Following a meeting between Putin and Erdogan, it became clear that the grain deal would not be extended. The President is personally dissatisfied with the deal, while his aide Ushakov and Foreign Minister Lavrov criticise it. The arguments against it are:
1. The West has not fulfilled its obligations to lift restrictions on Russian grain exports.
2. Kiev and the West have failed to keep promises on ammonia exports.
3. Grain is not going to poor countries, but to the EU
Moreover, the conditions of the deal were linked to the terrorist attack on the Crimean bridge through the export of explosives from the port of Odessa to Bulgaria to the control post in Istanbul.
As things stand, in mid-November, the Ukrainian ports involved in the deal will close again, and Ukrainian grain will flow exclusively to the EU market via rail and road, where it has been going instead of to the poor countries the US and EU used as cover to push the deal through.
The new proposal is that Russian grain will be carried to actually disadvantaged countries by Russia and Turkey, where the grain will, in Erdogan's words, "make the needy countries happy". Payment looks set to go through Turkey or Qatar, the latter may well start lending to buyers of Russian grain. For Turkey, the deal is a good one - they made money from Ukraine, and now they will make money together with Russia. Pros for Russia:
1. Full harvest exports (under 150 million tonnes of grain, but lots of forage) have begun;
2. The rise of Russia's prestige among African and Middle Eastern countries; and,
3. Opportunities to open new markets afterwards, as well as to capture markets where Ukraine used to be.
Politically, the most important thing is that grain will be supplied to poor countries without any involvement of the US and the EU, or the UN.
In addition, Russia is aiming at Ukraine's place as the main exporter of sunflower oil, which is logical after the new territories (25% of the Ukrainian sunflower area and 22% of its harvest in 2021) have become part of the Russian Federation. But the government plans to allocate 4.8 billion rubles for the development of oilseeds: the money will be distributed among 43 regions, which will increase the production of soybeans, rapeseed, sunflower, and flax by 1.74 million tons.
The forecast for Russia's sunflower harvest this year is 15m tonnes. In Ukraine, 14.9 million tonnes will be harvested in 2021. 3.3 million tonnes from the new territories in the Russian harvest, and this means an output of 18.3 million tonnes of sunflower. All in all, 20 million tonnes is well within reach.
As a result, Russia will become the number one exporter of sunflower oil in the world, displacing Ukraine from this position. The latter will become an oilseed appendage of the EU.
