# Explainer-Ukraine looks for ways to get its grain out Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-24 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: How Ukraine Plans to Break Naval Blockade for Grain and Oils Meta Description: Learn how Ukraine is overcoming obstacles to export grain and vegetable oils amidst a blockade, impacting global food prices and causing concerns of a food URL: https://financedigest.com/explainer-ukraine-looks-for-ways-to-get-its-grain-outhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-05-24t145206z1lynxnpei4n0r2rtroptp4ukraine-crisis-grain-1736815690680-compressed.jpg) By Pavel Polityuk and Silvia Aloisi KYIV (Reuters) – Ukraine is seeking ways to get grain and vegetable oils out of the country by breaking a months-long blockade of the [Sea](https://www.financedigest.com/offshore-crews-to-strike-on-bps-north-sea-installations-says-unite.html) of Azov and the Black Sea by the Russian navy and moving more by land. The war, together with Western sanctions against Russia, have sent the price of grain, cooking oil, fertiliser and energy soaring. That in turn is threatening a global [food crisis as many countries count](https://www.financedigest.com/analysis-east-europeans-count-their-pennies-for-christmas-as-food-costs-soar.html "Analysis-East Europeans count their pennies for Christmas as food costs soar") on Russia and Ukraine for more than half of their wheat imports, including some of the poorest. [Russia and Ukraine together account for nearly a third of the global wheat supply](https://www.financedigest.com/exclusive-kazakh-mcdonalds-shut-outlets-temporarily-after-halting-supplies-from-russia-sources.html "Exclusive-Kazakh McDonald’s shut outlets temporarily after halting supplies from Russia – sources"), and their importance has been underscored by an Indian export ban and adverse crop weather in North America and Western Europe. Ukraine is also a major exporter of corn, barley, sunflower oil and rapeseed oil, while Russia and Belarus – which has [backed Moscow in the war and is also under sanctions – account for over 40% of global](https://www.financedigest.com/analysis-at-world-cup-saudi-crown-prince-moves-back-on-to-global-stage.html "Analysis-At World Cup, Saudi crown prince moves back on to global stage") exports of the crop nutrient potash. HOW MUCH [GRAIN IS STUCK IN UKRAINE](https://www.financedigest.com/traders-cut-ukraine-2022-combined-grain-and-oilseeds-crop-forecast.html "Traders cut Ukraine 2022 combined grain and oilseeds crop forecast")? Grain is one of Ukraine’s main industries, with exports totalling $12.2 billion in 2021 and [accounting for nearly a fifth of the country’s](https://www.financedigest.com/5-countries-you-need-to-have-an-offshore-account-in.html "5 Countries You Need To Have An Offshore Account In") exports. Prior to the war, [Ukraine exported](https://www.financedigest.com/ukraine-grain-export-coordination-centre-opens-in-istanbul.html "Ukraine grain export coordination centre opens in Istanbul") 98% of its cereals and oilseed via the Black Sea, at a rate of up to 6 million tonnes per month. Typically, only a fraction of its exports went by rail, where transport [costs are higher](https://www.financedigest.com/uk-pub-operator-wetherspoons-loss-narrows-despite-higher-costs.html "UK pub operator Wetherspoon’s loss narrows despite higher costs"). But with the ports blocked and the railway system unable to cope with the extra volume, the country is currently only [exporting between 1-1.5 million tonnes a month](https://www.financedigest.com/sentiment-among-german-exporters-falls-for-third-month-in-a-row-ifo.html "Sentiment among German exporters falls for third month in a row -Ifo"). U.S. Secretary of State Antony Blinken last week accused Russia of using food as a [weapon in Ukraine by holding “hostage” supplies](https://www.financedigest.com/south-korea-has-not-supplied-lethal-weapons-to-ukraine-president-says.html "South Korea has not supplied lethal weapons to Ukraine, president says") for not just Ukrainians, but also millions around the world. The Kremlin [says it is the West that triggered the crisis by slapping sanctions against Moscow](https://www.financedigest.com/u-s-says-moscow-has-failed-in-war-aims-pledges-more-military-aid-to-ukraine.html "U.S. says Moscow has ‘failed’ in war aims, pledges more military aid to Ukraine"). According to a U.N. food agency official, nearly 25 million tonnes of [grain were stuck in Ukraine](https://www.financedigest.com/gazprom-gas-cut-tempers-economic-hopes-after-ukraine-grain-deal.html "Gazprom gas cut tempers economic hopes after Ukraine grain deal") as of early May due to infrastructure challenges and the naval blockade. As [prices surge](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out billion aid package for Italy clients hit by surging prices"), U.N. agencies are having to [cut food rations for refugees and displaced people by up to half](https://www.financedigest.com/elon-musk-plans-to-cut-half-of-twitter-jobs-bloomberg-news.html "Elon Musk plans to cut half of Twitter jobs – Bloomberg News") in parts of the Sahel, for example, due to a massive funding shortfall. WHY CAN’T THE [GRAINS GET OUT OF UKRAINE](https://www.financedigest.com/u-n-expects-ukraine-russia-grain-deal-to-be-implemented-in-a-few-weeks-officials.html "U.N. expects Ukraine-Russia grain deal to be implemented in a few weeks -officials") BY LAND? Exporting by train is a challenge because the [Ukrainian rail system operates](https://www.financedigest.com/grid-operator-urges-ukrainians-to-save-electricity-as-temperatures-drop.html "Grid operator urges Ukrainians to save electricity as temperatures drop") on a different gauge to European neighbours such as Poland, so the grain has to be transferred to different trains at the border where there are not many transfer or storage facilities. Kyiv has also been stepping up efforts to ship via the Romanian [Black Sea](https://www.financedigest.com/kremlin-remains-downbeat-on-state-of-black-sea-grain-deal.html "Kremlin remains downbeat on state of Black Sea grain deal") port of Constanta. But as of mid-May, only about 240,000 tonnes of grain – or 1% of the volume stuck in Ukraine – had passed through, its [manager Florin Goidea told Reuters](https://www.financedigest.com/thomson-reuters-builds-out-its-award-winning-connected-risk-platform-with-risk-management-solution-providing-a-personalized-enterprise-wide-view-of-risk.html "Thomson reuters builds out its award-winning connected risk platform with risk management solution providing a personalized enterprise-wide view of risk"). Re-routing grain to Romania involves [transport by rail](https://www.financedigest.com/chevron-considering-rail-transport-for-kazakhstan-oil-ceo-says.html "Chevron considering rail transport for Kazakhstan oil, CEO says") to ports on the Danube river and loading cargoes onto barges for sailing towards Constanta – making the process complex and costly. WHAT OTHER OPTIONS ARE BEING DISCUSSED? Western powers have been discussing the idea of setting up “safe corridors” to allow [grain to be shipped out of Ukrainian ports](https://www.financedigest.com/turkey-says-five-more-grain-ships-leave-ukrainian-ports.html "Turkey says five more grain ships leave Ukrainian ports"). But [officials have warned that any such corridor would not be possible without Russian](https://www.financedigest.com/u-s-russian-officials-set-for-security-talks-on-january-10-u-s-official.html "U.S., Russian officials set for security talks on January 10 – U.S. official") consent. Ukraine says it needs “guarantees of security”, with deputy [economy minister Taras Kachka telling Reuters](https://www.financedigest.com/thomson-reuters-keeps-outlook-but-wary-of-slowing-economy.html "Thomson Reuters keeps outlook, but wary of slowing economy") last week that having “vessels of third countries in the area …would be an ideal situation. Russia’s foreign ministry in turn said that if it were to heed a [United Nations appeal to open access to Ukraine’s Black Sea](https://www.financedigest.com/offshore-crews-to-strike-on-bps-north-sea-installations-says-unite.html "Offshore crews to strike on BP’s North Sea installations, says Unite") ports, the removal of sanctions against Russia would also have to be considered, the Interfax news agency reported. Making [things even more difficult are drifting mines in the Black](https://www.financedigest.com/qa-with-rachael-donnelly-associate-solicitor-in-the-property-litigation-team-at-blacks-solicitors-llp-on-the-key-things-to-look-out-for-when-buying-a-leasehold-property.html "Q&A with Rachael Donnelly, Associate Solicitor in the Property Litigation team at Blacks Solicitors LLP, on the key things to look out for when buying a leasehold property") Sea, which each side accuses the other of planting. Insurance [costs for any vessel braving these shipping](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar") lanes would also likely be very high. The situation has taken on added urgency because of a [shortage of grain storage space in Ukraine](https://www.financedigest.com/adm-beats-profit-estimates-as-ukraine-crisis-stokes-crop-shortages.html "ADM beats profit estimates as Ukraine crisis stokes crop shortages"), where the next crop will be harvested from July. Up to 35% of Ukraine’s total storage capacity of 61 million tonnes could still be used up by the old 2021 crop by the time the new harvest comes in, according to [research centre](https://www.financedigest.com/new-research-from-impact-com-shows-shifting-power-dynamic-that-puts-influencers-at-the-centre-of-the-brand-consumer-relationship.html "New Research from impact.com Shows Shifting Power Dynamic that Puts Influencers at the Centre of the Brand-Consumer Relationship") APK-Inform. (Additional reporting by Gus Trompiz in Paris; writing by Silvia Aloisi; editing by Jason Neely) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---