Weather, aborted Ukraine grain deal spell doom to EA food basket
Sunday July 23 2023
Corn grains fall out of the wagons of the first freight train with corn from Ukraine during unloading at the grain terminal in the port of Rostock. PHOTO | AFP
East African economies are staring at a fresh spike in food prices and a further deterioration in inflation outlook in the wake of adverse weather conditions that have heavily impacted the region, compounded by the collapse of a crucial grain export deal between Russia and Ukraine last week.
Latest data by the United Nations Food and Agriculture Organisation (Fao) shows that Cereal production in the East African region is expected to decline by four percent to 52.8 million tonnes this year from 55 million tonnes in 2022, according to the Fao latest quarterly report on ‘Crop Prospects and Food Situation’ around the world.
The UN agency, through its quarterly report on ‘Crop Prospects and Food Situation’ around the world dated this month shows that the region faces steep grain deficit with cereal import requirements for this year standing at around 13. 68 million tonnes and 14.77 million tonnes in 2024.
This signals East Africa’s huge demand for wheat, maize, rice, barley and sunflower whose global supply chain has now been disrupted by the collapse of the Russia-Ukraine Black Sea grain export agreement.
Read: Russia warns of Black Sea risks after grain deal exit
Among African Low-Income Food Deficit Countries (LIFDCs) total cereal production in 2023 is forecast at a slightly below-average level of 106.1 million tonnes largely as a result of erratic rain distribution in East Africa which has curbed harvest expectations in Kenya, Ethiopia, the Sudan, Uganda and Tanzania.
In the Sudan, in addition to unfavourable rains, soaring prices and shortages of key inputs due to the conflict have significantly constrained plantings, further weighing on production prospects.
Kenya, Uganda and Tanzania face unfavourable cereal production prospects in 2023 due to adverse weather conditions, according to the report.
Perennial drought
In Kenya about 5.4 million people were acutely food insecure between March and June, reflecting the lingering impact of a prolonged and severe drought between late 2020 and early 2023 that affected crop and livestock production, mainly in northern and eastern pastoral, agro-pastoral and marginal agricultural areas, while in Burundi about 1.2 million people are estimated to be facing acute food insecurity between June and September 2023, due to the lingering impact of floods in northern areas in late 2022 and high food prices due, in part, to the depreciation of the local currency.
In the Democratic Republic of Congo, 24.5 million people were projected to experience acute food insecurity between January and June 2023 due to the intensification of the conflict in the northeastern provinces, which, has prevented completion of the harvests and likely will reduce food availability in the months to come.
And early this year, 2.35 million people in North Kivu and 1.6 million people in Ituri had been displaced by the conflict.
Read: IOM: One million civilians flee east DR Congo
The displaced millions
In South Sudan 7.76 million people, almost two thirds of the total population, are expected to face severe acute food insecurity in the lean season between April and July 2023 largely fuelled by rampant inflation and insufficient food supplies, due to a stagnant agricultural production, impact of consecutive years with widespread floods and the escalation of organised violence at the subnational level since 2020.
In Tanzania, an estimated 990,000 people were facing severe acute food insecurity between March and May 2023, due to reduced domestic crop production and high food prices, while 839,000 people in 28 mainland districts and 151,000 in the Zanzibar Island were also affected by the food crisis.
In Uganda, an estimated 582,000 people are facing acute food insecurity between April and August 2023, reflecting the adverse impact of weather shocks, crop and livestock diseases, civil insecurity and high food price. 882,000 refugees from South Sudan and 495,000 from the DRC are hosted in camps and rely on humanitarian assistance in Uganda.
Ukraine accounts for 10 percent of the world wheat market, 15 percent of the corn market, and 13 percent of the barley market. However, the FAO says cereal production is forecast to drop in the Russian Federation and Ukraine in 2023.
In Ukraine, for instance, wheat production is forecast at 18.5 million tonnes this year, 30 percent below the five-year average while in the Russian Federation, the aggregate 2023 wheat output is forecast to decline to 82.8 million tonnes, following the 2022 all-time high, reflecting a contraction in the wheat planted area due to excessive wet conditions in late 2022 and softer crop prices.
Total cereal production in the Russian Federation, including above-average forecasts for maize and barley, is pegged at 125 million tonnes in 2023, comparable to the five-year average.
Read: Russia grain deal exit critical to resolving world hunger, experts say
“Uncertain prospects for maritime transportation links, conflict-induced damages to transport and storage infrastructure continue to limit exports of grains from Ukraine, and in total cereal exports are forecast to be about 10 percent below the five-year average in 2023/2024, according to the report.
At the commodity level, exports of maize and wheat from Ukraine are forecast at 23 million and 10 million tonnes, respectively, the lowest levels in the past eight years.
Quid pro quo guarantees
In the Russian Federation, total cereal exports in 2023/24 are forecast at an above-average level of 54 million tonnes, which including 45 million tonnes of wheat. Last week, Russia suspended the Black Sea Grain Initiative, a deal brokered by the UN and Turkey last July to ensure seamless grain exports from Ukraine to several African countries.
The Black Sea Grain Initiative had restored exportation of grains, including wheat, barley and sunflower from the warring eastern Europe countries, after the exports were severed by the war.
Until this Monday, the deal had facilitated the safe export of about 33 million tonnes of grain to 45 countries, Ukrainian Foreign Affairs Ministry data shows. 725,000 tonnes of this were chartered by the World Food Programme in support of its humanitarian programmes in several countries, including Kenya.
With the walk-back on the deal, African countries will usher back in the era of high food prices, given 44 percent of the wheat consumed on the continent come from Russia and Ukraine.
But the impact will go beyond the African continent. Ukraine has been supplying close to half of the world’s grain exports prior to the war. At least 10 percent of the world’s wheat exports came from Kyiv, and it accounted for about 20 percent of barley exports and 50 percent of sunflower oil exports. All these were disrupted by the war.
The deal was meant to guarantee safety of navigation of grain exports from Ukraine and create a humanitarian corridor, while also guaranteeing Russia’s own exports of grain and fertilisers, under the UN-Russia memorandum, signed on the same day.
Read: UN, Africa bank form platform to ease Russia grains, fertiliser exports
However, Moscow has protested the deal, saying it has worked only to the commercial advantage of Kyiv, while its own exports of agricultural products and fertiliser, bank payments and transport logistics continue to be blocked, contrary to the agreement.
In a statement posted on Facebook, the Russian Foreign Ministry said, “the results of the work on the implementation of these agreements look disappointing.”
As such, Moscow said it is withdrawing guarantees for the safety of navigation, curtailing the maritime humanitarian corridor, and restoring temporarily dangerous areas in the north-western waters of the Black Sea.
Global food security
“Only upon receipt of concrete results, and not promises and assurances, will Russia be ready to consider restoring the ‘deal’,” Moscow said in the statement posted on Monday.
Ukraine has, however, maintained that “no one has the right to destroy the food security of any nation,” and that the Black Sea Grain Initiative has only benefitted the 400 million people across Africa, Asia and Europe who have had food on their table as a result of the initiative.
“I have sent letters to President of Türkiye and the UN Secretary General with a proposal to continue the Black Sea Grain Initiative or its analogue in a trilateral format – as it is best,” said Dmytro Kuleba, Ukraine Foreign Affairs Minister.
The European Union Council has condemned Russia’s decision to suspend the deal, saying it “is further exacerbating the global food security crisis it created by its war of aggression against Ukraine and its blockade of Ukrainian sea ports.”
“By terminating the agreements, Russia is single-handedly blocking one of the crucial main export routes from Ukraine of grains for human consumption and is solely responsible for disruptions of grain deliveries worldwide and fuelling food price inflation globally,” the Council said Tuesday in a news release.
The United States Ambassador to the United Nations Linda Thomas-Greenfield also condemned the decision, saying it must be reversed.
“By suspending its participation in the Black Sea Grain Initiative, Russia has dealt another blow to the world’s most vulnerable,” she tweeted.