Expressing concern over Russia's decision to terminate the Black Sea Grain Initiative (BSGI) from July 17, Bangladesh's business community has called for continuing the deal as its termination will bring catastrophe to the smooth supply of wheat, impacting millions of people worldwide.
In a joint press statement issued by International Chamber of Commerce Bangladesh, the Federation of Bangladesh Chambers of Commerce and Industry, Dhaka Chamber of Commerce and Industry, Metropolitan Chamber of Commerce and Industry, Chittagong Chamber of Commerce and Industry, and Foreign Investors' Chamber of Commerce and Industry on the BSGI deal, the trade bodies said discontinuation of BSGI not only risks a man-made human catastrophe but also fails to address the already skyrocketing global inflation.
The business organisations are strongly urging the withdrawal of sanctions and the resumption of payments, insurance, and shipping for Russia's agricultural exports to secure an extension of the BSGI agreement. They argue that the agreement is a vital lifeline for global food security.
Bangladesh directly imports wheat and pulses from Russia and Ukraine. If the import through the Black Sea is halted due to the lack of an agreement, it could lead to disruptions in the local supply chain and cause market volatility in the country.
Additionally, various countries rely on imports of sunflower oil, iron, and vegetable seeds from Ukraine. If the major source of these imports is disrupted, it will have ripple effects throughout the world market, driving up prices for commodities like soybean oil and lentils. For instance, if the import of sunflower oil is halted, the increased demand in other countries, including India, will further drive up the price of soybean oil, said the statement.
The joint statement highlights that the BSGI facilitated the export of 32 million tonnes of foodstuffs from three Ukrainian ports to 45 countries across three continents, with a significant proportion of wheat exported through the Black Sea to least developed economies. It emphasises that the continuity of Ukrainian and Russian food and fertiliser exports is crucial for global food security.
According to the National Board of Revenue (NBR) data, Bangladesh imported 2.2 million tonnes of goods from Russia and Ukraine in the fiscal year 2021-22. More than 50 per cent of the country's wheat imports come from Ukraine. Russia is the second-largest source of pea exports after Canada, and sunflower oil is predominantly imported from Russia.
If the BSGI agreement is not renewed, traders will have to seek alternative markets and products to meet the demand for these goods. Importers and experts warn that the discontinuation of the Black Sea grain initiative by Russia could further inflate essential commodity prices and exacerbate the declining trend of wheat imports into Bangladesh, resulting in a low supply of food grain.
Redwanur Rahman, executive director of Bashundhara Foods and Beverages, one of the largest importers of consumer goods, said after Russia and Ukraine locked in a war, import of wheat and other products from Russia and Ukraine remained suspended.
“It has already left severe impact on the commodity markets in the world as well as Bangladesh. Prices of many commodities including wheat, edible oil, and lentil shot up. And Bangladesh is meeting its wheat demand through imports from India.”
After the Black sea grain agreement brokered by Turkey, imports started again and supply activities were also normal. “If imports stop again for discontinuation of the deal, the market of seven to eight commodities, especially wheat and edible oil, will be more volatile as most of wheat to make flour and sunflower oil are imported from Ukraine,” he said.
With a monthly demand for 30-60 thousand tonnes of wheat, Bangladesh currently maintains a buffer stock that can last for 3-4 months.
Shafiul Ather Taslim, director of TK Group, warned that the non-renewal of the Black Sea deal will inevitably result in supply shortages for directly imported products in the country's market.
He added that disruptions in the international market could also lead to problems in the availability of sunflower oil and other products.
