Explanation-Ukraine is looking for a way to extract its grain

KYIV (Reuters)-Ukraine is looking for ways to extract grain and vegetable oil from the country by breaking months of blockades in the Sea of ​​Azov and the Black Sea by the Russian navy and moving more by land.

The war, along with Western sanctions against Russia, has caused the prices of grain, cooking oil, fertilizer and energy to soar.

That in turn threatens a global food crisis as many countries depend on Russia and Ukraine for more than half of their wheat imports, including some of the poorest.

Russia and Ukraine together account for nearly a third of global wheat supply, and its importance has been underlined by Indian export bans and adverse crop weather in North America and Western Europe.

Ukraine is also a major exporter of corn, barley, sunflower oil and rapeseed oil, while Russia and Belarus – which have supported Moscow in the war and even under sanctions – account for more than 40% of global exports of potash crop nutrients.

HOW MANY GRAINS ARE BLOCKED IN UKRAINE?

Grain is one of Ukraine’s key industries, with exports totaling $ 12.2 billion in 2021 and accounting for nearly one -fifth of the country’s exports.

Before the war, Ukraine exported 98% of its grain and oilseeds through the Black Sea, at a rate of up to 6 million tons per month. Typically, only a small fraction of its exports use railways, where transportation costs are higher.

But with ports blocked and the rail system unable to accommodate additional volumes, the country now only exports between 1-1.5 million tonnes a month.

U.S. Secretary of State Antony Blinken last week accused Russia of using food as a weapon in Ukraine by withholding supplies of “hostages” for not only Ukrainians, but also millions around the world. The Kremlin says that the West triggered the crisis by imposing sanctions on Moscow.

According to UN food agency officials, nearly 25 million tons of grain were stuck in Ukraine in early May as a result of infrastructure challenges and naval sanctions. As prices soared, UN agencies had to cut food rations for refugees and displaced persons by up to half in parts of the Sahel, for example, due to a large lack of funds.

WHY CAN’T GRAINS COME OUT OF UKRAINE BY LAND?

Exporting by rail is a challenge because the Ukrainian railway system operates on different gauges to neighboring Europe such as Poland, so grain has to be transferred to different trains at the border where there are not many transfer or storage facilities.

Kyiv has also stepped up efforts to ship through the port of Constanta on the Romanian Black Sea. But as of mid-May, only about 240,000 tonnes of grain-or 1% of the amount stuck in Ukraine-had passed through, its manager Florin Goidea told Reuters.

Redirecting grain to Romania involved transporting it by train to a port on the Danube river and loading cargo onto barges to sail to Constanta – making the process complicated and expensive.

WHAT OTHER OPTIONS ARE BEING DISCUSSED?

Western powers have discussed the idea of ​​establishing a “safe corridor” to allow grain to be shipped out of Ukrainian ports.

But officials have warned that any such corridor would not be feasible without Russian consent.

Ukraine said it needed “security guarantees”, with deputy economy minister Taras Kachka telling Reuters last week that having “a third country ship in the region would be an ideal situation.”

Russia’s foreign ministry said that if it complied with a United Nations appeal to open access to Ukraine’s Black Sea ports, the removal of sanctions against Russia should also be considered, the Interfax news agency reported.

Complicating matters further are the drifting mines in the Black Sea, which each accuse the other of planting.

The cost of insurance for any ship traveling this shipping route is also likely to be high.

This situation has become even more pressing due to lack of grain storage space in Ukraine, where the next crop will be harvested from July.

Up to 35% of Ukraine’s total storage capacity of 61 million tonnes can still be used by old crops 2021 at the time the new harvest comes in, according to research center APK-Inform.

(Additional reporting by Gus Trompiz in Paris; writing by Silvia Aloisi; editing by Jason Neely)

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