Russia’s economy is boosted by deliveries of war grain

Russia's economy is boosted by deliveries of war grain

country’s Black Sea ports for nearly six months.

A wartime side deal quietly met Moscow’s demands to open the way for its wheat to the world and also boosted an industry vital to Russia’s economy, which has been caught up in broader sanctions.

As the US and its European allies work to wreck Russia’s finances with a web of sanctions for invading Ukraine, they have prevented from directly sanctioning grain and other commodities. feeding people around the world.

Russian and Ukrainian wheat, barley, corn, and sunflower oils are important to countries in Asia, Africa, and the Middle East where millions survive on subsidized bread. As the war sent food and energy prices skyrocketing, millions of people were pushed into poverty or on the brink of starvation.

Grains by the Black Sea and the other reassure Russia that its food and fertilizers will not be sanctioned, protecting one of the pillars of its economy and helping to ease concerns from insurers and banks. The deal allowed a western airline to move two-grain ships from Russia in a matter of weeks.

It used to take months because western banks refused to transfer payments to Russia. Although US and European Union sanctions are not aimed directly at Russian agriculture, Western banks have been careful not to run afoul of conflicts, making access to Russian grain more difficult for buyers and shippers because the agency says, ‘Go ahead, there are no sanctions,’ but the banks are sanctioning themselves,” said Gaurav Srivastava, whose company Harvest Commodities buys, ships and sells grain from the Black Sea region.

He called the process with the banks a “labor-intensive exercise. What has changed in recent weeks, Srivastava said, is “the look…that this is a kind of truce between all parties. The deal was important for Russia because it is the world’s largest exporter of wheat, accounting for almost a fifth of global shipments, and the country is expected to have one of its best harvest seasons this year.

Russia's economy is boosted by deliveries of war grain

According to the World Bank, agriculture accounts for about 4% of Russia’s gross domestic product. “The most important thing is employment,” said Russian economist Sergei Aleksashenko, referring to jobs created by agriculture on employment.

Agriculture provides 5-6 million Russian jobs, with some regions relying almost entirely on it for their livelihoods, he said. Srivastava, whose company operates out of Los Angeles and Geneva, hopes to ship 10 to 15 million tons of Russian grain. during the next year.

It was also able to remove two chartered ships that had been stuck in Ukrainian ports since the war began on February 24. He said the company intends to collect 1 million tons of grain from Ukraine as part of the four-month U.Approval.

“We are a commercial company, but we try to help farmers in both Russia and Ukraine,” Srivastava said. “I’m very optimistic, especially in the last few weeks. Russia’s demands for the deal include public statements by the US and EU that the sanctions are not targeting Russian food and fertilizer.

He also asked questions about financial transactions with the Agricultural Bank of Russia, access of Russian-flagged ships to ports, and exports of ammonia, which is necessary for the production of fertilizers. A week before Russia signed the agreement, the US Treasury issued statements containing such guarantees.

It was clear that Washington had imposed no sanctions on the sale or transportation of agricultural products or medicines from Russia. The Treasury Department also granted a broad license to authorize certainly
transactions related to agricultural products, the US said.

Strongly supports the efforts of the United Nations to bring both Ukrainian and Russian grain to world markets and to reduce the impact of Russia’s unprovoked war on Ukraine on world food supplies and prices. The EU also reiterated that Russian agriculture had not been sanctioned or blamed for the war’s global rise in food prices, and the Kremlin’s caps on agricultural exports intended to protect the domestic market.

Russia's economy is boosted by deliveries of war grain

Trade in agricultural or food products. Russia says it still faces challenges. The country’s agriculture ministry says difficulties in supplying imported farm equipment that isn’t directly sanctioned are also threatening grain harvests.

He said domestic needs are being met, but exports may be affected. Even after the agreement was signed, Russian Foreign Minister Sergey Lavrov rejected Western assurances that agriculture would be exempt from sanctions. During a diplomatic tour of Africa that focused on food exports, he said “half-truths are worse than lies” as he pointed to the deterrent effect of sanctions. Secretary-General António Guterres “promised to put pressure on Western countries to lift these restrictions,” Lavrov said “We’ll see if he can do that.

Meanwhile, Russian and Ukrainian grain is becoming increasingly important to stave off hunger in developing countries. SandP Global Commodity Insights said in a June report that 41 million tons of Russian wheat could be available for export this year.

But overall, the world is expected to produce 12.2 million tonnes less wheat and 19 million tonnes less corn for the 2022-2023 crop compared to last year, said International Grains Council chief Arnaud Petit. This was partly due to the war in Ukraine and the drought in Europe, he said.

While a strong US dollar and inflation could force some countries to ration food imports, Petit noted that some countries are introducing export controls that could affect grain availability in sub-Saharan Africa and the Middle East.

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