Article 3: Kerch Strait warning, a call for vigilance
Why in news: Renewed attacks on Black Sea ports and grain infrastructure have disrupted Russian and Ukrainian agricultural exports, reviving fears of a global food supply crisis similar to 2022.
Key Details
- Greater Odesa: Handles about 90% of Ukraine’s agricultural exports.
- Russian exports: Over 80% of Russian grain moves through Black Sea and Sea of Azov ports.
- Global wheat: Russia and Ukraine supply over 25% of global wheat exports.
- Other commodities: They account for around 15% of corn and barley and 60%+ of sunflower oil exports.
- Spillover effect: Shortages in sunflower oil can raise prices of soybean and palm oil.
Background: Food Price Shock
- In March 2022, the FAO Food Price Index reached an all-time high following Russia’s invasion of Ukraine.
- More than four years later, renewed attacks in the Black Sea region have revived fears of another global food crisis.
Growing Risk in the Black Sea
- Two-way attacks are targeting ports, grain terminals and cargo vessels across the Black Sea, Kerch Strait and Sea of Azov.
- From the agricultural trade perspective, this may pose a greater immediate risk than the West Asian conflict.
- Global markets have partly adapted to disruptions such as the Strait of Hormuz blockade and earlier Russia-Ukraine supply shocks.
Disruption of Ukrainian Exports
- The recent escalation has effectively halted operations at the Greater Odesa port complex.
- The ports handle around 90% of Ukraine’s agricultural exports.
- Any prolonged disruption could sharply reduce the availability of Ukrainian grain in global markets.
Impact on Russian Grain Trade
- More than 80% of Russia’s grain exports pass through ports on the Black Sea and Sea of Azov.
- These ports have also come under Ukrainian attacks, creating a risk of paralysis in regional export trade.
- Such disruption could trigger a food-supply shock similar to the one witnessed in 2022.
Global Commodity Spillovers
- Russia and Ukraine together account for over 25% of global wheat exports, around 15% of corn and barley exports, and more than 60% of sunflower oil exports.
- A shortage of one commodity can push up prices of substitutes; for example, a fall in sunflower oil supplies can increase demand for and prices of soyabean and palm oil.
- Thus, prolonged Black Sea disruptions could spread across multiple food commodities, raising global food prices and worsening food insecurity.
Conclusion
Renewed attacks across the Black Sea, Kerch Strait and Sea of Azov threaten major grain export routes. Ukraine’s Greater Odesa ports handle nearly 90% of its agricultural exports, while over 80% of Russian grain exports pass through the region. Since Russia and Ukraine are major suppliers of wheat, corn, barley and sunflower oil, prolonged disruption could trigger global food inflation and insecurity.
Descriptive question:
How can disruptions in the Black Sea region affect global food security and agricultural commodity prices? Discuss. (10 marks, 150 words)
Source: The Indian Express