Global food prices could skyrocket as Putin withdraws from grain deal

The International Monetary Fund (IMF) has warned that Russia’s withdrawal from the Black Sea grain programme might cause world grain prices to rise by 10 to 15 per cent.

According to IMF head economist Pierre-Olivier Gourinchas during a press briefing on Tuesday, this accord, brokered by the UN, allowed Ukrainian grain shipments via the Black Sea and played a critical role in guaranteeing an adequate global grain supply in the previous year.

Gourinchas stated that the same dynamics that helped maintain stable grain supply would now work in reverse, pushing up food prices as a result of Russia’s activities.

The IMF had previously stated that Russia’s withdrawal from the grain project could have a detrimental impact, particularly on regions strongly reliant on supplies from Ukraine, such as North Africa, the Middle East, and South Asia.

The European Union will look at helping fund the costly transportation of grain out of Ukraine after Russia halted a deal that allowed Black Sea exports vital to global food security, a top agriculture official said Tuesday.

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The thorny issue of how to get food products out of Ukraine — and help farmers in neighbouring EU countries compete with a glut of cheap grain — is threatening to shake the 27-nation bloc’s unity in supporting Kyiv as it battles Russia’s invasion.

Agriculture Commissioner Janusz Wojciechowski said the European Commission, the EU’s executive arm, would look at the possibility of financial support for transport companies, but Europe’s economic powerhouse, Germany, opposes such a move.

Poland, along with Slovakia, Hungary, Romania and Bulgaria, want to extend a ban on Ukrainian grain imports until the end of the year but will still allow food to move through their countries to the world.

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German Agriculture Minister Cem Ozdemir said: “What is not possible is to take the money from Brussels as compensation for the burden, but at the same time close the border to Ukraine, in part even for products that were allowed to be transported legally before the war.”

He added: “In the end, this leads to the fact that solidarity with Ukraine is undermined. The only one who is happy is Vladimir Putin.”

The grain import ban is scheduled to expire in mid-September. No decision was taken on extending the ban at Tuesday’s meeting.

Polish Agriculture Minister Robert Telus welcomed Wojciechowski’s comments.

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Barbara Woodward, Britain’s U.N. ambassador and the council’s current president, announced the meeting on Tuesday, saying Russia has ramped up attacks on grain stores in Odesa and across Ukraine while its “sabotage” of the Black Sea Grain Deal had increased wheat prices by 8 per cent.

She said the strikes with heavy missiles “to destroy food shows that weaponizing global food supplies is a calculated part of Russia’s strategy”.

In Washington, U.S. international development chief Samantha Power told reporters that the United States would look at putting more money toward silos and other storage so Ukraine’s grain harvests “don’t rot while they wait to reach global markets”.

Power said the US would focus in part on helping farmers get access to finance adding: “Their profit margins are just getting smaller and smaller.”

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