fact refused to inspect inbound vessels, the Ukrainian Ministry of Infrastructure said.
“Ukrainian agricultural products play a significant role in global food security. A complete shutdown of Ukrainian grain exports via sea routes will lead to higher food prices and exacerbate the crisis in impoverished nations. The international community and our partners understand this»
The Russian foreign ministry said it had no intention of extending the deal, while Russian president Vladimir Putin’s spokesman Dmitry Peskov said that no final decision had been made. Earlier, the Russians had threatened to disrupt the deal, and then twice extended it for two months instead of four.
Meanwhile, Ukraine is developing alternative options for grain exports, including enhanced use of the Danube River. At the same time, the option of using the grain corridor outside the grain agreement is gaining more and more attention. This is an option in case Russia refuses to extend this initiative.
“We call it Plan B. It refers to both the Danube ports and additional financial instruments that will allow us to insure ships entering Odesa ports and ready to ship grain outside the grain deal.”
The Ministry of Infrastructure of Ukraine is cautiously confirming this possibility.
“If you are asking about the operation of ports outside the grain deal, then all the agencies on whom it depends are working on this issue. I am not ready to say when it will happen and in what form.”
Previously, the Ukrainian parliament approved a $535 million fund that will guarantee payments to foreign shipowners in the event of damage to a vessel or cargo. The key question now is whether insurance companies and ship owners are ready to work in such conditions.
Part of Ukrainian business is ready for such a scenario, Yevhen Osypov, CEO of one of Ukraine’s largest agricultural companies Kernel, commented.
“If you are asking whether we believe in the Ukrainian insurance fund and whether we are ready to take risks as a company, then yes, we do, and we are ready to take risks. But how and in what formats will depend on the Ministry of Infrastructure and the military. That is, when an algorithm enabling entry to ports is developed.”
In any event, the entire grain market is waiting for July 17th. The final decision will have an instant impact on global grain prices.
That report was powered by Latifundist Media, with USAID support provided through Agriculture Growing Rural Opportunities (AGRO) Activity implemented in Ukraine by Chemonics International. For more information, visit their website or follow them on social media.