Why Is Russia Blocking Ukraine's Food Exports?
A short, spoken-word summary from CSIS’s Caitlin Welsh on her Critical Questions publication with Joe Glauber and Emma Dodd, “Why Is Russia Blocking Ukraine’s Food Exports?”
Russia’s termination of the Black Sea Grain Initiative (BSGI) will be a main topic of discussion in United Nations General Assembly meetings next week. The United Nations and others continue to urge Russia to rejoin the deal, while Russia declares its willingness to rejoin if its demands are met. It likely has no such intention. Continuing to block Ukraine’s agricultural exports is in Russia’s economic and political interest while Russia manipulates its own food exports to appease food-importing countries. And its exit from the deal has not contributed to a global food price spike—for now.
Q1: What was the Black Sea Grain Initiative?
A1: On July 17, 2023, Russia announced its intention to exit the deals brokered one year prior allowing the safe export of Ukrainian and Russian agricultural goods through the Black Sea. Under the “Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian Ports,” the full name of the BSGI, Turkey, Russia, and Ukraine, with support from the UN secretary-general, agreed to “facilitate the safe navigation for the export of grain and related foodstuffs and fertilizers” from Ukrainian ports. Under a separate memorandum of understanding between the Russia and the UN Secretariat, Russia reiterated its intention to facilitate the “unimpeded export” of agricultural products from Ukrainian ports, and the UN Secretariat agreed to facilitate the export of raw materials needed to produce fertilizers, namely ammonia, from Russia to world markets.
The BSGI was signed on July 22, 2022, and the first ships left Ukrainian ports on August 1, 2022. Until its termination, ships made 1,004 voyages from three of Ukraine’s Black Sea ports, exporting 32.9 million metric tons of Ukrainian-produced corn, wheat, sunflower oil, barley, rapeseed, soybeans, and other products. Cargo was imported by 45 countries around the world, but the impacts of the BSGI were global. The agreement helped ease global grain prices that had hit an all-time high in March 2022 in response to Russia’s full-scale invasion of Ukraine. Under the BSGI, the UN World Food Program (WFP) procured 80 percent of its wheat purchases from Ukraine, shipping over 725,000 metric tons of wheat to alleviate food insecurity in Africa, the Middle East, and Asia.
Upon exiting the deal, the Russian Foreign Ministry provided a lengthy rationale for its decision, including critiques of the implementation of the agreement and its impacts on global food security, but Russia’s decision to terminate the deal—and not to rejoin in the nearly two months since—is best understood as a strategic calculation in the context of its war in Ukraine. Simply put, Russia sees greater benefit in remaining outside the deal than staying in it.
Q2: Why did Russia leave the BSGI, and why has it stayed away?
A2: First and foremost, by exiting the BSGI, Russia intensified its pressure on Ukraine’s agricultural infrastructure and farms, which Russia has intentionally targeted since the outset of its invasion, as analyzed by CSIS and widely reported by others. Despite Russia’s attacks, Ukraine’s agriculture sector has remained afloat thanks to the concerted efforts of Ukraine’s government, companies, and farmers, with support from Ukraine’s allies, and the BSGI helped facilitate Ukraine’s exports.
Prior to Russia’s invasion, Ukraine exported approximately 90 percent of its agricultural products via its Black Sea ports. Russia’s occupation forced Ukraine to seek alternate routes for its exports, pushing up land transportation costs, while road and rail infrastructure was not equipped to handle the volume of grains Ukraine had shipped by sea. The implementation of the BSGI gave Ukraine access to Odesa, Chornomorsk, and Pivdennyi, which together had handled about half of Ukraine’s prewar maritime agricultural exports. With Russia exiting the BSGI, Ukraine loses access to these ports once again.
Prior to Russia’s invasion, agriculture contributed to approximately 10 percent of Ukraine’s GDP and provided 41 percent of Ukraine’s export revenue, according to the State Statistical Service of Ukraine. Ukraine’s GDP contracted by more than 29 percent in 2022 compared to 2021, and the contribution of agriculture to Ukraine’s GDP was 39 percent lower in 2022 than 2021, according to World Bank data.
Second, by forcing Ukraine to seek alternative transportation for its agricultural products, Russia forces the European Union to continue to reckon with market disruptions caused by Ukraine’s shifting export routes. As Ukraine increased the volume of grain it exported by land, the glut of Ukrainian grain in neighboring countries caused grain prices to plummet and sparked farmer protests in Poland, Slovakia, Hungary, Romania, and Bulgaria in early 2023. By May 2023, the European Union had approved measures by these countries to ban the import of Ukrainian wheat, maize, rapeseed, and sunflower seed into their countries, while still facilitating the transport of these products through their countries. The measure was extended until September 15, when the European Union is expected to extend it once again. A Ukraine reliant on alternative export routes continues to put financial pressure on the European Union to support these countries’ farmers and political pressure on the European Union to continue to extend its “exceptional and temporary” trade measures, threatening unified EU support for Ukraine.
Third, constricting Ukraine’s agricultural exports opens opportunities for Russia to benefit—economically and politically—from its own agricultural exports. While Ukraine’s agricultural production has fallen due to Russia’s attacks, Russia’s own agricultural production has soared due to favorable growing conditions. According to U.S. Department of Agriculture (USDA) estimates, Russia’s exports of wheat for the 2023–2024 season are expected to be 48 percent higher than 2021–2022, at 49 million metric tons, more than any other wheat-producing country or the European Union. (In contrast, Ukraine is expected to export 11 million metric tons of wheat in 2023–2024, according to the USDA.)
Russia is also accused of having stolen nearly 6 million metric tons of Ukrainian wheat and sold it as Russian product. The contribution of agriculture to Russia’s GDP increased by nearly 22 percent from 2021 to 2022, according to World Bank data. And while global grain prices have decreased since their March 2022 peak, Russia, like other grain exporters, would benefit from increased grain prices—including any increases caused by the cessation of the BSGI.
Russia also seeks political benefit from its expanded agricultural exports. Merely months into its war in Ukraine, former Russian president Dmitry Medvedev called food exports Russia’s “quiet but ominous” weapon, and in 2022, many of the countries that refrained from condemning Russia in the UN were those most dependent on Russian agricultural imports. As Ukraine’s agricultural exports decline, Russia aims to make up for the shortfall, thereby increasing its influence in countries reliant on the Black Sea for their food. In recorded remarks at August’s BRICS summit, President Putin declared that Russia “has the capacity to replace Ukrainian grain both commercially and as free aid to needy [countries], especially since our harvest is again expected to be perfect this year.”
Q3: Why did Russia join the BSGI in the first place?
A3: Given the many benefits Russia reaps from staying out of the BSGI, why did it join in the first place?Russia expected to continue to export ammonia, a raw material for nitrogen fertilizer, under the agreement, though no ammonia passed through the Togliatti-Pivdennyi pipeline under the BSGI. (Despite a decline in fertilizer sale volumes, Russia’s revenue from fertilizer exports surged in 2022, as fertilizer prices spiked following Russia’s invasion of Ukraine.) Moreover, analysts agree that Russia likely saw its participation in the BSGI as a way to quell opposition from countries looking to blame Russia for the 2022 spike in global food prices. That is, with Russia facilitating Ukraine’s agriculture exports under the BSGI, it could deflect blame for global food insecurity to Western countries, whose sanctions affected Russia’s agricultural exports despite carve-outs, and to the European countries that had protested transit of Ukrainian grain through their borders.
By July 2023, global food prices were nearly 14 percent below their 2022 average. While the number of ships inspected in Ukrainian ports had exceeded 10 per day in October 2022, that number fell to less than two inspections per day by mid-June, according to the United Nations, as Russia delayed inspections of ships entering and leaving Ukrainian ports. Russia could have predicted, therefore, that its sudden departure from the BSGI in July 2023 would not cause the sudden reactions on global agricultural markets as its invasion in 2022—and that its exit from the BSGI would not risk alienating food-importing countries.
Q4: Absent the BSGI, how is Ukraine exporting its agricultural products?
A4: In terminating the BSGI, Russia withdrew security guarantees for safe navigation in the northwest region of the Black Sea. The following day, Russia intensified its assault on the infrastructure Ukraine relied upon for its agricultural exports. With these attacks, Russia made clear that it sought not only a stoppage to Ukraine’s agricultural exports through Odesa, Chornomorsk, and Pivdennyi, but the termination of its agricultural exports writ large. Since July 18, 105 port infrastructure facilities have been damaged in Russia’s attacks, including grain terminals, warehouses, port infrastructure, industrial equipment, and administrative buildings on the Black Sea, Dnipro River, and Danube River. Russia is estimated to have destroyed 280,000 metric tons of grain following its withdrawal from the Black Sea Grain Initiative in July.
Nonetheless, Ukraine continues to seek alternative routes for its agricultural products with the help of the United States and other allies. As of September 2, the temporary humanitarian corridor Ukraine announced on August 10 has seen the safe passage of four vessels that had been trapped in Ukraine’s ports since the invasion began. Progress has also been announced along European Union “solidarity lanes.” By July 31, the Croatian prime minister agreed to the use of Croatian ports for Ukrainian agricultural goods, which were moving by early September. On August 18, the Romanian prime ministers agreed to increase Ukraine’s exports through Romania, including by improving transportation infrastructure and border crossings, aiming to allow Romania to transport 60 percent of Ukraine’s agricultural exports. In advance of this agreement, the United States pledged financial support to Ukraine and its neighbors to expand alternative export routes, emphasizing the potential to double exports via Romania. In July, Admiral James Stavridis (retired) proposed using NATO convoys to protect ships carrying Ukrainian agricultural goods in the Black Sea. In response to a question regarding NATO envoys, Ambassador James O’Brien, head of the State Department’s Sanctions Office, answered that “we are studying all options,” but that focus should remain on Russia—for its culpability for Ukraine’s diminished agricultural exports, and its ability to lift its de facto embargo on Ukrainian exports should it so choose.
Q5: What are the prospects for renewal of the BSGI?
A5: While Ukraine explores alternative routes, and Russia continues to attack and destroy the infrastructure necessary for Ukraine’s agricultural exports, diplomacy to restart the BSGI continues. On September 4, Turkish president Erdogan and Russian president Putin met in Sochi, Russia, with the BSGI on their agenda. In a press conference following the meeting, President Putin declared that Western countries had failed to implement aspects of the BSGI pertaining to Russia’s agriculture sector by refusing to lift sanctions on the export of Russian grain and fertilizer, among other criticisms. Russia would resume the grain deal immediately, according to President Putin, as soon as agreements to lift “restrictions on the export of Russian agricultural products are fully implemented.”
Despite Russia’s rhetoric, neither the United States nor the European Union have sanctioned Russian exports of food and fertilizer, positions which both the United States and the European Union have made publicly clear. Despite explicit carve-outs for food and fertilizers, exports of some Russian products have nonetheless been affected, as some potential buyers remain wary of doing business with Russia and sanctions on Russia’s insurance and banking industries had impacts on its agricultural trade. Recently, the UN secretary-general proposed connecting a subsidiary of the Russian Agricultural Bank to the SWIFT international payment system, which Moscow shunned.
In total, Russia’s explanations for exiting the BSGI are likely red herrings. Russia continues to see strong upsides in remaining outside the BSGI while continuing to attack Ukraine’s agricultural export infrastructure, and only slight downsides in terms of opposition from food-importing countries. Since termination of the BSGI, several countries have decried Moscow’s decision, including Egypt, Kenya, and China. President Putin continues to try to appease food-importing countries through offers of low-cost and free grains. At the September 4 press conference, President Putin announced an agreement among Russia, Turkey, and Qatar to move one million tons of Russian grain to “the neediest countries,” and reiterated his intention to ship Russian grains free of cost to six African countries, as announced at the Russia-Africa Summit in August. Global food prices were lower in August than July, according to the United Nations, and low food prices are likely to quell any persisting opposition from food-importing countries.
Q6: What are the impacts on global food security?
A6: The impacts of Russia’s invasion of Ukraine on global food security were immediate and stark, precipitating “one of the most disruptive periods in decades for global food security,” according to an assessment of the Office of the Director of National Intelligence. Russia’s invasion affected not only the prices of agricultural commodities shipped from the Black Sea, but the prices of diverse other foods, increasing malnutrition, particularly among the world’s poor. Furthermore, Russia’s invasion of Ukraine and other factors increased the cost of food procurement for the UN WFP by 39 percent between 2019 and 2022, limiting the reach of WFP assistance to the world’s most food-insecure populations. The UN FAO predicts that by 2030, 600 million people will still face hunger—a figure 23 million higher than if Russia had not invaded Ukraine.
Though Russia’s termination of the BSGI limits food-importing countries’ access to a major source of exports, the immediate effects are less severe than 2022. Recent analysis by the International Food Policy Research Institute (IFPRI) suggests that the termination of the BSGI will likely have only small impacts on wheat imports in Sub-Saharan Africa, and that the impacts would be driven by higher global prices, not a reduction in imports from Ukraine, which had supplied relatively little wheat to Sub-Saharan African countries in 2022. Nonetheless, the loss of Ukrainian exports poses risks to global markets. Global grain stocks remain low, and reduced output from Ukraine “leaves a smaller buffer if major global producers fall short,” according to further IFPRI analysis. Furthermore, impacts are likely to intensify over the coming months. Ukraine’s barley, corn, rapeseed, sunflower, and wheat are harvested through late summer and into the fall, with exports increasing through the fall and into the winter. For this reason, global cereal commodity prices could spike in coming months, according to UN FAO chief economist Maximo Torero. Beyond impacts on global food security, the most severe impacts are felt by Ukraine’s farmers and those working across Ukraine’s agriculture sector.
So long as Russia can manipulate Ukrainian agricultural exports, it can threaten Ukraine’s economy and global food security in order to achieve its political aims. While lower food prices quell potential opposition from food-importing countries, higher food prices would bring higher profits to Russian producers and increase the leverage Russia has through its ability to reopen Ukrainian export routes. Securing ample and low-cost export routes for Ukrainian grain and increasing investments to rebuild Ukraine’s agricultural sector are critical to defusing what has become one of Russia’s most potent weapons in its war in Ukraine.
Caitlin Welsh is the director of the Global Food Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Joseph Glauber is a senior adviser (non-resident) with the CSIS Global Food and Water Security Program. Emma Dodd is a program coordinator for the CSIS Global Food and Water Security Program.