GLOBAL – The International Monetary Fund (IMF) warns that the end of the Black Sea deal can lead to an increase in grain prices by 10-15% between now and the end of the year.
Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund (IMF) made this observation while giving a press conference on July 25, linking the forecast to recent developments in the cereals market which threaten to shake up the trade of certain cereals which are vital for the world’s diet.
Cereals are the most important crops in the world and play a crucial role in global food security. In this context, prohibitions, restrictions, or disruptions in trade are sources of concern.
According to the expert, now that the grain deal has been suspended, the same mechanics works in reverse and it is likely to put upward pressure on food prices.
“ In the current context, these types of restrictions can also lead to retaliatory measures. We encourage the removal of these kinds of export restrictions, as they can be detrimental on a global scale ,” said Gourinchas.
Gourinchas expressed concern about Russia’s exit from the Black Sea grain export deal with Ukraine and India’s decision to ban sales of non-basmati rice globally on July 20, adding that this latest move in the Asian country is already on top of the broken rice export restriction that has been in place since September 2022.
“It’s very clear that the Black Sea Grain Initiative was very instrumental in making sure that there would be ample grain supply to the world in the last year.”
He pointed out that there are estimates of about 33 million tons of grain were shipped from Ukraine to the rest of the world, which helped keep price pressures on food and grain prices lower.
According to the official, these various measures are likely to maintain the inflation of world food prices which for several months have been experiencing upheavals due to extreme weather conditions.
These statements by the official reinforce the remarks made nearly a week ago by Martin Griffiths, UN Under-Secretary-General for Humanitarian Affairs in the Security Council.
The official who was worried about the soaring grain prices observed after Russia’s withdrawal from the agreement on grain exports to the Black Sea explained that developing countries could be the most affected.
This is following that, on July 17, Russia refused to continue participating in the initiative, since the other parties did not fulfill their obligations in that part of the agreement that concerned the supply of Russian products to the world market.
However, Putin has assured that Moscow could resume the grain deal if all the promises made to it were fully fulfilled.