After five months of war, Ukraine and Russia have reached an agreement to allow the resumption of wheat exports via the Black Sea. It should be signed this Friday in Istanbul, Turkey having played the intermediary with the United Nations. This agreement should apply”very quickly“, but he “is conditioned by the state of the conflict and its possible extensiont”, tempered this Friday on franceinfo Thierry Pouch, chief economist of the Chambers of Agriculture and associate researcher at the Regards laboratory of the University of Reims-Champagne-Ardenne. This agreement “is vital“, according to him, for Ukraine and its farmers, but also for many importing countries in the world, such as Egypt, Lebanon or Poland.
franceinfo: Do we have a guarantee that this agreement will be respected?
Thierry Pouch: It will be insofar as we have nevertheless made a lot of progress over the past two months in the negotiations. There had been the declaration of the UN Secretary General who predicted hurricanes of famine, a few weeks ago. Insofar as there is an important expectation from a certain number of countries which are cruelly dependent on Ukrainian wheat, but also on corn. This is the case of Lebanon, Tunisia, Turkey and Egypt. But even in Europe there are important importers like Estonia, Lithuania or Poland. This can only be respected if we want the international food situation not to deteriorate as it is expected to deteriorate.
How soon will this agreement apply in these countries in practice?
If the agreement reached is signed today, it will take approximately 3 to 4 weeks to finalize it from an operational point of view. Then it can go very quickly. If we just take the example of the port of Odessa, which can accommodate ships in deep water with loads of 65,000 tons, we can go relatively quickly.
This is very important for Ukraine because the harvests are being done at the moment. The silos must be freed up in order to feed them with the new harvest that is coming. In addition, there are still agricultural exports for Ukraine, which represents 10% of gross domestic product. It is something important. It is vital for farmers who are very impatient since it can obviously supply their cash flow. And in addition, Ukraine has devalued its currency, so it can also be an asset to sell a little more and cheaper.
Can we find other sources of supply than what happens in Ukraine or Russia?
Ukraine represents only 10% of world exports for wheat. For Russia, we are around 20%. Rather, Russia is the granary in a way. Then you have a handful of exporters that may be alternatives. This is obviously the case for Australia, the United States, Canada, but also for France and Romania. Obviously, India had positioned itself, but it had placed an embargo on its exports so we can no longer count on it, even if it is not a major exporter. It is the ninth globally. But already, countries that are very dependent on international wheat such as Egypt, the world’s largest importer, had turned to Russia and a little to France recently, to be able to supply the population. So, there are solutions, especially since the harvest in France this year should not be as bad as it has been announced. There will be a very, very slight drop. France has been exporting a lot for a few weeks now around the Mediterranean.
The application of this agreement can be called into question at any time?
The agreement should apply, but obviously, all this is conditioned by the state of the conflict and its possible extension. So, if there is a military degradation, if there is a diplomatic blockage, it is likely that Russia could question this agreement. There are already some bombings of agricultural land at the moment. All of this is still very, very hypothetical, very random. But it still constitutes a significant advance that could have repercussions on the price of wheat, which has already been falling for a few days and could fall further. This would rather be good news for importing countries, which would see their import bill lighten.