LONDON, ENGLAND – A pandemic followed by a war have presented the grains sector with the biggest challenges most people can remember, and traders face continued uncertainty over supply from Ukraine through the Black Sea, according to analysts speaking at the recent International Grains Council (IGC) Conference in London, England. There also were warnings about the need for change in consumption patterns, and innovation, to tackle climate change.

Kei Takagi, Japan’s Parliamentary vice minister for foreign affairs, opened the meeting by reminding delegates that “cooking brings people happiness.”

“The stable supply of food is a prerequisite,” he said. “Food security is greatly affected by the COVID pandemic and climate change, further exacerbated by Russia’s invasion of Ukraine. The international community must once again come together to ensure a stable food supply.

He urged that “the food supply not be used as a weapon of war.”

“Restrictions on food exports that are not consistent with the WTO should not be made,” he added. “Speculative behavior that takes advantage of the crisis should be restrained.”

Taras Kachka, deputy minister for Development of Economy, Trade and Agriculture of Ukraine, Trade Representative of Ukraine, speaking remotely, thanked the Japanese government for the equipment it has supplied to Ukrainian farmers. He noted that the global grains market was negatively impacted by Russia’s invasion, particularly as Ukraine had just gone through the first season in which everything from sowing to harvest was affected by the conflict. Even so, Ukraine was still responsible for 10% of international trade.

“The international price in Ukraine will be on the level of the cost of production,” he said. “Harvested grains and oilseeds will be level of 62 million (tonnes), exports about 40 million.” Kachka also explained that “we have only three seaports operating at capacity,” and under the “fragile agreement,” to ship grains and other commodities via the Black Sea, “Russia uses every possibility... to complicate these exports.”

Ukraine’s “intention is to ensure freedom of navigation to and from Ukrainian seaports,” he said.

He also commented on trade via the EU Member States neighboring Ukraine, noting that the volumes were “scaring farmers,” particularly in Poland. “We see no negative impact,” he said, pointing out that the increased subsidies being paid to Polish farmers, “go far beyond what is allowed by WTO rules,” and destabilize markets.

Another issue was that more than 100,000 hectares of Ukrainian farmland had been mined. The government in Kyiv is “working with partners on proper demining,” Kachka said. The destruction of a major dam, “impacted not only irrigation in region and (caused) immediate damage,” but created a “danger of more long-term contamination of soil. It will take time to assess exact long-term impact.”

Jean-Marie Paugam, deputy director-general, World Trade Organization (WTO), focused on the international response to food inflation and high geopolitical tensions.

“In a very limited time, we managed to put together coherent response,” he said, noting the contributions of international organizations and national governments. “(It) also involved close cooperation with the private sector, banks, trade finance, traders, international organizations, for example IGC.” The WTO’s “key role,” is “to monitor and report (for example,) export restrictions.”

“Food inflation remains at record levels,” he noted, also expressing concern that “fertilizer production is highly concentrated.”

The WTO will “continue to work for transparency…, to improve the working of the market (and) improve the resilience of the world market,” he said.

Mohamed Lamini, head of cabinet at Algeria’s Ministry of Agriculture and Rural Development, told delegates that his country is both an importer of wheat and an exporter, having achieved a big rise in production, which enabled it to export in many sectors and cover 65% of its own food needs.

“It is impossible for a single country to ensure food security without international cooperation.” - Yeocheol Yoon, the ambassador of the Republic of Korea to the United Kingdom and Ireland

“Measures without precedent were put in place in the last three years,” he said, reporting a “big investment in the south,” which increased the area of farmland and extended the availability of irrigation, while putting in place measures to save water.

“Algeria is self-sufficient in hard wheat, and it imports soft wheat,” he said.

Ralph E. Goodale, Canadian High Commissioner in the United Kingdom, said that in Canada droughts, floods and wildfires continue to take their toll, and he underlined the need “to increase resilience,” at a time of “record-breaking prices for food, fuel and fertilizers.”

Yeocheol Yoon, the ambassador of the Republic of Korea to the United Kingdom and Ireland, said the world is facing a new food security crisis. As a small mountainous country, which has to import almost all types of food, except rice, South Korea is increasing stockpiles.

“It is impossible for a single country to ensure food security without international cooperation,” the ambassador said.

Daniel Whitley, administrator, Foreign Agricultural Service, US Department of Agriculture, said that US farmers and ranchers have been contributing to food security, outlining the country’s food aid program.

“The current global situation underscores the need for all of us ... to unite behind common principles,” he said. “We must come together to support science-based rulemaking.”

Abdullah Dashti, the UN coordinator for the Black Sea Grain Initiative (BSGI), said the deal meant “you’re better off.”

With 1,900 inspections performed, it is responsible for “8% to 10% of grain exports of world, 31 million tonnes,” he said. “We are the technical solution for the political problem.”

Opening a session organized by the International Grain Trade Coalition, Iliana Axiotiades, secretary general of the European traders’ association COCERAL, said that “the grain trade is resilient by nature.”

“There is an accumulation and an acceleration of challenges,” she added, giving the land route out of Ukraine as an example. “At the moment the Black Sea option ... is not functioning properly. Inspections are three times a day.”

That meant delays for vessels at a cost she put at $20,000 to $50,000 a day.

Pat O’Shannassy, chief executive officer, Grain Trade Australia, said that “market efficiency, improving distribution of food from the place it is produced to the place it’s consumed is very important.”

“Confidence is what drives markets,” he said, pointing out that the markets had gone through “two of the most significant market disruptions hopefully most of us will see in our lives,” referring to the pandemic and the war in Ukraine.

Gary Martin, president of the International Grain Trade Coalition, explained that “private sector investment in our industry is 100-fold greater than public investment,” underlining the “necessity to provide for liquidity and financial security to provide investment.”

“Competition in a transparent environment that’s well informed is absolutely crucial,” he added.

In a session on the prospects for the milling sector, Eren Günhan Ulusoy, director, International Association of Operative Millers (IAOM) Eurasia and chairman of the board of the Turkey-based Ulusoy Milling Company, noted that “Turkey’s biggest advantage is to be close to the supplier countries, despite what happened last year with war.”

   As well as being the world’s leading flour supplier, Turkey also has a large domestic market.

“In two decades, our population has increased from 16 million to 18 million, plus 5 million immigrants,” he said. “For consumption, we need more imported supply.”

Because of the availability of Russian grain, prices are back to pre-war levels, but Ulusoy said the tonnage shipped through the Black Sea was “getting less and less due to problems created by Russian side and the shorter period,” a reference to Russia’s insistence on limiting the extensions to the deal to 60 days.

Fabien Varagnac, an independent milling sector consultant, reported on the growth in Africa’s milling sector.

Starting from the 1960s up to today, he said there has been “a substantial increase in wheat consumption (as food) per inhabitant.”

However, the development stabilized from the 1980s until the 2000s, but after 2007 the booming economy of most of the continent led to a boom in wheat consumption. Millers had installed more capacity, with mills concentrated in the main port areas.

“Another important trend is the incorporation of local crops into flour, for example cassava, corn, sorghum,” he said. “It has a positive market image.”

Vince Peterson, president, US Wheat Associates, explained that the United States had gone through “three consecutive years of drought,” which “brought our crop down to about 45 million tonnes,” a record low.

He put exports at 20 million tonnes, with some help from imports of Canadian wheat.

Francesco Vacondio, president of European Flour Millers, the organization that represents the sector in the EU, said: “Our product is flour. It is not a commodity. It is an ingredient.”

Vacondio noted that consumption is falling.

“In Europe we went from an average of roughly 68 kilograms of bread consumption per capita in 2004 to 64 today,” he said. “Younger consumers eat less bread than older consumers. Bread consumption is declining. White bread consumption is declining faster.”