Black Sea Grain Initiative faces collapse, global wheat supply threatened by 10% shortfall

In a concerning development, the Black Sea Grain Initiative has taken a hit, potentially leading to significant global consequences. The former Indian Ambassador to the World Trade Organisation (WTO), Jayant Dasgupta, warns that the termination of this initiative could result in a total availability of wheat being approximately 10 percent less than usual. This decrease in supply could have far-reaching effects on the global wheat market, causing prices to soar and impacting food security in vulnerable regions.

Ukraine, a major player in the wheat market, has been significantly affected by the Black Sea Grain Initiative's disruption. Historically, Ukraine has been responsible for exporting around 10 percent of the world's traded wheat. The country has also played a significant role in corn exports, making its presence vital in the global grain trade.

The initiative's termination has particularly affected the Ukrainian ports of Odessa, Cherno Mosk, and Denny, which have been instrumental in exporting wheat. However, Ukraine is not entirely reliant on these ports; it has also been utilising its land borders and railway networks for wheat exports and has been using three Romanian ports - Constanta, Galata, and Andrea - to facilitate its grain shipments.

"But Ukraine has its land borders and railway networks, enabling it to engage in exports, such as through three Romanian ports—Constanta, Galata, and Andrea—thus significantly influencing the region's trade dynamics," he said.

As a consequence of the disruption, the prices of Ukrainian wheat are expected to rise. This price increase is likely to have a ripple effect on the global wheat market, resulting in higher prices worldwide.

Jayant Dasgupta points out that the global wheat market amounts to about 200 million metric tons. In the best year, 2021, Ukraine exported approximately 90 million tons, highlighting the country's significant contribution to global wheat trade.

Given the current situation, it is anticipated that countries with substantial wheat stocks, such as the United States and Russia, will step up their exports to compensate for the reduction in Ukrainian exports.

In 2021, Russia exported about 33 million tons of wheat, but with the decline in Ukrainian wheat exports, they may increase their export volumes this year.

However, it is essential to recognise the potential humanitarian impact of this situation. While corn is mainly used for animal feed, wheat is a staple food for millions around the world, especially in Africa and the Middle East.

A surge in wheat prices could lead to increased food insecurity, causing immense suffering for vulnerable populations in these regions.