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Ukraine wants grain deal to be extended 1 year with new ports

by Reuters

KYIV Feb 22, 2023 - 2:30 pm GMT+3
The bulk carrier VALSAMITIS is loaded with wheat at the Black Sea port of Chornomorsk near Odesa, Ukraine, Feb. 18, 2023. (EPA Photo)
The bulk carrier VALSAMITIS is loaded with wheat at the Black Sea port of Chornomorsk near Odesa, Ukraine, Feb. 18, 2023. (EPA Photo)
by Reuters Feb 22, 2023 2:30 pm

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 said Wednesday.

Last July, the Black Sea Grain Initiative brokered by the U.N. and Türkiye 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 upon.

"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.

"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.

He said Ukraine would insist on an increase in the number of inspection teams "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 meets all its obligations under the grain export deal.

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

"There is no positive momentum. But, at the same time, the U.N., 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 tons 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 tons of agricultural products monthly under the deal. Still, Vaskov said Ukraine could export 6 million tons a month from the ports of the Odessa region and boost it to 8 million tons if Mykolaiv joins.

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

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 ships' route 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.

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