Ukraine, Russia, Turkey and the UN agreed on the export of grain from seaports

Minister of Infrastructure of Ukraine Olexander Kubrakov, Minister of Defense of Turkey Hulusi Akar and Secretary General of the United Nations (UN) António Guterres signed an agreement on the export of grain, related food products and fertilizers (including ammonia) from the territory of Ukrainian ports. Mirror agreement with representatives of Turkey and the UN was signed by the Minister of Defense of the Russian Federation Sergiy Shoigu .

As reported Interfax Ukraine, the term of the contract is 120 days with the possibility of extension.

According to the terms of the agreement, which uncovered President’s advisor Mykhailo Podolyak, control over the ports “Pivdennyi”, “Odesa” and “Chornomorsk” remains with Ukraine. No other vessels are foreseen in these ports, except for those that are supposed to ensure the export of grain.

Also, no accompaniment by Russian ships is provided. If necessary, inspections of ships will be carried out by general groups in territorial waters.

As noted in the text of the initiative itself, it is based on the agreements of the parties to the 1974 International Convention on the Safety of Life at Sea. In particular, the parties agree on the following:

• maximum security guarantees for all vessels participating in this initiative;
• creation under the auspices of the UN in Istanbul of a joint coordination center (JCC), which includes representatives of all parties;
• Creation and work on the ships participating in the initiative of inspection teams from the representatives of the parties, which will inspect the ships in the ports designated by Turkey, when entering/leaving the Turkish Strait to check the absence of unauthorized cargo and personnel on board.

It is expected that the signing of the agreement will help relieve border crossings and create conditions for the gradual resumption of the work of iron&steel enterprises.

“This decision is important for all Ukrainian exports, including steel. Since the beginning of the war, the railway has been the main way to transport goods for export, which has led to huge traffic jams at the border. So, this decision should help relieve border crossings, as grain cargo will follow its traditional path and will not compete with other cargo when passing the border with European countries. So, conditions are being created for the gradual resumption of the work of the shutdown enterprises of the iron&steel complex. In addition, the devaluation of the hryvnia will have a positive impact on the work of exporters,” said GMK Center Chief Analyst Andriy Tarasenko.

For the treaty to come into force, it must be approved by the Cabinet of Ministers.

Ukraine is the fourth largest grain exporter in the world. In 2021, it exported 51.2 million tons of grain. Seaports were the main export route. 95% of grain exports from seaports were handled in Mykolaiv, Odesa and Chornomorsk.

With the beginning of war, the seaports ceased operations, as the Russian fleet blocked shipping in the Black and Azov Seas. Moreover, the Russian fleet fired on civilian merchant ships, and some of them were captured and towed to the Crimea.

Before the war, Ukraine exported an average of 5 million tons of grain per month. During the two months of the war, grain exports dropped to 0.5-0.6 million tons per month. In June 2022, it reached 1.6 million tons.

GMK Center analysts consider that a shortage in the grain market will accelerate global inflation.