Ukraine war: No money in the pot for grain transport after Russia deal collapse, EU says
- Ukraine will largely have to rely on expensive routes through Europe, resulting in 10-15 per cent increase in global grain prices, the IMF estimates
- Russia backed out of the Black Sea grain deal that allowed for safe passage of Ukraine cargo ships, and could now benefit by undercutting Ukraine
The European Commission has no immediate money in the budget and no clear way to help finance the extra transport costs Ukrainian grain exports will face with the end of the Black Sea deal, sources said, leaving an opportunity for Moscow to cash in.
Russia backed out of a UN-led Black Sea grain deal this month that allowed for the safe passage of Ukrainian cargo ships laden with cereals, oilseeds and wheat to reach global markets.
Russia has already promised free grain to some of Ukraine’s African customers.
Ukraine, one of the world’s biggest grain exporters, will now have to rely almost entirely on expensive routes through the European Union and the cheapest alternative artery, the Danube River, may not be able to expand its volume as much as hoped after bombings.
The International Monetary Fund estimated a 10-15 per cent increase in global grain prices as a result.
In a letter dated July 21 and seen by Reuters, Ukraine’s agriculture ministry asked EU trade chief Valdis Dombrovskis for the Commission to provide financial aid for the extra transport cost of using alternate EU routes known as “Solidarity Lanes”. Ukraine estimates the extra cost to be US$30-US$40 a tonne.