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The Ukraine-Russia Grain Deal: A Success or Failure?

Iliya Kusa
Ship at port next to large grain elevators
Elevator grain-carrier of Ukraine.

On October 29, Russia announced it had quit the “grain deal” brokered by the UN and Turkey in July to allow Ukraine to export grain by the Black Sea. Moscow presented its move as a response to an alleged attack by Ukraine on the Russian fleet around Sevastopol city. Despite Russia’s warnings, a group of ships loaded with grain nonetheless exited through the safe corridor, exporting grain that had been loaded in Ukrainian ports. Shortly thereafter, Russia made a U-turn and announced it would return to the agreement after negotiations with Turkey. Moscow cited “written guarantees” from Ukraine that Kyiv would not use this corridor for military purposes or attacks against Russia.

This brief spat over the deal, which to that point had worked for all parties, left a mixed impression. On the one hand, Russia’s actions underscored that the agreement was vulnerable and weak, and made clear Moscow’s readiness to abandon it at any moment it saw fit. On the other hand, Turkey’s intervention, which secured the continuation of the deal and convinced the Kremlin to rejoin it, illustrated the significant influence Ankara wields in the Black Sea, both as a key interlocutor between parties and as a counteracting player to Russia.

Russia’s move was inevitable. From the very beginning Moscow has seen the grain deal as affording it leverage over Ukraine and the West. Grain exports are one of the few sources of hard-currency income for the Ukrainian economy. What is more, being a security guarantor of the agreement allows Russia to raise the stakes with minimal effort every time it wants to pressure the West by destabilizing world food prices, which in turn has an impact on inflation worldwide. Indeed, Russia’s brief suspension of its participation in the grain deal caused a spike in wheat prices across the globe.

Still, this diplomatic incident raises the question of whether the grain deal has been a success or a failure. The answer, in my opinion, depends on what one views as its initial primary goal.

Multiple Potential Goals of the Grain Deal

The most obvious goal is food security. Russia’s invasion of Ukraine caused a surge in global food prices, dealing a heavy blow to countries already at risk of food insecurity. Ukraine has been one of the world’s largest exporters of grain, contributing 42 percent of the global share of sunflower oil, 16 percent of maize, and almost 10 percent of wheat. Not only are Ukraine’s exports essential for the stability of world markets, but Ukraine’s grain exports have also contributed greatly to the World Food Program’s humanitarian stocks, shipped regularly to such war-ridden countries as Yemen, Ethiopia, Somalia, and South Sudan.

In that context, the July agreement between Russia and Ukraine allowing grain and fertilizers to return to the market probably averted a humanitarian catastrophe and economic meltdown. Since the signing of the deal, around 9.5 million tonnes of grain products have left Ukraine by sea. More than 100 ships have sailed from Ukraine, with 47 percent of the grain cargoes going to Turkey and Asian countries, 36 percent going to the EU, and 17 percent to Africa. Immediately after the agreement went into effect, food prices fell by 7.90 percent since March 2022. After hitting an all-time high immediately after Russia’s invasion in February, world wheat prices dropped by 14.5 percent and cereal prices dropped by 11.5 percent. Prices for those grains are still higher than they were in 2021, but the deal certainly eased pressure on the market. So, in terms of stabilizing markets, the deal has proved to be effective.

However, the agreement was not designed to save conflict-affected communities around the world, which for the most part continue to suffer critical food shortages. Particularly, Russia has constantly criticized the agreement, alleging that the grain is not reaching countries that need it the most.

Indeed, contrary to popular perception, the majority of grain exports that were shipped out of Ukrainian Black Sea ports didn`t go to the poorest and most needed countries but rather to Europe and Turkey. Over the past five months, more than 12.3 tonnes of grain were shipped from Ukraine, with 44 percent of it being corn rather than wheat (29 percent). The main destinations of the cargoes were Spain (2.5 million tonnes), China (2 million), Turkey (1.9 million), Italy (1.3 million), and the Netherlands (898,000). Most of the grain that had been held up in Ukrainian silos after February 24 was corn (not wheat), contracted by international companies, not necessarily to feed people but, for example, to use as biofuel or animal food. Therefore the agreement wasn’t designed to immediately avert famine in countries like Yemen or Somalia but rather to stabilize the market and contain prices, which in turn hurt countries’ ability to purchase food.

From the Ukrainian perspective the agreement has positive implications. It allowed Ukraine to return to almost prewar amounts of exports, increasing its share from 1–1.5 million tonnes to almost 4 million tonnes. In addition, the deal freed up some space for Ukraine to store the next harvest, which is expected to amount to 53 million tonnes, far exceeding domestic needs. The deal allows Ukrainian farmers to start planting crops for next year. The deal also ensures that Ukraine’s farming sector is not totally destroyed. Because of the war, Ukraine’s farming industry has lost 50 percent of its 2021 gross output, which has led to serious liquidity problems for farmers. The grain had to be moved out of storage silos to avert a storage crisis, and if the whole goal of the deal was to move grain out of Ukraine, then the treaty made it possible.

Any hope that the grain deal might serve as a basis for the slow build-up of a potential compromise between Russia and Ukraine/the West, however, has been dashed. Ukraine and Russia don’t trust each other and are not ready to negotiate. Russia’s attempt to abandon the deal demonstrated that Moscow doesn’t see it as a trust-building measure but rather is trying to instrumentalize it as part of its war effort. Nor does Ukraine see the agreement as part of a potential peace process: President Zelensky insists that Russia should leave all Ukrainian territory occupied since 2014, including Crimea, no matter whether there is a grain agreement in place or not.

If the agreement is thought of as a means of stabilizing the Black Sea situation and localizing the war in Ukraine, then one could argue it has partially succeeded. Although Russia didn’t stop its indiscriminate attacks against energy, military, and civilian infrastructure in Ukraine’s South, it did show restraint toward foreign ships, which started shipping grain out of Ukraine through the Turkey-supervised safe corridor. In some way, the agreement has contributed to the creation of certain rules, however temporary, and “red lines” in terms of safety and predictability for ships transiting the Black Sea.

Finally, if the agreement was about strengthening Turkey’s geopolitical leadership in the region, then it has definitely succeeded. Ankara boosted its diplomatic image by presenting the agreement as an achievement aiding food-dependent African and Asian countries. Moreover, Turkey cemented its role as a key mediator in the Russia-Ukraine war, capable of talking to both sides. President Erdoğan in particular has been able to capitalize on the deal by placing Turkey at the heart of any potential follow-up agreements between Kyiv and Moscow.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.

About the Author

Iliya Kusa

Iliya Kusa

Analyst, Ukrainian Institute of the Future
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Kennan Institute

The Kennan Institute is the premier US center for advanced research on Eurasia and the oldest and largest regional program at the Woodrow Wilson International Center for Scholars. The Kennan Institute is committed to improving American understanding of Russia, Ukraine, Central Asia, the South Caucasus, and the surrounding region though research and exchange.  Read more