Relief In Nigeria As Russia In Deal To Supply Grains To Six African Countries

Fear of wheat scarcity and food insecurity in Africa may have reduced following Russian President Vladimir Putin’s near completion of a deal to secure free grains for six countries on the continent after the UN-brokered Black Sea grain deal collapsed in July.

The new development could prevent supply disruption of wheat, price increase of grains, and market volatility in Africa and especially Nigeria which primarily relies on imported wheat from different sources including Europe to meet its domestic demand, said a member of the Flour Millers Association of Nigeria (FMAN), one of the sectoral groups in the Manufacturers Association of Nigeria (MAN).

Although the names of the African countries are not disclosed, prices of grain products like flour, pasta, bread and others that are made from wheat skyrocketed by five per cent in Nigeria and globally, after Russia pulled out of the deal which aimed to ensure safe grain exports via the Black Sea.

Putin, however, is said to be eager to allay African fears about the impact of the deal’s collapse on food security after the press briefing with his Turkish counterpart, Recep Tayyip Erdogan, where Putin said “We are close to completing agreements with six African states.”

He stated that the country would supply the grains and carry out logistics free of charge, adding that deliveries “would begin in the next couple of weeks”.

Ukraine and Russia have both announced plans to ship grain outside of the grain pact, which the UN has claimed is critical to world food security.

Putin stated that his administration was ready to return to the deal “as soon” as restrictions on its exports were lifted.

“We will be ready to consider the possibility of reviving the grain deal,” he said, adding that, “And we will do it as soon as all the agreements on lifting restrictions on Russian agricultural exports are fully implemented,” he added.

Russia has already opposed the agreement, claiming that the West is imposing indirect limits on its grain and fertilizer exports by restricting access to global financial networks and insurance.

Turkey wants both sides to return to the deal and use it as the foundation for larger peace discussions.

The new development is coming after the Kremlin, about a month ago, tore up an agreement brokered last summer by the U.N. and Turkey to ensure safe Ukraine grain exports through the Black Sea. Since then, Kyiv has sought to reroute transport through the Danube and road and rail links into Europe. But transport costs that way are much higher, some European countries have baulked at the consequences for local grain prices, and the Danube ports can’t handle the same volume as seaports.

Russia followed up on the withdrawal from the agreement with a drone attack in August, and pounded grain storage facilities and ports along the Danube River that Ukraine has increasingly relied on as an alternative transport route to Europe after Moscow broke off a key wartime shipping agreement using the Black Sea.

The Russian army’s attack on grain storage facilities and ports in Ukraine according to the FMAN member could have several implications for the Nigerian market, particularly for businesses that rely on wheat as a raw material:

It could lead to supply disruption of wheat to Nigeria if Ukraine’s alternative transport route to Europe is compromised. “This might result in shortages, leading to higher prices and potential difficulties for businesses dependent on wheat”, stated the FMAN member.

“The 5 per cent price increase in the Wheat market indicates an immediate market reaction to the supply disruption. Nigerian businesses using wheat as a raw material could experience higher production costs, which might lead to increased product prices for consumers.

Another is market volatility which the attack highlighted as the vulnerability of global supply chains, potentially leading to increased market volatility. “Businesses might need to manage unexpected price fluctuations and consider alternative sources for wheat”, he said.