In today’s Finshots we break down the Black Sea Grain Initiative and see what it has done to cushion the global food crisis.
There’s one thing almost every country has witnessed in the last 390 days as the war continues to rage on in Ukraine ― food crisis and the ensuing price rise. For instance, food prices in January 2023 were ~30% above the average food prices during 2020.
And it’s becoming a bit of a problem.
You see, Russia and Ukraine are two of the world’s largest grain exporters claiming about 30% of the pie. Russia also provides 13% of the world’s fertilisers, while Ukraine supplies half of all sunflower oil. And an attack on Ukraine meant that it couldn’t safely export essential items like wheat, maize and barley to even its closest neighbours in Africa and the Middle East.
Before the war kicked off, nearly three fourths of its exports travelled through the Black Sea. Come the war, Ukraine’s port infrastructure was damaged, some were under Russia’s control and anything that was left couldn’t travel, because Russia threw 400–600 naval mines into Ukraine’s sea zones. This meant that any ship carrying exports could blow up if they ever ferried over these waters.
And these obstacles quickly paved way for shortages and rise in global food prices.
But here’s the thing. These inflated prices are still 18% lower today than all-time highs of March 2022. The reason?
The Black Sea Grain Initiative or the Black Sea Corridor. What’s that, you ask?
To put it simply, it’s an agreement that the United Nations brokered between Russia, Ukraine and Turkey back in July 2022. The deal lets Ukraine gather all its exports at three major ports Chornomorsk, Odesa and Yuzhny. And offers a safe route or a corridor devoid of under water mines so that its ships can reach and pass through the Bosporus Strait in Turkey. From here, these grains and fertilisers can easily enter the Mediterranean Sea and reach countries in Africa and around the world.
And to monitor all of this, the UN formed a Joint Coordination Centre or a JCC that had representatives from its side and all three countries involved. So essentially, any ships that moved in and out of Ukraine had to be registered with the JCC and overseen by them.
And guess what? This initiative helped Ukraine increase its average monthly exports from about 1.7 million tonnes in August 2022 to about 4 million tonnes in February. But that’s not all. The initiative has also helped other countries deal with hikes in food prices.
Nearly 45% of the 23 million tonnes of food exports went to developed countries like Spain, Netherlands, Italy, the Republic of Korea, Germany, France, Greece, Ireland and Israel. The rest to Egypt, India, Iran, Bangladesh and countries in the Middle East and Africa.
And you could see food prices easing briefly. For instance, the international reference price for wheat dropped for about 3 consecutive months, picking up only slightly in February. Corn prices too followed a similar trajectory. And you would think that this is a win-win for everyone involved.
Unfortunately, there are some issues. The first issue is the nature of the deal. It’s a tentative deal that offers little flexibility. Russia has threatened to back out of the deal multiple times and has even blockaded the ports on occasions citing Ukrainian aggression. The second issue is that the agreement was supposed to last until November 2022. Since then, however, representatives from the UN have tried to extend the program every few months on humanitarian grounds. But negotiating extensions have also allowed Russia better bargaining power. Once again, they’ve sought concessions of their own to keep the corridor. How long will this deal persist?
We don’t know. Finally, there’s the fact that the corridor has helped developed nations more than developing countries i.e. countries that really need the help.
For instance, low-income countries couldn’t fully extract the benefits of lower prices due to their weak currencies. And as a consequence, many countries in Africa paid more for basic food items at a time when they are already reeling from a food crisis.
So yeah, while the Black Sea Grain Initiative has helped suppress a sharp rise in global food prices, the agreement that enabled all this still hangs very much in the balance.
Ditto Insights: Why Millennials should buy a term plan
According to a survey, only 17% of Indian millennials (25–35 yrs) have bought term insurance. The actual numbers are likely even lower.
And the more worrying fact is that 55% hadn’t even heard of term insurance!
So why is this happening?
One common misconception is the dependent conundrum. Most millennials we spoke to want to buy a term policy because they want to cover their spouse and kids. And this makes perfect sense. After all, in your absence you want your term policy to pay out a large sum of money to cover your family’s needs for the future. But these very same people don’t think of their parents as dependents even though they support them extensively. I remember the moment it hit me. I routinely send money back home, but I had never considered my parents as my dependents. And when a colleague spoke about his experience, I immediately put two and two together. They were dependent on my income and my absence would most certainly affect them financially. So a term plan was a no-brainer for me.
There’s another reason why millennials should probably consider looking at a term plan — Debt. Most people we spoke to have home loans, education loans and other personal loans with a considerable interest burden. In their absence, this burden would shift to their dependents. It’s not something most people think of, but it happens all the time.
Finally, you actually get a pretty good bargain on term insurance prices when you’re younger. The idea is to pay a nominal sum every year (something that won’t burn your pocket) to protect your dependents in the event of your untimely demise. And this fee is lowest when you’re young.
So if you’re a millennial and you’re reading this, maybe you should reconsider buying a term plan. And don’t forget to talk to us at Ditto while you’re at it. We only have a limited number of slots everyday, so make sure you book your appointment at the earliest:
1. Just head to our website by clicking on the link here
2. Click on “Book a FREE call”
3. Select Term Insurance
4. Choose the date & time as per your convenience and RELAX!