Ukraine shipping more grain through Black Sea despite threat from Russia

Grain thunders into rail cars and trucks zip around a storage facility in central Ukraine, a place that growing numbers of companies turned to as they struggled to export their food to people facing hunger around the world.

Now, more of the grain is getting unloaded from overcrammed silos and heading to ports on the Black Sea, set to traverse a fledgling shipping corridor launched after Russia pulled out of a UN-brokered agreement this summer that allowed food to flow safely from Ukraine during the war.

It was tight, but we kept working we sought how to accept every ton of products needed for our partners, facility general director Roman Andreikiv said about the end of the grain deal in July. Ukraine's new corridor, protected by the military, has now allowed him to free up warehouse space and increase activity.

 

Growing numbers of ships are streaming toward Ukraine's Black Sea ports and heading out loaded with grain, metals and other cargo despite the threat of attack and floating explosive mines.

It's giving a boost to Ukraine's agriculture-dependent economy and bringing back a key source of wheat, corn, barley, sunflower oil and other affordable food products for parts of Africa, the Middle East and Asia where local prices have risen and food insecurity is growing.

"We are seeing renewed confidence among commercial operators keen to take Ukrainian grain cargoes, said Munro Anderson, head of operations for Vessel Protect, which assesses war risks at sea and provides insurance with backing from Lloyd's, whose members make up the world's largest insurance marketplace.

Ihor Osmachko, general director of Agroprosperis Group, one of Ukraine's biggest agricultural producers and exporters, says he's feeling more optimistic than two months ago.

At that time, it was completely unclear how to survive, he said.

Since the company's first vessel departed in mid-September, it says it has shipped more than 300,000 metric tons of grain to Egypt, Spain, China, Bangladesh, the Netherlands, Tunisia and Turkiye.

After ending the agreement brokered by the UN and Turkiye, Russia has attacked Ukraine's Black Sea ports a vital connection to global trade and grain infrastructure, destroying enough food to feed over 1 million people for a year, the UK government said.

The risk to vessels is the main hurdle for the new shipping corridor. Russia, whose officials haven't commented on the corridor, warned this summer that ships heading to Ukraine's Black Sea ports would be assumed to be carrying weapons.

Ukrainian President Volodymyr Zelenskyy said that allies had agreed to provide ships to help his country protect commercial vessels in the Black Sea but that more air defence systems were needed.

Air defence is in short supply, he told reporters on Saturday at an international food security summit in Kyiv. But what's important is that we have agreements, we have a positive signal and the corridor is operational.

While a deadly missile strike on the port of Odesa hit a Liberian-flagged commercial ship this month, not long afterward, insurers, brokers and banks teamed up with the Ukrainian government to announce affordable coverage for Black Sea grain shipments, offering shippers peace of mind.

Despite such attacks, Ukraine has exported over 5.6 million metric tons of grain and other products through the new corridor, US Ambassador to Ukraine Bridget Brink tweeted on Friday.

Before the war, it was nearly double that per month, Ukrainian Deputy Economy Minister Taras Kachka said.

The way that they're transporting right now, it's certainly much more expensive and time consuming, said Kelly Goughary, a senior research analyst at agriculture data and analytics firm Gro Intelligence.

But they are getting product out the door, which is better than I think many were anticipating with the grain initiative coming to an end, she said.

Farmers also are facing low prices for their grain, which makes sending trucks to Odesa's often-attacked port not worth the risk for one agricultural company near the front line.

Instead, Slavhorod, which farms near the border with Russia in the Sumy province that faces daily shelling, has chosen to store its peas, wheat, soybeans, sunflower and corn in warehouses.

There's risk in keeping the 3,500-hectare (8,650-acre) farm running at all: Signs warned of explosive mines near where workers were collecting corn in a field 3 kilometers (nearly 2 miles) from Russia.

But who, if not us? It's the only industry that brings some income to the country, said Slavhorod's chief agronomist, Oleksandr Kubrakov, who survived driving over a mine last year.

But it's becoming increasingly challenging to maintain morale.

This year, there is less enthusiasm because grain prices are low, the product remains near the border and at any moment" it could be destroyed, he said. It's a big risk.

Since the war started, Ukraine has struggled to get its food supplies to countries in need. Even during the yearlong UN deal, when Ukraine shipped nearly 33 million metric tons of food, Russia was accused of slowing down ship inspections required to be done by all sides.

That corridor worked in an unpredictable way for us, said Mykola Horbachov, president of the Ukrainian Grain Association.

Now, the Ukrainian military decides when it's safe to sail.

This may incur additional costs, but it is still more predictable than it was before, Horbachov said.

Osmachko of Agroprosperis Group agrees. Before the invasion, the exporter paid $50 per metric ton to ship grain through the Black Sea. Alternatives since the war including river routes through Europe cost the company nearly three times more, Osmachko said. Under Ukraine's new corridor, the company pays USD 70 to 80 per metric ton.

It's more efficient, more profitable, he said.

Plus, Ukraine's shipping corridor allows vessels to travel less in dangerous areas compared with the grain deal and avoid those often-delayed inspections, said Anderson of Vessel Protect.

Agroprosperis Group no longer needs to pay for ships to wait around. Inspection delays cost the company USD 30 million in losses during the yearlong grain deal, Osmachko said.

While the delays are gone, there still is military risk, safety risk, war risk. And not all of the insurance companies are ready to take this risk, Osmachko said.

To ease that hurdle, an insurance program launched this month to provide affordable coverage to shippers carrying food from Ukraine's Black Sea ports. The partnership between insurance broker Marsh McLennan, Lloyd's, two Ukrainian state banks and the government offers up to USD 50 million for each of two types of coverage protecting against damage and other losses.

In another boost, a humanitarian program was extended Saturday that donates Ukrainian grain to nations facing food shortages with support from countries worldwide. Next, it will bring enough grain to help nearly 400,000 people in Nigeria, Zelenskyy said.

The goal for the new shipping corridor is to export at least 6 million metric tons of grain a month, Ukrainian Agriculture Minister Mykola Solskyi said. It has a lot of work to do: Ukraine exported 4.3 million metric tons of grain in October through all routes, the ministry said.

We maintain cautious optimism, based on the fact that we have been fighting before and will continue to fight further, he said.