Russia’s suspension of the Black Sea grain export agreement, which allowed Ukraine to export millions of tons of grain, will also have consequences in Latin America, where vulnerable countries will suffer from rising food prices, while others could benefit by increasing their own grain production.
Experts anticipate that an increase in the price of food in Latin America is “inevitable”. According to some forecasts this could begin to be felt as early as the next few weeks.
“With the suspension of the agreement cereals, food prices in the region are likely to rise, putting pressure on household budgets and increasing famine,” he told the voice of america Bernardo Javalquinto, economist and academic based in Chile.
Grains such as wheat and corn are two of the most important staple foods in Latin America, due to their use in dishes such as bread, pasta, tortillas and popcorn, recalled Javalquinto, who is a member of the Bretton Woods Committee, a non-profit organization in the US dedicated to economic cooperation.
For Gustavo Flores-Macías, assistant vice chancellor for international affairs at Cornell University, “although the price increase will probably not be as pronounced as when the war began, the effect of higher food prices will also be felt in Latin America, especially among countries that depend on grain imports.
Flores-Macías warned that “the increase in food prices is likely to be felt in a matter of weeks, as existing supplies run out and grains and sunflower oil become scarce.”
However, the collapse of the agreement “can also help producing countries in the region, such as Argentina and Brazil, which have increased grain production,” said Flores-Macías.
The member countries of the Common Market of the South (MERCOSUR) -Argentina, Brazil, Paraguay and Uruguay- could benefit from the end of the grain agreement, “since it will raise the world prices of these basic products” and they are “large exporters of grains and other agricultural products, including oilseeds,” he told the VOA Christopher Hernandez-Roy, associate director of the Americas program at the Center for Strategic and International Studies, a think tank in Washington.
However, in the case of Argentina, for example, the end of the grain agreement comes at a time of severe drought, which is affecting the country’s agricultural production.
Javalquinto explained that although Latin America is a “major producer of agricultural products such as soybeans, coffee and sugar”, the war in Ukraine has disrupted global supply chains, “making it more difficult and expensive for Latin American farmers to access inputs such as fertilizers and pesticides.”
Other countries in the region that depend on MERCOSUR exports “could expect to pay higher prices; and other countries that depend on imports, such as the Caribbean, Haiti, Venezuela, Cuba and Central America, will inevitably suffer higher food prices,” according to Hernandez-Roy.
The grain export agreement was mediated by the United Nations Organization (UN) and Turkey in July 2022, and since then, has allowed 1,145 ships will sail from Ukraine with corn, wheat, sunflower oil, sunflower meal, among others, to countries in Africa, the Middle East and Asia.
“The last thing Latin America needs is another increase in food prices,” he told the VOA Benjamin Guedan, director of the Latin America program at the Wilson Center, a think tank in Washington.
Guedan explained that “Latin American central banks aggressively fought inflation fueled by global supply chain disruptions and Russia’s invasion of Ukraine” and rising grain prices “threatens to reverse that progress.” and it would harm the most vulnerable part of the region at a time of rising hunger.”
Worried about the increase in famine in Latin America
In its report On the State of Food Security and Nutrition in the World in 2023, the Food and Agriculture Organization of the United Nations (FAO) assured that almost 600 million people are expected to suffer from chronic malnutrition in 2030, which represents “about 23 million more than if the war in Ukraine had not happened.”
In Latin America and the Caribbean, 6.5% of the population suffers from hunger, according to the FAO.
For Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics in Washington, the suspension of the deal did not come as a “complete surprise” and even “grain traders seem unimpressed” that it was already being factored into commodity prices. market, the risks of Russia’s exit from the agreement.
“There is still room for the agreement to continue on a trilateral basis between Ukraine, Turkey and the European Union. Given Turkey’s role in securing shipping lanes in the Black Sea and its NATO membership, it would be a disastrous mistake for Russia to try to directly intercept and/or destroy food shipments,” Hendrix explained.
The President of Chile, Gabriel Boric, said on Monday at the regional summit of the European Union and the Community of Latin American and Caribbean States (CELAC), that “today it is Ukraine but tomorrow it could be any of us… here has been clearly violated international law not by both parties, but by a party that is invading, which is Russia. I think it’s important that we say it clearly.”
In June 2022, a study of the Economic Commission for Latin America and the Caribbean (ECLAC) anticipated that the “destruction of agricultural productive capacity” in Ukraine and the “paralysis of a large part of the trade in cereals and fertilizers” with Russia, opened the perspective of a world food crisis .
ECLAC explained that “with a view to the future”, food security must be a priority in the region. “The region’s position as a net producer of food is favored by its richness in terms of biodiversity and biological natural resources and the availability of water and agricultural land, especially in the countries of the southern cone.”
US says “it will continue to work” to allow exports of Ukrainian grain
US State Department Secretary Antony Blinken said the US government “deeply regretted” Russia’s decision to suspend participation in the Black Sea Grain Initiative. “The Russian government’s continued use of food as a weapon harms millions of vulnerable people around the world,” he noted.
The US official explained that since August 2022, through the agreement, more than 32 million metric tons of Ukrainian cereals and food have been sent to the world that have “contributed to reducing the difficulties in the poorest countries of the world, since bringing cereals to world markets lowers food prices for everyone.”
Russia’s exit from the agreement was announced by Kremlin spokesman Dimitri Peskov, who assured that his country would return to the program when its demands were met.
“We urge the Russian government to reverse its decision, resume negotiations and fully extend, expand and implement the Initiative immediately for the benefit of the millions of people who depend on Ukrainian grain,” Blinken added.
For his part, John Kirby, spokesman for the White House National Security Council, assured that the US will continue to “work with other countries to allow both the russian grain such as Ukrainian reach the rest of the world, including ensuring that our sanctions do not run counter to Russian propaganda.”
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