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Supply Chain

Ukraine Wants One-Year Grain Deal Extension To Include New Ports

By Reuters
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Ukraine Wants One-Year Grain Deal Extension To Include New Ports

Ukraine will ask Türkiye and the United Nations this week to start talks to roll over the Black Sea grain deal, seeking an extension of at least one year that would include the ports of Mykolaiv, a senior Ukrainian official has said.

The Black Sea Grain Initiative brokered by the UN and Türkiye last July allowed grain to be exported from three Ukrainian ports. The agreement was extended in November and will expire on March 18 unless an extension is agreed.

"A formal proposal will come out from us this week on the need to work on an extension," Yuriy Vaskov, Ukraine's deputy minister of restoration, told Reuters in an interview.

He said the exact date of the talks, which have previously taken place in Türkiye, had not yet been set.

Extension Request

"We will request ... to extend it not for 120 days but for at least one year because the Ukrainian and global agricultural market needs to be able to plan these volumes (of exports) in the long term," Vaskov said.

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He said Ukraine would insist on an increase in the number of inspection teams "in order to eliminate the accumulation of vessels waiting for inspections".

Ukraine has repeatedly accused Russia of delaying inspections of ships carrying Ukrainian agricultural goods, leading to reduced shipments and losses for traders.

Russia has denied those accusations, saying it is meeting all its obligations under the grain export deal.

Vaskov said that since November, the situation with inspections had not changed and that there were only three inspection teams from the Russian side.

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"There is no positive momentum. At the same time, the UN, Türkiye and Ukraine are ready to conduct 40 inspections per day if necessary. And there is such a need - about 140 ships are waiting for inspection," he said.

Potential To Boost Exports

A major global grain grower and exporter, Ukraine's grain exports were down 28.7% at 30.3 million tonnes in the 2022/23 season as of Feb. 20, hit by a smaller harvest and logistical difficulties caused by the Russian invasion.

Ukraine exports around 3 million tonnes of agricultural products a month under the deal, but Vaskov said Ukraine was able to export 6 million tonnes a month from the ports of Odesa region and boost it to 8 million tonnes if Mykolaiv joins.

Despite a decrease in the 2022 grain harvest to around 54 million tonnes from a record 86 million in 2021, at least 30 million tonnes of grain are still in silos and could be exported, according to the agriculture ministry.

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Vaskov said Mykolaiv's ports, which accounted for 35% of Ukrainian food exports before the Russian invasion, were ready to join the initiative and would need a maximum of two weeks to start operations.

He said Kyiv did not see Russia's occupation of the Kinburn spit as an obstacle to adding Mykolaiv's ports to an extended deal. The spit of land overlooks the route that ships would use to sail from Mykolaiv's ports into the Black Sea.

"If the ports (of Mykoliav) are included in the initiative, there will be an obligation not to attack ships carrying agricultural products, which can work even in the current situation," Vaskov said.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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