The sea is agitated and agitated
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Kateryna Spivakova, Director of Communications and Regulatory Support at Kernel
According to our most optimistic calculations, if the war ends today, the agricultural sector of Ukraine will need at least four years to recover to pre-war indicators. With each subsequent day of the war and problems with exports via sea routes, this crisis deepens and affects the lives of Ukrainians and the world community more and more.
When Russia blocked our Black Sea routes on February 24, the world felt the shortage of Ukrainian agricultural products due to high prices on the grain market and food shortages. Stories about empty shelves with sunflower oil in European supermarkets became the heroes of the evening news for a while.
They showed those who were far from the war events in Ukraine, how globalized our world is and how the flap of the “wing of the butterfly of war” in a country little-known before this can cause a tsunami in the form of a threat to global food security.
Today, the world feels something similar after the shelling of the international waters of the Red Sea by the Yemeni Houthis. Avoiding danger, ships went around the Cape of Good Hope, supply chains slowed down, oil and natural gas prices rose, and the threat of food and consumer goods shortages reappeared.
Blockade of the sea. Ukrainian experience
Having a common enemy works wonders. We in Ukraine know this better than anyone. After blocking the Black Sea, all possible instruments of influence were used – from diplomatic negotiations to the laying of new logistics routes. We had and still have something to fight for: before the invasion, the Ukrainian agricultural sector provided up to 20% of GDP and more than 40% of export revenues.
The emergence of the Grain Initiative was inevitable. There remained only the question of its conditions, and as it later became clear, the observance of these conditions by the Russian side. Let me remind you that, in general, during the existence of the “grain corridor” from August 2022 to July 2023, the state exported more than 33 million tons agricultural products.
Thankfully, the export by sea somehow took place within the framework of the initiative, but the constant problems with the operation of the agreement and the delays of ships on the Bosphorus still created consequences that remain quite tangible for the agricultural industry.
Thus, in the absence of sales, residues accumulated, and the profitability of crop production rapidly went down. Because of this, farmers began to reduce sown areas and production volumes: in the new season by 15%, in the following – the figure could and still can reach 30%.
As a result, Ukraine can collect 30 million tons less grain in just a few years. And this entails a decrease in tax revenues to the budgets of all levels and foreign exchange earnings, unemployment, problems with the decentralization of local authorities.
The consequences for the world will also be difficult: global migration processes, an increase in the unemployment rate, food problems, and the threat of famine.
“Grain Corridor” is dead. Long live the new sea corridor!
The appearance of a new sea route in the Black Sea in August 2023 makes us believe that the consequences described above will not come to this. This path opened opportunities for the entire spectrum of Ukrainian exports, including metallurgy. The waiting time for ships to enter Black Sea ports has been reduced to 1-3 days. Compare with 30-40 days of downtime in the “grain corridor”.
All this is very encouraging, although questions still remain to be resolved. For example, the focus of attention is on the high cost of insurance of ships bound for Black Sea ports against war risks in Ukraine.
Now this price, unfortunately, is continued to pay Ukrainian agricultural producers. Lowering insurance rates or switching to more flexible conditions will increase the competitiveness of Ukrainian exports on the world market.
Nevertheless, over 10 million tons of agricultural products were exported through the Ukrainian corridor in the first 5 months. And the volumes were gaining momentum, as there was no-no and again – a threat from the Red Sea slowed down. The sea stirs and continues to stir.
The grain path: from numbers to sensations
In addition to the dangers on the water, it is worth remembering the vulnerability on land. Attacks on Ukrainian port infrastructure exposed the vulnerability of global logistics to terrorist groups. It turned out that several dozens of missiles are enough to block a critically important link of world food security. This “knowledge” can be adopted by the Houthis within a year to stop all world logistics through the Red Sea.
To tell the story of the Grain Initiative, the Ukrainian Corridor and its importance for the world and for our internal unity, it is not enough to operate with numbers and graphs. The world needs to see and feel it.
For this purpose, we have started work on a large art project “Grain Path”, the parts of which will be a photo book, an exhibition exposition and other thematic initiatives. All this will allow you to feel both the defenselessness and the common challenge to face the Russian or Houthi terrorists together.
The “Grain Path” project is the first attempt in Ukraine to tell a story not through meanings, but through images with the participation of leading photographers, artists, illustrators and designers of exhibition spaces and books. Kernel is preparing an art project for presentation at this year’s Book Arsenal.
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