Policy Backgrounders

Russia Departs from the Black Sea Grain Initiative

July 21, 2023

On Monday, Russia suspended its participation in the Black Sea Grain Initiative, a 2022 agreement brokered by the UN, Turkey, Ukraine, and Russia that enabled Ukraine to export grain and other foodstuffs through humanitarian corridors in the Black Sea. The agreement has helped reconnect foodstuffs from Ukraine to global supply chains, significantly contributing to lower food prices in the global market. Russia’s withdrawal from the agreement will bring turbulence to global food markets and will disproportionately affect low-income countries.

• Prior to the deal’s last renewal on May 17, Russia threatened to quit the deal because it said its demands to improve its own grain and fertilizer exports had not been met. Russia also complained that its agricultural banks were still cut off from the international SWIFT payment system.

• Global food prices may rise in response to the end of the Initiative. Prior to this, prices had been falling, with the UN Food and Agriculture Organization (FAO) Food Price Index (FFPI) averaged 122.3 points in June 2023, down 1.7 points from May, continuing the downward trend and averaging as much as 37.4 points (23.4 percent) below the peak it reached in March 2022. The FFPI stood at 140.6 a year ago when the deal was reached and has since declined 11.6 percent.

• Efforts by the EU to transport Ukrainian grain via land routes have prompted anger from grain-producing European countries that say the shipments undercut local supplies and prices.