In an exclusive interview, an international official spoke about the prospects for the global food market
The grain deal has been in the spotlight of the world community for several months now. Initially, it was designed to help residents of the poorest countries in Africa and Latin America to freely receive food, despite the hostilities in Ukraine. However, lately Moscow has been thinking about pulling out of the deal as it is not fulfilling its mission. The topic of the Grain Deal was also discussed at the St. Petersburg International Economic Forum. On its sidelines, we managed to have an exclusive conversation with a prominent international UN official, director of the FAO (Food and Agriculture Organization of the United Nations) Office for Liaison with the Russian Federation Oleg Kobyakov.
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Due to the events in Ukraine, as well as large-scale sanctions imposed by the West against Russia, global grain supplies were disrupted, which increased the severity of the food crisis in several countries of the world. The so-called Grain Deal was called to correct the situation. The agreement provided for the creation of safe sea corridors for the export of Ukrainian grain under the supervision of observers from Turkey and the UN.
However, not all countries and politicians shared the official position. Many still believe that the provisions of the document are not aimed at helping the poorest countries and stabilizing the world wheat market. In any case, for some time now the Kremlin has been thinking about withdrawing the deal, since the entire Russian part of the agreement is not being implemented. This was stated by the press secretary of the President Dmitry Peskov. And Foreign Minister Sergei Lavrov recently spoke about the possibility of extending the agreement as follows: «How can you extend something that does not work?» And according to President Putin, the corridors of the Grain Deal are constantly used by Ukraine to launch maritime drones.
And what do they think about the current execution of the grain deal and its prospects for its organizer and guarantor – UN?
“The UN, through its Secretary General António Guterres and his Deputy for Humanitarian Affairs, Martin Griffiths, has repeatedly spoken out about the Grain Deal,” Oleg Kobyakov said in a conversation with MK. — This agreement was concluded with the help of the «big» UN, with the help of its humanitarian component, that is, from New York. Geneva is also dealing with this issue, represented by the Director General of the UN Conference on Trade and Development, Rebeca Greenspan. FAO is not a procedural entity here. Yes, our statistics on production and trade are used, but here the position of the FAO does not differ from the position of the UN.
According to our interlocutor, the agreement contributes to the stabilization of the world food market, the predictability of food.
“Of course, we, as an organization that is responsible for nutrition and food on a global scale, express the hope that this set of agreements will once again be extended for a new period. This will allow markets to behave more calmly, and consumers in all traditional countries where both Russian and Ukrainian food is exported feel more confident,” the head of the FAO office emphasized.
Meanwhile, a number of Russian experts are sure of the opposite. Thus, the head of the Russian Grain Union (RGU), Arkady Zlochevsky, earlier in an interview with MK said that the implementation of the agreement would not be able to help the inhabitants of African and Latin American countries. “It was a PR hysteria, not based on any foundation. What did she lead to? To crazy price increases. The entire argumentation by the Ukrainian side of the need for this Grain Deal in relation to poor countries looks ridiculous and absurd. How will high prices help poor countries replenish food supplies? The main problem is not that there are not enough resources, but that there is not enough money to buy them, — said the head of the RGU. “By definition, initially this deal could not have had any effect on the food supply of poor countries at all.”
Oleg Kobyakov, for his part, does not agree that the Grain deal provoked a rise in prices. “Statistics say otherwise. Grain prices have continued to decline for almost a year now. In May 2023, in general, grain prices fell by more than 6% (according to the FAO food price index). The cost of corn fell by almost 9%, barley by 8%. This suggests that the Grain Deal is having a stabilizing effect on the market, — says the UN official, — But you need to be aware that about 20% of the grown grains are sold through international trade channels. Everything else remains within the producing countries. Of this volume (20%), Russian and Ukrainian total exports account for about 10%, but, nevertheless, on a global scale, this is a very significant value. The stability of these supplies has a significant impact on the world grain market.
Recall that the FAO calculates the food price index for five main commodity groups: cereals, vegetable oils, meat, dairy products and sugar. As the head of the FAO office told us, the highest world prices are, first of all, for grain. And since grain is a feed for livestock and poultry, an increase in prices for meat, dairy products, and vegetable oils is naturally fixed – in fact, for all product groups. “But the highest grain prices were in April 2022. Since then, they have steadily declined. According to the latest data that we have (for May 2023), prices have decreased for grains, vegetable oils and dairy products. Slightly, about 1%, increased the price of meat, as well as sugar, but this is not related to the situation in Ukraine. This is a global situation. If we talk about the dynamics of Russian prices, their growth has also slowed down,” Kobyakov noted.