Brief
Russia's full scale invasion of Ukraine has brought hundreds of thousands of deaths, millions of displaced people, and caused grave damage to Ukraine's economy. Economic damage is not localized: Ukraine is one of the world’s main grain exporters and the war is causing disruptions in global food supplies. Due to the war, Ukraine's harvest was down 37% in 2022 vs 2021. In addition to a lower harvest, Russia continues to force delays in the Black Sea that is keeping Ukrainian foodstuffs from reaching intended markets, while Ukraine grains fills up neighboring country’s storage bins.
Ukraine Makes a Lot of Grain, A Lot
It is hard to understate just how much grain Ukraine normally produces. It is perfectly appropriate that their flag is literally a wheat field against a blue sky:
Before the full scale invasion, Ukraine had a population of 43.8 million while being the number 1 global exporter of sunflower oil and high in many other products. Ukraine has highly fertile soil and allows maximal agricultural production – which compares starkly to the European agriculture market that supports farmer and small town livelihoods more than simply maximizing growing as much as possible.
Grain Deal Summary
The original grain deal was a piece of paper with no security guarantees or definitions involved – I was quite skeptical it would work at all. The UN was hopeful a deal could get done, Russia wanted cover to transport stolen Ukrainian grain and other products, and Turkey was happy to play Kingmaker. Russia even launched terror missiles at the port of Odesa within a day of it coming into effect (all of which were thankfully intercepted). However, the grain beat all of the skeptics expectations by allowing for a large amount of grain to leave the Port of Odesa, and be sent directly to the global markets that depend on it (Egypt, Nigeria, the Horn of Africa, etc).1 Although Russia was able to move large amounts of their own goods, we can tell at this point that the deal continues to be useful to Ukraine and not Russia – given how hard Russia is trying to end the deal while the rest of the world is pushing to keep the grain flowing. While Russia has not yet ended the deal itself, they are forcing delays in the Black Sea and not allowing Ukrainian foodstuffs to reach key markets.
By blockading the open sea lanes into Ukraine and especially the port of Odesa, Russia has blocked a ton of grain from reaching foreign nations. Despite Ukraine being able to get tons of grain out into neighboring countries, they are not equipped with enough facilities to send that much physical grain out to the rest of the world. Ukrainian grain is piling up in neighboring countries and causing new problems. Eastern Europe does not broadly have the logistical capacity to move Ukraine’s whole harvest onto world markets – the way Ukraine had been sending across the Sea. The people who should be getting Ukrainian grain, such as Somalians, have wheat prices skyrocketing locally.
Grain Bins Filled Up, Neighboring Farmers Stressed Out
Ukraine has increased its capability to load grain into neighboring countries – Ukrzaliznytsia has expanded rail capacity and loading facilities at all borders. Unfortunately, the capacity to ship grain from Poland, Romania, Hungary, onto the rest of the world has not expanded in kind, and global demand has been lower than expected. The result? A ton of Ukrainian grain filling up storage sites across Central and Eastern Europe.
This caused prices to crash and hurt farmers in Europe. The border of Bulgaria and Romania was closed by farm protesters trying to stop Ukraine grain trucks. Poland saw massive protests as well, and earlier this month struck a deal with Ukraine that grain could flow through Poland but no grain could be sent to Poland as a destination for a couple months.
Romania remains the only neighbor currently open to Ukrainian grain for the time being, but it's possible that all neighboring countries close to Ukrainian grains as a destination until they sell down their overflowing grain storage.
Summary
The Black Sea grain deal beat my original expectations in its ability to get grain out of Ukraine and to the people who need it the most. However, at this moment Russia is not abiding by inspection schedules and creating a backlog and mockery of the current grain deal. Grain has backed up locally in Ukraine and nearby nations and is not getting to the parts of the world where it’s in the most demand. While Politico may fret that this tension is making a mockery of solidarity, that shows their American bias and lack of understanding of the Poles. Poland continues to stand united with Ukraine for a military victory, even as these grain struggles cause tensions for a major voting base of their ruling party.
Until Russia goes home, Ukraine needs to find more ways to get its grain out to the world. Getting the grain out to its neighbors is not cutting it. European Union agriculture had enough grain, without an unexpected deluge of Ukrainian grain and hot spots like the Horn of Africa have food prices spiraling upwards because grain is not reaching them. This the perfect time for a group effort, logistical investment, and military aid to send Russia back home.
Thank you for reading.
Article by @PerceptionMoney
Second Author @j_prettybuds