The Ukraine conflict and the Black Sea grain deal have highlighted the ‘geopolitics of wheat’ and helped Russia gain leverage over Europe while expanding its influence in Africa and the Global South.
In the complex fabric of international relations, the interaction between geopolitics and trade – particularly of vital commodities – often occupies a key position. Nowhere is this more evident today than in the grain trade agreement between Russia and Ukraine, known as the Black Sea Grain Initiative.
Nestled within the fertile plains of Eastern Europe, Russia, and Ukraine stand as formidable players in the global cereal production arena, particularly in the domain of wheat cultivation. Their collaborative efforts significantly contribute to stabilizing global food prices and securing the food supply for numerous countries.
But the historical, political, and regional intricacies inherent to these two states have often cast shadows over their global economic interdependence, a situation further exacerbated by the ongoing conflict in Ukraine.
Major players in the global grain market
On 22 July, 2022, a landmark agreement was brokered with the mediation of Turkiye and the UN, in which Russia and Ukraine would facilitate grain exports from both countries to global markets.
Central to this agreement was the establishment of a secure maritime route in the Black Sea – traversing the Bosphorus Strait in northwestern Turkiye – that would ensure the safe transit of grain shipments to and from Ukrainian ports.
Moreover, the accord envisioned the creation of a joint coordination center comprising representatives from the three states who would be tasked with monitoring and inspecting ships to prevent the transportation of weapons.
The global significance of this agreement cannot be overstated, given the pivotal roles that Russia and Ukraine occupy as the world’s foremost cereal exporters. According to the World Food Program, Ukrainian cereals sustained the diets of approximately 400 million people globally in 2021.
Yet due to the ongoing proxy conflict in Ukraine, the number of individuals experiencing acute hunger is projected to surge by 47 million, representing a 17 percent increase, with the majority of those affected residing in sub-Saharan Africa.
Russia and Ukraine collectively account for a substantial share of the global grain market, with Russia being the leading wheat exporter (20 percent of global exports) and Ukraine following closely behind as the fifth-largest (10 percent of global exports).
Additionally, the two neighbors jointly contribute 25 percent of the world’s barley exports and 15 percent of maize exports. In 2021, Russia recorded wheat exports valued at $8.92 billion, with major destinations including Egypt ($2.44 billion), Turkiye ($1.79 billion), Nigeria ($493 million), Azerbaijan ($339 million), and Saudi Arabia ($316 million).
During the same year, Ukraine’s wheat exports totaled $5.87 billion, with key destinations being Egypt ($851 million), Indonesia ($640 million), Pakistan ($594 million), Nigeria ($490 million) and Ethiopia ($440 million).
Russia’s wheat export surge amidst Ukrainian decline
However, the outbreak of war has severely impacted Ukrainian wheat exports, causing them to plummet from 21 million tons in the 2019-20 season to 16.8 million tons in 2022-2023, with a further decline to 10.5 million tons anticipated in the next year.
The US Department of Agriculture (USDA) predicts that Ukraine’s wheat production will dwindle to 17.5 million tons, marking the lowest level since 2012-2013.
Despite western efforts to stifle Russia’s economy, Moscow has emerged as the primary beneficiary of this decline, effectively filling the void left by reduced Ukrainian exports. Russian wheat exports soared to a record-breaking 45.0 million tons in the 2022/2023 season, reflecting a remarkable 36 percent increase from the previous year and surpassing the previous record set in the 2017-2018 season by 3.5 million tons.
Thanks to competitive prices and abundant supplies, the USDA anticipates that Russia will account for over 20 percent of the global wheat trade in the 2022-2023 season, with Russian wheat stocks projected to reach their highest levels in nearly three decades.
Data from the Russian state statistics service Rosstat reveals that grain stocks until May 2023 were 61.5 percent higher than the previous year, while wheat stocks increased by 69.4 percent. Russian wheat exports are poised to set a new record at 47.5 million tons in the 2023-2024 season, surpassing exports from the EU (38.5 million tons), Canada (26.5 million tons), Australia (25 million tons), and Argentina (11 million tons).
Disparities within the Black Sea Grain Initiative
According to EU data, nearly 33 million tons of cereals and other foodstuffs were exported through the Black Sea Grain Initiative. UN data further reveals that these cereals and food were shipped to 45 countries spanning three continents, with 46 percent going to Asia, 40 percent to Western Europe, 12 percent to Africa, and 1 percent to Eastern Europe.
The primary exports include maize (51 percent), wheat (27 percent), sunflower flour (6 percent), sunflower oil (5 percent), barley (4 percent), rapeseed (3 percent), and others (4 percent).
But to Moscow’s consternation – and contrary to its expectations – UN figures indicate that 90 percent of maize and 60 percent of wheat exported through the initiative found their way to high- and upper-middle-income countries, while only 10 percent of maize and 40 percent of wheat went to low- and middle-income countries.
These figures very clearly underscore the deal’s importance to Europeans. While initially aimed at meeting the food needs of poorer nations, it has instead overwhelmingly served the interests of western countries. Low-income states benefited from only 9 percent of total wheat exports and zero maize exports through this agreement.
This explains the west’s keen efforts to re-engage with the agreement after Russia’s July withdrawal from the deal, in which Moscow made clear that the west’s failure to fulfill its Russian grain export commitments scuttled the agreement’s renewal.
More grain for the Global South
This situation is not unfamiliar to Europeans. The stark contrast between western rhetoric and actions has become increasingly evident, contributing significantly to the competition between the Global South and major powers.
While the EU vocally advocated for a grain agreement to “avert a worsening food crisis” in impoverished countries – but hoarded the grain for its own use – Russia exported 11.5 million tons of cereals to Africa in 2022 and nearly 10 million tons in the first half of 2023.
During the recent Russia-Africa summit, Russian President Vladimir Putin announced that Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic, and Eritrea would each receive between 25,000 and 50,000 tons of grain, with Moscow also covering the shipping costs.
Impact of Russia’s grain diplomacy
Russian grain diplomacy has become a valuable card for Moscow to influence opinion in the African continent, which it has been able to further capitalize on after the shocking self-interest Europeans displayed during the last grain deal.
Russia’s conditions for rejoining the grain agreement have sparked a complex diplomatic situation with significant implications. Moscow’s demands include the reconnection of its state agricultural bank to the international bank messaging system SWIFT, a more equitable distribution of grain to poorer countries, especially in Africa, and the rollback of sanctions affecting export processes and logistics.
The UN proposed a compromise that would connect a ‘subsidiary’ of Russia’s State Agricultural Bank to SWIFT, but Moscow insisted that the connection must be a direct one.
For Russia, the grain deal represents leverage over Europe, given the potential impact of rising food prices on European countries already grappling with a self-inflicted energy crisis. With Moscow’s withdrawal from the agreement, global grain prices surged, affecting wheat, rice, vegetable oil, and sunflower oil.
As a mediator in this ongoing conflict, Turkiye also has a vested interest in the deal’s restoration. Success in persuading Russia to return to the agreement would bolster Ankara’s diplomatic standing, particularly in its relations with the west.
Moreover, ‘food politics’ are not restricted to the Russia-west conflict: Poland, Hungary, Romania, Bulgaria, and Slovakia have imposed bans on the transportation of Ukrainian cereal products through their territories to protect their own farmers from cheap Ukrainian imports. While the bans are set to expire this month, these countries intend to extend them, further underscoring the need to resume the grain agreement.
Europe’s options appear limited, as the deal not only contributes to food security but also significantly impacts the west’s image in the Global South. Russia is keenly aware of this and actively works to publicize the destinations of Ukrainian grain while positioning itself as a guarantor of food security in numerous African countries, including Egypt.
Russian grain diplomacy has thus become a strategic tool for Moscow to project itself as a benefactor to Global South countries and to promote multipolarity that seeks less dependence on the west. With revenues and resources both in Russian hands, this is not a scenario in which Europe and the US can emerge unscathed.