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How Ukraine has been exporting grain since the end of the grain deal with Russia

Since the end of the cereal agreement unilaterally decreed by Russia on July 17, Ukraine can no longer safely export its grain through the Black Sea. To circumvent the blockade of the Russian army and sell their grain production essential to global food security, the Ukrainians had to find alternatives.

An employee of the Romanian company Comvex monitors the landing of Ukrainian grain from the Romanian port of Constanta on the Black Sea on June 21, 2022. © Vadim Ghirda/AP

By: Pierre Fesnien Follow

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With production accounting for nearly 20% of its economy and 41% of its exports before the outbreak of war with Russia in February 2022, the agricultural sector is absolutely indispensable to the survival of the Ukrainian economy. This was not lost on Moscow, which, from the first days of the conflict, had launched a maritime blockade on Ukrainian ports to prevent exports and cut off Kiev from a large part of its revenues.

Faced with pressure from the international community and the dangers that the blockade posed to global food security, Russia finally agreed to sign with Ukraine, in July 2022, an international agreement under the auspices of Turkey and the UN to allow the export of Ukrainian grain through the Black Sea. In one year, nearly 33 million tons of grain were able to leave the ports of Odessa, Chornomorsk and Yuzhnyi, thus avoiding a food crisis that threatened many countries in Africa and around the Mediterranean.

The agreement, known as the "Black Sea Grain Initiative", was ultimately not renewed by Moscow, for which the Black Sea has once again become a de facto "risk zone". Not enough to discourage the Ukrainians who for nearly two years have multiplied the alternatives to export their cereals. RFI takes stock of the alternative routes used by Ukraine to export its cereals.

• Circumventing the blockade

Despite Moscow's threats to attack all ships entering and leaving Ukraine, Kiev seems determined to continue using the sea route to export its grain with or without Russian approval. For the first time since the end of the grain agreement, a cargo ship loaded with 3,000 tonnes of Ukrainian wheat left the port of Chornomorsk for the Bosphorus Strait on Thursday 21 September. A second cargo ship also made the same journey on Sunday 24 September with 17,600 tonnes of wheat bound for Egypt.

Kiev is seeking to open a new maritime corridor along the western Black Sea coast to circumvent the Russian blockade. The ships sail along the Ukrainian coasts but also, and above all, the coasts of Romania, Bulgaria and Turkey in order to dissuade Russia from attacking these boats in the territorial waters of NATO member countries. The United Kingdom also claimed that British warplanes were protecting the cargo ships during the crossing in order to be ready to retaliate in the event of a Russian attack.

The cargo ship Aroyat which reached the Bosphorus from the port of Chornomorsk with 17,600 tons of wheat on board bound for Egypt on September 24, 2023. AFP - STRINGER

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Is it sustainable? Time will tell. If boats do not sink, there will be a history and it can be repeated, says Alexandre Marie, chief analyst of Agritel-Argus Media France. For the moment it is rather anecdotal, we are on an epiphenomenon. But psychologically, it's important.

Odessa's deep-water ports have a monthly grain export capacity of about 4.5 million tons, just over the equivalent of the capacity of alternative river and land routes. If Ukraine wants to sustain its trade balance and bring in foreign currency, it has every interest in continuing to circumvent the Russian blockade in the Black Sea. However, this poses insurance concerns for shipowners, which causes the price of transport to skyrocket. However, it is to be expected that Kiev will repeat the experience, three boats should try to cross it to the Bosphorus in the coming days.

• The waterway via the Danube

Since the blockade began in 2022, the Danube river route from Ukraine's two largest inland ports, Reni and Izmail, has been the number one alternative to avoid the Russian threat in the Black Sea. Even during the implementation of the grain agreement, the route remained particularly busy, especially because the inspection of each vessel required by Russia greatly delayed the cargo ships. In 2022, the amount of grain to transit through the Danube increased from 1.4 to up to 2.2 million tonnes per month. So much so that in May and June 2023, the tonnage of grain to transit the river was greater than that using the grain corridor still in force at the time.

According to Alexandre Marie, the maximum capacity of the waterway could potentially reach "2.5 million tons of grain by me", but transiting Ukrainian grain through the Danube is not without encountering a number of logistical problems. The width of the river requires the use of much smaller ships to travel up the river and transport grain cargoes to Constanta, via the Danube-Black Sea Canal which allows to reach the first Romanian port from where grain can be loaded on larger ships. They can then reach the Bosphorus Strait safely or be sent overland to the rest of Europe by train or truck.

The export routes of Ukrainian grain. © Graphic Studio France Média Monde

This route is safer, but also slower. And Russia, which has understood its importance for the Ukrainian economy, no longer hesitates to target the Danube ports. Since the end of the grain agreement, the port infrastructures of Reni and Izmail have been regularly the target of drone attacks despite their very close proximity to the Romanian border.

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The Danube is a temporary alternative, but does not replace the loading capacity offered by all the ports in the Odessa region. Before the war, the latter made it possible to export quantities three times larger than what passes through the Danube today," Gautier Le Molgat, director of Agritel, told RFI. During the grain agreement, Ukraine could export between 7 or 8 million tons every month, with the end of the agreement, these exports fell by half, to about 4 million tons per month.

" READ ALSO Ukrainian cereals: "The Danube is not enough to replace the ports of the Black Sea"

• The land route with the train and trucks

This is the third alternative for Ukrainian grain. From the beginning of the war, Ukraine and its European allies did everything possible to develop grain exports by rail and road. For example, the European Union has launched solidarity corridors to enable Ukraine to export its cereals by lifting customs duties and quotas.

Almost one million tonnes of grain cross the borders of Ukraine's neighbouring countries (Poland, Romania, Hungary, Bulgaria and Slovakia) every month by rail. At the same time, 500,000 tonnes are also exported monthly by truck. "Of the 4 million tonnes exported via alternative routes, about 2.2 million tonnes pass through the Danube, a big million tonnes go by train and the maximum that was made by truck was 700,000 tonnes. So in total, if we add the maximum capacity of the Danube, which is around 300,000 tons more, we can reach 4.3 million tons per month," says Alexandre Marie.

Ukrainian grain exports by mode of transport. © Graphic Studio France Média Monde

But going overland is also not without logistical problems, especially since Ukrainian railways dating back to Soviet times are 85 mm wider than in Europe. This means transshipping cargo from one train to another once it arrives at the border.

In addition, the storage of large quantities of grain in countries bordering Ukraine is beginning to arouse the anger of local farmers and diplomatic tensions between Kiev and some of its allies, because it leads to a drop in prices and generates unfair competition since Ukrainian cereals are not subject to the agricultural rules of the European Union. In May 2023, while the Black Sea grain agreement was still in force, the European Commission imposed an embargo on Ukrainian grain in five countries: Poland, Hungary, Slovakia, Romania and Bulgaria. Expired on 15th September several countries including Poland decided to extend this embargo provoking the anger of Kiev.

To put an end to the simmering diplomatic crisis between Ukraine and one of its closest allies, Polish President Andrzej Duda reached a compromise: the sale of Ukrainian grain in Poland remains banned but the authorities have announced the opening of corridors to allow their transit through the country. "We must do everything to ensure that the transit of Ukrainian grain is as high as possible," Duda said.

• What is exported and to which countries?

Of the 33 million tonnes of cereals exported via the Black Sea grain agreement, almost 51% was maize, 27% wheat and 10% sunflower products. Nearly 65% of this wheat was exported to developing countries compared to 51% of maize. Egypt, Tunisia, Ethiopia, Kenya, Morocco, Sudan and Algeria were among the main African beneficiaries of these exports, which they were also able to re-export to other countries on the continent.

Ukrainian grain exports by cereal type during the cereal agreement. © Graphic Studio France Média Monde

The United Nations World Food Programme (WFP) has also transported wheat from Black Sea ports. By July 2023, the program has purchased 80 percent of its grain stock from Ukraine, up from 50 percent before the war. During the implementation period of the initiative, more than 725,000 tonnes of wheat left Ukrainian ports bound for Ethiopia, Yemen, Afghanistan, Sudan, Somalia, Kenya and Djibouti.

Destinations of cereals exported via the cereals corridor agreement. © Graphic Studio France Média Monde

If the cereal initiative in the Black Sea had, among other things, the objective of avoiding a global food crisis, the end of the agreement does not however call into question "the supply of countries where food inflation is a real subject because the alternatives are there, says Alexandre Marie. The exports of major exporters are not affected by the slowed export flow in Ukraine. Russia has greatly expanded its market share. Worse than that, Europe is now lagging behind in its exports given Russian competition."

If at the beginning of the implementation of the agreement in July 2022, corn left Ukrainian ports in large quantities, today the situation has changed. The wheat season is coming to an end and the corn harvest will soon begin. Ukraine must therefore continue to export its wheat to free up space in its grain silos to accommodate maize.

However, using alternative river and land routes to export these cereals comes at a significant cost. "Logistics are very expensive. The other side of the coin is prices paid to farmers that are well below the world market, because all logistical costs have to be amortized. The price paid to farmers is clearly below the production costs for cereals, says Alexandre Marie. This is where the big questions arise for the future: will producers be resilient enough to continue producing for the next harvest? ».

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