Food prices to skyrocket as Russia ends grain export deal

Members of the public protesting over high food prices during Sabasaba demonstrations in Nairobi on July 7, 2022. [Esther Jeruto, Standard]

The food crisis facing the country is expected to worsen after Russia yesterday ended a United Nations’ backed Ukraine grain-export deal nearly a year into the agreement, heightening uncertainty over global food supplies.

The grain deal was hailed as preventing a global food emergency when it was brokered by the UN and Turkey last year. It ended a de facto blockade of Ukrainian ports by Russia, which agreed to let ships pass after inspections in Turkey.

The prices of key food items have climbed locally significantly over the last couple of months, adding pressure on cash-starved households still reeling from the economic hit of the Covid-19 pandemic.

“The Black Sea agreements ceased to be valid today,” Kremlin spokesman Dmitry Peskov was quoted telling reporters on a conference call yesterday.

“Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated.”

Kenyan officials could not immediately be reached on the expected impact of the withdrawal of Moscow from the pact.

But analysts said, Russia’s suspension of the Black Sea grain deal could drive up food prices across the globe including Kenya which relies on both Ukraine and Russia - both among the world’s biggest exporters of grain and other foodstuffs.

Russia and Ukraine are significant players in the global commodities market including oil, wheat and maize, with Kenya being one of the importers of these goods.

Any fresh severe supply disruption is likely to add price pressures on food commodities at a time the current raging food crisis has stoked social tensions. The move by Russia comes at a time when President Ruto’s administration is facing mounting pressure to address the high cost of living.

UN Comtrade — a source for official international trade statistics — shows Kenya was in 2020 the sixth highest importer of agricultural products from Russia, with the main commodity being wheat.

Nearly half of Ukraine’s agricultural exports to Africa, including Kenya, is also wheat while maize is about a third.

This means any fresh disruption could set up Kenya for increased prices of bread and wheat, spooking a market where food prices are already on a steep rise.

Kenya National Bureau of Statistics (KNBS) data shows the country imported goods worth Sh37.99 billion from Russia and Sh7.47 billion from Ukraine in 2020.

The Kenya Kwanza administration faces the uphill task of bringing living costs under control.

The National Treasury had early this year warned Kenyans of tough economic times ahead as energy and food costs soar and inflation rages in the fall-out from the war in Ukraine.

Millions of hapless Kenyan families around the country have increasingly found it difficult to put food on the table in the face of unprecedented high prices.

These families are looking to President William Ruto’s new administration to soften a severe cost-of-living squeeze.

Russia’s President Vladimir Putin had threatened recently to suspend participation in the grain deal.

He had however noted that Moscow could return to it if its demands were met for easier rules for its own agriculture and fertilizer exports.

Alongside the Black Sea grain deal, a three-year deal was struck last year under which UN officials agreed to help Russia get its food and fertiliser to foreign markets.

Moscow says those terms have not been fully implemented, reported Reuters.

Western countries say Moscow is trying to use its leverage over the grain deal to weaken financial sanctions, which do not apply to Russia’s agricultural exports.