BLACK SEA GRAIN INITIATIVE - INTERNATIONAL RELATIONS
News: Explained | What is the Black Sea Grain Initiative?
What's in the news?
● In
a move that allayed concerns about yet another disruption to global food supply
chains, Russia re-joined the Black Sea Grain deal.
● The reversal came a day after Russian President Vladimir Putin stated that Moscow would suspend, but not end, its involvement in the deal.
Black Sea Grain Initiative:
● The
deal, brokered by the United Nations
(UN) and Turkey, was signed in Istanbul on July 27 this year.
● Initially
stipulated for a period of 120 days, with an option to extend or terminate
thereafter in November, the deal was to provide for a safe maritime humanitarian corridor for Ukrainian exports (particularly
for food grains) from three of its key ports, namely, Chornomorsk, Odessa and
Yuzhny/Pivdennyi.
● Ukraine
is among the largest exporters of wheat,
maize, rapeseed, sunflower seeds and sunflower oil, globally. Its access to
the deep-sea ports in the Black Sea enables it to directly approach Russia and Europe
along with grain importers from the Middle East and North Africa.
● Russia’s action in the East European country has now disturbed this route, earlier used to ship 75% of its agricultural exports - precisely what the initiative sought to address.
Objectives:
● The
central idea was to calm markets by ensuring an adequate supply of grains, thereby limiting food price inflation.
● The Black Sea Grain deal endeavours to tackle escalating food prices emanating from supply chain disruptions because of Russian actions in the world’s ‘breadbasket’.
Key features:
● The
deal put in place a Joint Coordination
Centre (JCC), comprising senior representatives from Russia, Turkey,
Ukraine and the UN for oversight and coordination.
● All
commercial ships are required to register directly with the JCC to ensure
appropriate monitoring, inspection and safe passage.
● Inbound
and outbound ships (to the designated corridor) transit as per a schedule
accorded by the JCC post-inspection. This is done so as to ensure there is no unauthorised
cargo or personnel onboard.
● Following
this, they are allowed to sail onwards to Ukrainian ports for loading through
the designated corridor.
● All
ships, once inside the Ukrainian territorial waters, are subject to the
nation’s authority and responsibility.
● No
military ships or unmanned aerial vehicles can approach the corridor closer
than a pre-decided distance agreed upon by the JCC. This too would require
consultation with the parties and authorisation of the JCC.
● In the event of non-compliance or suspicious activities, upon the request of a party, the JCC would provide assistance to the crew or conduct an inspection against security guarantees.
Significance of the deal:
● As
per the UN Office for Coordination of Humanitarian Affairs, approximately 9.8 million tonnes of grains have been
shipped since the initiative was commenced.
● The
UN Food and Agricultural Organisation’s (FAO) Food Price Index, which assesses
the monthly change in international prices of a basket of food commodities,
fell for the sixth consecutive month in a row this October.
● Following the fifth consecutive month of decline, the supply situation in markets was seen to be easing, with the potential for further price drops.
What would suspension of the deal mean?
● In
a nutshell, the deal’s suspension was expected to re-introduce the price pressures on grain prices, especially that
of wheat, with inventory being at historical lows.
● It
could particularly impact countries in the Middle East and Africa such as
Egypt, Turkey, Lebanon, Sudan and Yemen which have benefitted from the
resumption (refer to the chart) and are particularly dependent on Russian and
Ukrainian exports.