Erdo?an confident Russia-Ukraine grain deal will continue

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A vital deal allowing Russian and Ukrainian wheat and fertilisers to be exported through the Black Sea is expected to continue, according to the Turkish president, bringing relief to some of the poorest countries in the world.

“I am of the opinion that it will continue. There’s no problem there,” Recep Tayyip Erdo?an, who mediated the agreement, told a press conference at the G20 summit in Bali, Indonesia. The deal was scheduled to expire on Saturday.

Russia has been holding out on renewing the agreement, signed in July, since in its view it was being implemented unfairly because of sanctions on Russian agricultural exports. Russia briefly suspended the deal in October.

But Erdo?an said he was confident the deal was going to be renewed for a year.

Turkey and the UN had jointly negotiated the initial Black Sea grain deal in July, and Erdo?an said its existence, permitting grain to pass a Russian naval blockade, had allowed through 11bn tonnes of grain. Erdo?an said he would be holding further talks with the Russian president, Vladimir Putin, as soon as he returned to Turkey from the G20 summit.

The UN secretary general, Ant?nio Guterres, had also been holding talks with the Russian foreign minister, Sergei Lavrov, in Bali.

Russia complained that the deal in July was allowing Ukrainian grain past its navy on the Black Sea while its own grain and fertiliser exports were not given commensurate free access to world markets because of sanctions on ships and banks.

The Kremlin has also secured an agreement to resume use of a pipeline that transports ammonia, a key ingredient in nitrate fertiliser, through Ukrainian-controlled territory before reaching a port near Odesa. Russian use of the pipeline was suspended after its invasion of Ukraine in February.

The UN plan is that ammonia produced by the Russian fertiliser producer Uralchem be brought to the Russia-Ukraine border. The product will be purchased by the US commodities trader Trammo before being put into the pipeline, ensuring no Russian-owned grain transfers across Ukrainian territory. Uralchem is owned by a Dmitry Mazepin, a Russian oligarch who is subject to sanctions, making the transaction more complex.

The largest purchasers of fertilisers from Odesa in 2021 were Morocco (800,000 tonnes), Turkey (600,000), India (360,000) and Tunisia (190,000). The price of wheat has risen 50% since 2021 but has stabilised partly because of the Black Sea grain initiative.

Moscow had also asked for sanctions to be lifted on the Russian banks that specialise in handling Russian agricultural exports but it is not clear if that is being allowed.

Speaking in Bali, Lavrov said Guterres had given Russia written assurances that the west would remove obstacles to Russian exports.

Ukraine has been unhappy about the slow pace at which Russia conducts the joint inspection of ships as they arrive and depart from Ukraine. The commitments were underscored in a meeting in Istanbul between Russia and the UN humanitarian chief, Martin Griffiths.

Lavrov said this deal ensured Russian ships could visit European ports, foreign vessels could visit Russian ports and for Russian banks to export agricultural goods without facing extortionate insurance costs.

He added Russia had been able to export a total of 10.5m tonnes of grain, mainly wheat, with 60% going to Asia and about 40% to Africa.

Ukraine and Russia provide about 30% of the world’s exported wheat and barley, 20% of its maize, and more than 50% of its sunflower oil. Russia is also the largest exporter of fertilisers, accounting for a 15% share.

In a sign of how other wheat producers are benefiting from the Ukraine war and higher prices, the Australian firm GrainCorp announced on Wednesday net profits after tax for the 2022 financial year of $380m, an increase of 173% on the previous year.