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“We only have a few months to get the grain out of Ukraine”

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The cross : Since the beginning of the Ukrainian crisis, restrictions on the trade in foodstuffs have multiplied. The specter of a global food crisis, like the one that hit the planet from 2008, is regularly raised. Should we be alarmed?

Jean-Marie Paugam: From a strictly economic point of view the situation is bad, with extremely high food prices. On the other hand, if we look at the state reactions, the situation is tense without being dramatic. The WTO has counted 41 measures restricting trade – excluding sanctions: it is worrying, but there is no general desire to interrupt world trade.

Many of these measures are taken around the Black Sea and by developing countries. We draw a parallel with the situation at the start of Covid, when countries applied export restrictions on medical products for a month or two before changing their minds on realizing the risk of reprisals. Commercial reactions are under control: for two or three weeks, there has been no gearing.

Nevertheless, the question of grain stocks in Ukraine, estimated at 25 million tonnes, is essential…

J.-MP: For the moment, the world is not lacking in food, strictly speaking: the question is that of access and the price of access to these foodstuffs. The real risk is in front of us: we must urgently take out the grain stocks that are in Ukraine. Some countries have only a few months of reserves. We must not forget Russia: if its agricultural products are not affected by the sanctions, in fact the insurance premiums are such that the entire trade infrastructure is blocked, with banks that do not want to finance these operations because, to ensure that they will not have problems, they go beyond the obligations provided for by the sanctions.

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Treating this situation urgently will allow the abscess to deflate. The second emergency is fertilizers, part of which is blocked in Russia. Without them, we cannot ensure agricultural production and the problem will rest next year. A country like Brazil, which has an almost unlimited production capacity, needs it today.

If the European Union is active on the subject of rail freight, it is difficult to imagine, in view of the volumes, any other solution than the removal of Ukrainian stocks by sea…

J.-MP: Indeed, it is necessary to set up maritime corridors. It’s up to the Russians, Ukrainians, Turks, etc., to agree on how to get these grains out safely. This could allow private operators to lower their prices and banks to come back to the table to finance these operations.

What is your role in this crisis?

J.-MP: The WTO must act for transparency: it is up to us to count, to note the trade restriction measures. If the States do not have a good knowledge of the situation, they are tempted to take preventive measures, which will feed speculation on the market. The second thing is to encourage them not to turn off the export tap.

Certainly, you have the right, in times of crisis in order to protect your population, to restrict your exports. But, it must be kept in mind that supply and demand at the global level are not synchronized: there are surpluses in one area at one time “T”, needs in another… These measures must remain proportionate and temporary so that the system can manage its deficits and surpluses. And if the WTO authorizes these temporary restrictions, it also provides that the situation of net importing States must be taken into account.

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The crisis also makes it possible to bring productivist discourse up to date, as is the case in France, at the risk of compromising climate commitments. How do you view these policies?

J.-MP: From the point of view of the food crisis, the urgency is to have the most food on the table. In the short term, if countries have excess stocks, let them release them. If in addition, they can increase their production, it is good to take in this phase of crisis. This falls under the sovereign arbitration of the countries.

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Turkey tries to set up maritime corridors

The Turkish Foreign Minister will welcome his Russian counterpart Sergei Lavrov on Wednesday, June 8. At the request of the United Nations, Turkey will try to convince Russia to accept maritime corridors to export Ukrainian wheat. Before the war, Ukraine exported 12% of the world’s wheat, 15% of corn and 50% of sunflower oil. The paralysis of Ukrainian exports has led to a surge in prices. The UN Food and Agriculture Program (FAO) estimates that an additional eight to thirteen million people could suffer from undernutrition worldwide if the crisis continues.

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