Grain price to hike in Nigeria as Russia halts trade deal with Ukraine

In a significant blow to global food stability, Russia has terminated its participation in the Black Sea Grain Initiative, an agreement that allowed Ukraine to export its grain by sea.

Ngozi Okonjo-Iweala, Director-General of the World Trade Organisation and former Nigerian Finance Minister, expressed her deep disappointment at the termination of the Black Sea Grain Initiative. In a tweet, she highlighted the importance of this trade route for global food prices and its impact on vulnerable populations, including the poor people and poor countries who are likely to be hardest hit by the disruption.

About the Black Sea Grain Initiative

The Black Sea Grain Initiative was an agreement that allowed Ukraine to export its grain by sea through the Black Sea region. It was brokered by the United Nations and Turkey and aimed to facilitate the trade of grain, food, feed, and fertiliser from Ukraine to international markets.

Ukraine is one of the world's major producers and exporters of grain, particularly wheat and maize, and its grain exports are essential for meeting the food demands of many countries around the world.

By providing a reliable trade route for Ukrainian grain exports through the Black Sea region, the initiative ensured a steady and predictable supply of grain to international markets. This stability in grain supply helped to mitigate the impact of fluctuations in agricultural production and weather-related events in other parts of the world. When there is a steady flow of grain from a major exporter like Ukraine, it can serve as a buffer against food crises and price spikes in times of global shortages.

How this affects Nigeria

Food production in Nigeria has been experiencing shocking decline in the last 3 years. Dataphyte's report revealed that between Q1 2020 and Q1 2022, crop production has declined by 47.2%. This can be credited to the fact that the gran producing regions have struggled with insecurity and flooding disasters.

In the bid to be proactive and mitigate the impact of these issues, early this year, Nigeria signed the “Grains from Ukraine” project, would see Nigeria receiving grain imports from the war torn eastern European country Ukraine;

According to Nairametrics, this information was disclosed by “the Ukrainian Minister of Agrarian Policy and Food, Mykola Solskyi, who led a delegation to Nigeria’s Minister of Foreign Affairs, Geoffrey Onyeama, and his Agriculture and Rural Development counterpart, Mohammad Abubakar, in Abuja.”

In light of the deal the former minister for Agriculture and Rural Development, Mohammed Abubakar, noted that the establishment of grain hubs in the country are already in effect.

“...I can say that over 30% of our agricultural businesses are with Ukraine, especially in the area of wheat, fertiliser and other grains. And this I can assure you will continue to improve our relationship,” the minister said.

Nigeria, like many other countries in Africa and the Middle East, relies on imports of food commodities to meet its domestic demand. The Black Sea region has played a crucial role in facilitating the flow of grain and other food items to these regions, particularly via Ukraine's exports. With the termination of the agreement, there is a growing concern that food prices could become more volatile and increase in Nigeria, potentially leading to food crisis.