How Ukraine can ‘push’ grain for export

The Black Sea grain initiative has helped Ukraine reach its best agricultural exports in three years. Less than a year into the deal – not taking into account its interruptions due to Russia  – about 1,000 dry cargo ships exported more than 30 million tonnes of grain from Ukraine’s Black Sea ports, which is 60 percent of Ukraine’s total grain exports.

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That is why Ukrainian president Volodymyr Zelenskyy is calling on saving the grain corridor.

"The Black Sea grain initiative can and should carry on. If it’s without Russia, then so be it. The agreement on grain exports, with Turkey and the UN, remains in force. The only thing that is needed now is its careful implementation and the world’s decisive pressure on the terrorist state," he said the other day.

Russia, too, understands the importance of this export route for Ukraine. But why did the grain corridor actually work, and is it possible to keep it going without Moscow?

‘Grain corridor’ as an indulgence

A year ago, Russia agreed not to destroy the grain corridor for three reasons.

First, it bargained for sanctions relief. Restrictions on exports of fertilisers and grain from Russia were eased, as well as deliveries of spare parts for Airbus aircraft used by Russian airlines. It is likely that Russians were also allowed to import some consumer goods from the sanctions list.

Second, the resumption of grain supplies from Ukraine to world markets contributed to a drop in global prices, making China, a major importer, happy. And for Mr Putin, any ‘adjustment’ to appease his Chinese friends is important.

Third, under the cover of the deal, the Russians were able to sell the grain they stole from the occupied Ukrainian territories. According to the Ukrainian Grain Association (UGA), since February 2022, Russians have illegally exported about four million tonnes of Ukrainian grain.

Interestingly, during the same period, Rosstat recorded a strange, even anomalous jump in the grain harvest. The best way to bring stolen grain into legal circulation is by passing it off as your own crop.

Moscow would continue to demand more and more concessions in the sanctions regime by blackmailing the others with withdrawing from the grain deal. The stakes had risen in the days before, with the UN secretary-general promising to reconnect a subsidiary of Rosselkhozbank [Russian Agricultural Bank], governed by the son of the Russian federal security service’s chief, to the SWIFT payment system.

But the game was spoiled by a painful blow to the Russian president’s longest-held dignity: The blowing up of the Crimean bridge left no choice, and he had to slam the door.

Too risky to continue?

As LIGA.net has already reported, the plan for a ‘grain corridor’ without Russia needs reliable security cover.

Rising insurance costs, and even refusal to insure grain carriers when entering the Black Sea, could be the first obstacle. The main danger is damage to the vessel while loading in Ukrainian ports during Russian shelling, as during the shelling of Odesa and Mykolaiv.

"In order to block grain exports from Ukraine, Russia will continue to massively shell port infrastructure for transshipment with a certain regularity, using kamikaze drones and cruise missiles of various types," says Ivan Kyrychevskyi, an expert at Defense Express, a publication focusing on defence and security.

Strengthening air defence is only part of the solution. It is also necessary to agree with the UN on certain ports, such as those in the cities of Chornomorsk or Pivdenne, as exclusively grain ports and deploy monitoring, with the UN and Turkey involved. It is clear that it is impossible to provide full security this way.

As for maritime communications, the most effective way to ensure their security is to provide air cover by NATO forces. But how? Mr Kyrychevskyi recalls the case of Kuwait, which acted in a similar situation during the Iran-Iraq war of 1980-1988. Back then, the United States took over the mission of protecting oil ships in the Persian Gulf.

"Of course, Kuwait appealed to 'common values'. But an effective argument was that Kuwait informed the Americans that if its tankers were not protected by the US Navy, the USSR Navy would take over," he adds.

Alternatives: Constanta and land

‘Grain corridor’ cannot yet be replaced in full. Ukraine is working on several alternatives – but even combined, they will only serve as a makeshift to maintain grain exports.

First, it is the transshipment of grain through the Romanian port of Constanta. Second, railways route across Europe to Baltic ports and even Spanish ports. Third, the ministry of agrarian policy helped modernise road transport by introducing an electronic queue – not so much about increasing volumes as about improving the quality of logistics and reducing vehicle downtime at the border.

Finally, there’s a unique project of a vegetable oil pipeline, which, in fact, will become an export hub for Ukrainian oil. The pipeline is expected to ensure the supply of vegetable oil – mainly sunflower, but also rapeseed and soybean – from Yahodyn in the Volyn region to the port of Gdansk. The pipeline will be 600 kilometres long and have a capacity of up to two million tonnes of oil per year.

The Ukrainian agricultural ministry said that the project is currently undergoing "internal Polish procedures related to the approval of the route". Those are lengthy ones and affect many communities and environmental standards. So, it will be faster to build the pipeline itself than get it approved.

All that remains is to wait for the resuscitation of the main grain pipeline project.

A few years ago, Ukraine announced the construction of a whole complex of elevators around the pipeline, which would be able to deliver up to 10 million tonnes of grain to the seaport. China was supposed to be a partner in the USD 2.5 billion project and even chose the port to that end.

German media now report that Russia’s withdrawal from the grain deal hurts China’s interests. That is why the idea of a grain pipeline is not so futuristic, since the Chinese can handle its scale.