BLACK SEA GRAIN INITIATIVE 

1. Context 

2. Key points

• The reversal came a day after Russian President Vladimir Putin stated that Moscow would Suspend, but not end, its involvement in the deal.
• The Russian Federation believes that the guarantees it has received currently appear sufficient and resumes the implementation of the agreement and the mediation of the United Nations and Turkey had secured the continued cooperation.

3. Black Sea Grain Initiative

• The Black Sea Grain deal endeavours to tackle escalating food prices emanating from supply chain disruptions because of Russia's actions in the world's "breadbasket".

• The central idea was to calm markets by ensuring an adequate supply of grains, thereby limiting food price inflation.

3.1 Ukraine exports

• Ukraine is among the largest exporters of wheat, maize, rapeseed, sunflower seeds and sunflower oil, globally.
• Its access to the deep-sea ports in the Black Sea enables it to directly approach Russia and Europe along with grain importers from West Asia and North Africa.
• Russia's actions in the East European country had disturbed this route which earlier used to ship 75 per cent of its agricultural exports precisely what the initiative sought to address.

3.2 Importance 

• As per the UN Office for Coordination of Humanitarian Affairs, approximately 10.1 million tonnes of grains have been shipped since the initiative commenced.
• The UN Food and Agricultural Organisation (FAO) Food Price Index, Which assesses the monthly change in international prices of a basket of food commodities, fell for the sixth consecutive month in a row during the September assessment period.
• It was earlier inferred that the supply situation in markets was seen to be easing, with the potential for further price drops.
• People hoarded the grain in the hope of selling it for a sizeable profit owing to the supply the crunch was obligated to sell.
• The initiative has also been credited for having made a "huge difference" in the global cost of living crisis.

• As pointed out by several observers, notwithstanding its reach, the initiative alone cannot address global hunger; it can only avert the chances of the global food crisis spiralling further, especially when the region is yet to scale prior year levels.

3.3 Consequences of deal suspension 

• In a nutshell, the deal's suspension was expected to re-introduce the price pressures on foodgrains, especially wheat, with inventories being at historical lows.
• It could have particularly impacted countries in West Asia and Africa such as Egypt, Turkey, Lebanon, Sudan and Yemen which have benefitted from the resumption and are particularly dependent on Russian and Ukrainian exports.
• Countries which are more dependent on Ukraine as a supplier of wheat and other grains buy more during the winter to supplement their harvests, which are largely consumed by the end of the year.
• The suspension could have spurred food insecurity as well as potentially exacerbated political tensions.
• As for domestic challenges, the researchers observe that storage facilities in Ukraine are already at capacity even as farmers turn to harvest the crops planted in spring.
• This, combined with restricted export opportunities would have implied lower prices for farmers even as shortfalls spur prices globally.

For Prelims & Mains