Russia-Ukraine grain deal a relief for Africa


Mighty Russian military enter Ukraine

JOHANNESBURG, (CAJ News) – AFRICAN countries reliant on food imports will be the major beneficiaries of the deal between warring Russia and Ukraine to allow grain exports from Ukrainian Black Sea ports.

Some 22 million tonnes of grain in Ukranian silos over the past few months has been unable to reach export markets because of the disruptions of the war on infrastructure and the attacks on vessels transporting goods.

“This chaos is all about to change now, at least if everything goes smoothly with the recently signed ‘Russia-Ukraine grain deal’,” said Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz).

He noted the immediate benefit should be through grain prices, which could soften following the agreement, although possibly marginal, as it implies that there would be an increase in supplies available to the world market.

The possible softening of prices is poised to add to an already positive picture of global grain prices, which have come off from the record levels seen in weeks following Russia’s invasion of Ukraine in late February 2022.

Sihlobo outlined the implications of the recent deal for Africa.

From a continental perspective, the economist noted Africa imports about US$80 billion worth of agricultural products a year.

These mainly are wheat, palm oil and sunflower seed.

“Therefore, however marginal, a potential decline in the prices of these commodities would be a positive for the importing countries in the continent and African consumers,” Sihlobo said.

The expert explained Africa imports $4 billion of agricultural products from Russia, 90 percent of which is wheat and 6 percent is sunflower seed.

Africa imports $2,9 billion worth of agricultural products from Ukraine. About 48 percent of this was wheat, 31 percent maize. The rest includes sunflower oil, barley and soybeans.

Sihlobo said the World Food Programme would now be able to source food for donations in some struggling African regions, particularly East Africa.
“So, this is overall a good development for consumers, specifically in the poor developing nations,” the economist said.

He noted prices however would not go back to pre-war levels.

Drought in South America, East Africa and Indonesia as well as rising demand for grains in China weighed on global grains supplies and pushed prices up before the Russo-Ukraine war.

Moussa Faki Mahamat, chairperson of the African Union Commission, welcomed the signing of the grain agreement.

“I also wish to warmly congratulate (Senegal) President Macky Sall, for having called for the urgent need for the resumption of cereals from Ukraine and Russia to global markets, as made to President (Vladimir) Putin during a joint AU mission to Sochi on 3 June 2022,” he added.

Sall is the AU chairperson.

Sihlobo noted the Food and Agricultural Organisation’s Global Foof Price Index was down 2 percent in June 2022 from the previous month, a third monthly decline.

Still, this is up 23 percent year-on-year.

“This means that the recent deal and possible resumption of trade would bring much-needed relief to the grains market,” Sihlobo said.

– CAJ News








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