We want to take the time to check in on farmers in Ukraine. This week we have an update on the newly signed grain deal and Russia’s failure to commit.
Latifundist Media has partnered with us to provide boots-on-the-ground coverage:
Greetings from the country that has been at war for five months. We bring you the latest news from the frontlines in Ukraine. On July 22nd, Ukraine and Turkey, mediated by the UN, reached an agreement on the unblocking of the ports of Odesa, Chornomorsk, and Pivdennyi on the Black Sea. A similar agreement was signed by Turkey and the UN with Russia. One of the main components of the agreement was Russia’s commitment to cease its attacks on Ukrainian port facilities. Less than 24 hours after signing the agreement, Russia launched a missile attack on the port of Odesa. The incident put the agreement in question. U.S. Secretary of State, Antony Blinken stated that the attack casts serious doubt on Russia’s commitment to the previously included agreement on the export of Ukrainian grain. Ukraine’s Minister of Infrastructure announced that Ukraine would continue to form convoys of vessels for grain exports. Would businesses want to operate under such conditions and expose themselves, their employees, and their vessels to danger? Shota Khajishvili, the Co-Founder of a company called Risoil, gave his opinion on the matter.
“Everybody’s looking for freight. The insurers will take the risk, while first-class ship owners will be cautious. There will always be ship owners who face financial problems and want to take risks to profit from this. I do not know whether this will work, but if the corridors work smoothly, then everything is possible. But if you ask me, I guess the Russians are most likely to do something ugly. After all, the mine war has not stopped. Their submarines may plant mines on the convoy track and then accuses us of doing it,” says Khajishvili.
Before Odesa was attacked, the agricultural markets were rather optimistic. Wheat futures fell by 7 percent and the cost of Ukrainian farm products was expected to go up, but now, very few ship owners and insurance companies are willing to enter this market because of the high risk of shelling. Even taking into account the potential increase in freight costs, caused by additional war risks.
Maxigrain Business Development Manager, Olena Neroba, says, “Before the war, this report provided more than half of Ukrainian grain exports. We expected that in case of cheap logistics, we would be able to supply the previous grain crop to our buyers as well as the new season of grain, which we are now harvesting. The key problem is that firstly we have to let go of those vessels which are stuck at the port before the war. Some of them are already loaded with grain and others are still empty. [Another obstacle is] some shippers have to wait while another one will be checked for security issues and then loaded with grains, which leads to higher costs of freight because of longer routes.”
Ukrainian businesses have no faith in the Russians and they are getting ready for provocations, such as the attack on the port of Mykolaiv and its infrastructure on July 26th. Nevertheless, businesses still have plans to export grain. Within two weeks, the ships are meant to leave from three ports in the country.
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