What’s the way out of the Black Sea Grain deal?

The recent disruption in the Black Sea Grain deal has raised concerns about the global grain supply chain, particularly as it pertains to Ukraine. The first two cargo ships carrying 20,000 tons of wheat enroute to Africa and Asia arrived at a Ukrainian seaport in the Southern Odesa Region, following Russia's withdrawal from the agreement. The Ukrainian navy introduced a temporary corridor to facilitate the export of wheat, but questions remain about the adequacy of this solution to address the grain supply challenges. Paul Baker, CEO of International Economics Consulting, shared insights on these developments with CNBC Africa's Julius Bizimungu. Ukraine's role as a key grain supplier to the developing world is significant, with approximately 50% of their exports directed towards developing countries. Additionally, Ukraine has been a major supplier to the World Food Programme, supplying essential grains to some of the world's most vulnerable populations in conflict-affected regions. The disruption in supply from Ukraine has led to increased prices and concerns about depleting grain stocks due to targeted attacks on supplies by Russian missiles. Moreover, despite sanctions, Russia still exports grains, but limitations on transport capabilities due to sanctions have impacted Russian grain supply as well. The dual effect of disrupted supplies from both Ukraine and Russia has created challenges in the global grain market. However, efforts to establish alternative transportation routes, such as using roads and rivers like the Danube, have faced obstacles. While the creation of temporary corridors by the Ukrainian Navy has facilitated some exports, logistical challenges and security risks have constrained the effectiveness of these routes. Moreover, the targeting of river ports by Russian attacks has further complicated the situation, indicating that the temporary solutions may not fully address the supply chain disruptions. The potential ratification of the interim corridor by the International Maritime Organization could enhance security and provide safe passage for grain shipments. However, the process of ratification is time-consuming, and the willingness of countries to endorse the corridor remains uncertain. Despite the challenges in the current supply chain, there is a growing recognition of the need to diversify and deconcentrate supply chains in the global grain market. The concentration of supply in a few major players has raised concerns about the vulnerability of the supply chain to disruptions. The emergence of new major players like India, which has significantly increased its export capacity, and Australia, which has boosted its grain exports, demonstrates the potential for diversification in the market. Additionally, countries are exploring strategies to enhance self-reliance in grain production, though the feasibility of such initiatives varies given climatic conditions and resource constraints. In the context of Africa, where the supply base for grain production is limited, the challenges of ensuring a stable and diversified supply chain are particularly pronounced.