KYIV, UKRAINE and KANSAS CITY, MO. — Russia announced on July 17 it was suspending its participation in the Black Sea Grain Initiative, which for nearly a year has allowed safe passage of Ukraine grain exports via the Black Sea in the midst of a war between the two countries.

The deal, which was brokered by the United Nations and Turkey, was set to expire at 5 p.m. on July 17. The last shipments from Ukraine departed from the Port of Odesa on July 16.

Russia invaded Ukraine on Feb. 24, 2022, and during the first five months of the conflict blockaded Ukrainian ports which prevented Ukraine, a leading exporter of wheat, corn and sunflower oil, from making shipments via the Black Sea. Grain prices during that period soared to near record highs and food insecurity, especially in developing countries, reached critical levels. An agreement was reached on July 27, 2022, to resume Ukrainian grain exports and the deal was extended several times until Russia announced on Monday that it was suspending its participation.

Kremlin spokesman Dmitry Peskov told reporters on Monday that the Black Sea agreements are no longer valid.

“Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated,” he said.

Russia in recent weeks had threatened to not extend the deal unless a series of demands, including the removal of obstacles to Russian grain and fertilizer exports, were met. The United Nations has proposed reconnecting a Russian agricultural bank to the SWIFT international payment system in exchange for Russia extending the Black Sea Grain Initiative, according to a Reuters report. Sources told Reuters that UN Secretary-General Antonia Guterres proposed that Rosselkhozbank be reconnected to the network, which was cut off by the European Union in June 2022 following Russia’s February invasion of Ukraine.

More than 33 milllion tonnes of grain and other foodstuffs has been shipped from Ukrainian ports since the blockade was lifted a year ago, according to the United Nations.

If the suspension of the agreement is prolonged, it remains to be seen to what extent Ukraine can maximize its ability to export grain through other means. Since the invasion in February 2022, Ukraine has increased its ability to ship grain from three inland ports on the Danube River. In the past year, Ukraine has increased grain shipments on this route from a few hundred thousand tonnes to 2 million annually, according to the Ukrainian Grain Association, which noted that there is potential to double that figure.

The country has also made efforts to boost its grain shipments by truck and rail through Europe.

However, Vladyslava Magalestska, former deputy minister of food and agriculture for Ukraine, told World Grain, Pet Food Processing’s sister publication, that even with the improvements made on the Danube River, it can’t replace the volume of grain that is shipped via the Black Sea.

“It’s a quite small amount compared to the southern ports,” said Magalestska, currently senior adviser, Food Security and Global Agricultural Value Chain, Enterra Solutions. “It’s not enough.”

Soon after announcing its decision to suspend involvement in the Black Sea Grain Initiative, Russia began targeting Ukrainian ports. On July 18 and 19, the country struck ports in Odesa and Mykolaiv, as well as damaged infrastructure of the port of Chornomorsk, causing damage that will take Ukraine one year to repair.

Following all these attacks, Russia’s military said it would consider all ships heading for Ukrainian waters to be potentially carrying weapons and their flag countries as parties to the war on the Ukrainian side.

Implications on pet food

Not only does Russia’s decision impact the global food market, but it also spells dangerous for the pet food and treat industry. Though grain analysts remain optimistic on the impacts of Russia’s move, citing speculation that Turkey and EU countries may provide military protection to help Ukraine move grain safely, the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) projects grain outputs to dip.

The FAS projects wheat output in Ukraine to decline to 17.5 million tonnes in the 2023-24 marketing year, down from the record 33 million in 2021-22. It sees exports declining to 10.5 million tonnes from 16.8 million in 2022-23 and 18.9 million the year prior to that.

The USDA also forecasts corn production to dip slightly to 25 million tonnes from 27 million, while it expects exports to be slashed to 19.5 million this year from 28 million tonnes in 2022-23. This decrease in corn production, in particular, is worrisome for the pet food industry.

“We are concerned that Russia’s suspension of the Black Sea Grain Initiative will once again have ripple effects across the global corn supply chain, affecting not only food prices, but those of pet food as well — a major user of US corn,” said Constance Cullman, president and chief executive officer of the American Feed Industry Association (AFIA), to Pet Food Processing. “During the marketplace instability of the last three years, our industry has managed disruptions in global commodity supplies, but continued volatility in the marketplace only adds to supply uncertainty and the price of production.”

For context, in 2020 more than 1.2 million tonnes of US corn was used in the production of pet food, according to the “Pet Food Production and Ingredient Analysis” report from IFEEDER, Pet Food Institute (PFI) and the North American Renderers Association (NARA), and shared by the AFIA.

Though the pet food and treat industry mainly uses US corn and grains, a disruption to the global ingredient supply could mean rising prices for manufacturers.

“Pet food production can be impacted by a range of factors that can influence the supply chain ingredient marketplace,” said Dana Brooks, president and chief executive officer of PFI, to Pet Food Processing. “We are at this point, unfortunately, familiar with supply chain issues, as there have been disruptions since the beginning of the pandemic and the conflict in Ukraine. Even though the United States produces more than enough grain, it is a global product, so any disruption will affect ingredient supplies and cost. Russia’s decision to back out of the Black Sea Grain Initiative certainly falls into that category.

“The important thing to know is that pet food makers are committed to sourcing the best quality and safest ingredients possible and continuing to provide pet owners with the finest in complete and balanced nutrition,” she added.

Read more about supply chain topics affecting the industry on our Operations page.