Not only did Vladimir Putin virtually control Ukrainian grain exports, but he could also count on the difficulties of other exporting countries. Westerners are looking for solutions to bring wheat out of Ukraine.
If the question of Europe’s dependence on Russia’s gas and oil is at the center of the conflict played out between Russia and Ukraine, wheat is just as sensitive, if not more troubling.
Thanks to its fertile lands, Ukraine will in 2018 be the 5th world producer of corn, the 8th producer of wheat, the first producer of sunflower, the third producer of buckwheat. In general, in the world, 12% of grain exports come from Ukraine. And if we add Russia, which is unable to export its grain due to international sanctions, that is a third of the world’s wheat coming from the two countries.
However, many states are highly dependent on Ukrainian wheat. Its productions feed the global market because Ukraine has limited domestic needs and therefore can export significantly. In theory.
Russia’s invasion actually completely changed the situation, Ukrainian ports were blocked by Russians, exports paralyzed: 20 million tons of grain were on hold. Consequence: wheat prices have risen by 40% since the start of the war with Ukraine on the European market (Euronext). The ton is currently trading at 400 euros.
This is enough to raise fears of a severe food and social crisis, especially for countries like Egypt, the largest importer of wheat in the world (50% of its wheat comes from Russia and 30% from Ukraine. The country also exports a large portion of its wheat and corn production to China, Algeria, Libya, but also Tunisia, Morocco and Nigeria.
“We expect social unrest in these importing countries in the coming months”, confirming BFM business this Friday Arthur Portier, consultant at Agritel.
Russia has taken a measure of this form of harassment and is now using wheat as a geopolitical weapon to force Western countries to end their sanctions.
Make Westerners bow
Russian President Vladimir Putin said on Thursday that he was ready to help “overcome the food crisis“caused by the blocking of Ukrainian and Russian cereals due to ongoing rivalry, subject to the lifting of sanctions against Moscow.
“Russia is ready to make a significant contribution to overcoming the food crisis by exporting grain and fertilizers, which are subject to the removal of Western political restrictions,” the Russian president said.
On Friday, “Vladimir Putin stressed that attempts to hold Russia accountable for difficulties in delivering agricultural products to world markets are unfounded,” the Kremlin said in a statement.
The Russian head of state reiterated “anti-Russian sanctions from the United States and Europe” as the cause of the food crisis.
A surprise ally: India
The Kremlin’s strategy is aided by a surprise ally: India. The country is the second largest producer of cereal in the world (110 million tonnes last year) but most of its production is intended for domestic consumption.
At the start of the war, the country was told to export little of its production (something it traditionally does not do) to relieve importing countries. But eventually he decided to change his mind.
“Unfortunately there is heat wave in india“, explained the Minister of Commerce,” wheat has dwindled “and production estimates need to be changed downwards.
In this context, “we must pay attention to our national food security”, the minister reasoned, saying “people also don’t want to take advantage of the plight of the poor” by buying and storing large quantities, which with the aim of restoring them. on the market later at higher prices.
Restricts production in other exporting countries
As Arthur Portier, consultant at Agritel explains: “International demand is concentrated on very few exporters, there is in particular France, the United States which is currently in the grip of difficulties due to bad weather, drought, which raises the price of wheat. There is also Canada, but they have difficulty sowing “.
“Time comes before geopolitics and drives the markets,” he continued.
Europeans are looking for solutions
Westerners are currently looking for solutions to bring Ukrainian wheat into the country and relieve global markets. The Romanian port of Constanta could be one of the solutions, but its capacity is limited to 90,000 tonnes per day. Above all, the grain must be transported from Ukraine by rail to this port. However, the size of the railways differs between Romania and Ukraine. Therefore, it is necessary to disload the grains and reload them on another train: a complicated and above all very time consuming operation.
Northern European states are promoting a coalition project of “generosity” in the Black Sea, part of which is under Russian blockade.
The idea was to escort cargo ships carrying grain from Ukraine via Atlantic Alliance ships. But this situation is extremely dangerous: what will happen in the event of a pass of arms between Russian and Western buildings? Moreover, its implementation depends on the goodwill of Turkey, which controls maritime traffic through the Bosphorus, whether in time of peace or in time of war.
At the same time, DB, the German railway company, is trying to haul massive quantities of grain from Ukraine via Poland to northern German ports for export.
Ultimately, Westerners want to combine the two modes of transportation. But no one says this is enough: trains carry fewer cereals than the gigantic freight traditionally used. It takes 15 trains to have the equivalent of a freighter.