How Russia loots grain from Ukraine

This is an audio transcript of the Behind the Money podcast episode: ‘How Russia loots grain from Ukraine’

Michela Tindera
Recently, the FT’s Polina Ivanova discovered this video on the messaging platform Telegram. In it, you could see this man who’s standing and talking in front of a train being filled up with grain.

Nikita Busel
(Speaking in a foreign language)

Polina Ivanova
So, Nikita Busel in this video, he’s there wearing red chinos and matching red moccasins. And he’s a Russian businessman standing in the Zaporizhzhia region of Ukraine, which in Russia seized in March.

Michela Tindera
Nikita Busel’s company is a government-run firm called the State Grain Operator. And this video is basically a propaganda pitch directed toward local farmers who are living in this occupied part of southeastern Ukraine.

Polina Ivanova
It’s actually an hour-long video all about what Russia’s doing for the economy of this region after it was seized by Russian troops. And it talks about other industries as well. But there’s a big focus on grain because Zaporizhzhia region is obviously, it’s, it’s a big grain producer.

Michela Tindera
When Russia attacked this area, many Ukrainian agricultural business owners were forced to flee and leave their crops behind. Once Russia set up a quasi-government there, it also created some businesses like Busel’s. Busel previously founded a couple of boutique hotels and a coffee shop chain in central Russia. And in this video, Busel tells us what exactly this new venture does.

Nikita Busel
(Speaking in a foreign language)

Polina Ivanova
He explains how his company operates. What he says is that this grain operator goes and finds abandoned assets, you know, farms and plants and grain silos that have been left behind by Ukrainian businessmen who fled the war and fled the occupation. Their company goes in and installs its security on these assets and gets them working again. And he goes this is great for the employees. Obviously, this is the dictionary definition of looting.

Michela Tindera
And this — Busel’s company — is where our story starts today. Polina and two more of our colleagues used a collection of documents, satellite imaging and sources in ports to track the movement of one 3,000-tonne shipment of grain that left the Zaporizhzhia region of Ukraine in August and travelled all the way to Turkey.

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I’m Michela Tindera from the Financial Times. On today’s episode of Behind the Money: How Russia is plundering Ukraine’s grain industry.

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Welcome, Polina. Thank you so much for being here.

Polina Ivanova
Thank you.

Michela Tindera
So, Polina. Russia invaded Ukraine almost nine months ago now. So what impact did that have on the global food supply?

Polina Ivanova
I think what’s crucial to say is that this trade is, is really lucrative. So there are already issues with food supply globally. But, you know, Russia’s invasion of one of the world’s biggest grain producers, leading to like a blockade of its ports and real difficulty in exporting wheat from Ukraine, have really sent wheat prices and global food prices up, exacerbating earlier problems and, you know, triggering basically a food crisis.

News clip
Russia’s cynical ploy to hold hostage more than 20mn tonnes of Ukrainian grain is leading to a food crisis here in Tunisia.

News clip
The war in Ukraine is a continent away, but its impacts are ricocheting in this market in north-west Syria. Prices for food are . . .  

Michela Tindera
Polina, you tracked this grain shipment using all kinds of tools, you know, satellite imagery and various paperwork. And so to begin this journey that this grain takes, there’s this one document that kicks off this whole chain of events. What is that? Tell me more about it.

Polina Ivanova
Right. So the first document that we’ve seen is the founding document of this State Grain Operator. It shows that the company was set up in May and that it works as a state agency and that it says very clearly in its kind of founding document that any proceeds that it makes go back into the administration of this region. Now, this region has subsequently been annexed by Russia. Russia claims to have now annexed this and that this is now Russian territory, which makes this company and the administration a part of the Russian state. So we can draw that line between the occupation officials, their actions and the Russian state apparatus very clearly that claims to control this area.

Michela Tindera
Mmm-hmm. And in this video we heard earlier of Busel talking. You said that he explains how the company goes in and finds these abandoned assets. But there’s more to this too, then?

Polina Ivanova
How it bills itself is that it buys grain from local farmers. It sets the price. It tells them to come to these drop-off points and sell the grain that is, that is left over from the last year’s harvest and that the company then exports it and any profits it makes go back into the company and then go back and get reinvested into the area.

Michela Tindera
And what do the Ukrainians think of this? I mean, the video paints it as this sort of nice new business deal.

Polina Ivanova
I also spoke to the owners, the Ukrainian owners of agricultural businesses that operated in the area that then fled when the invasion began. And they painted a very different picture of, of how this system operates, saying that this is basically expropriation. These were our businesses, this was our grain that was in storage. These are our fields that are now being harvested, except it is now the State Grain Operator that is profiting from our grain.

Michela Tindera
Right. And so the State Grain Operator gets the grain from the Zaporizhzhia region. And in this case, you tracked a specific shipment of nearly 3,000 tonnes of milling wheat coming out of that area of Ukraine, leaving from the occupied port of Berdyansk. So how did you figure out that the State Grain Operator was involved in this one 3,000-tonne shipment?

Polina Ivanova
We see this pretty unique set of documents that appear to show that the State Grain Operator is not only transporting grain by rail and by vehicle to central Russia and to other markets via Russia, but that it is also loading this batch of 3,000 tonnes of wheat on to a vessel. Now, the documents show that the State Grain Operator is the seller. They list the buyer of this grain. They list the vessel. The business that is listed as the buyer has completely denied that these documents are real or that this deal happened and that this vessel went anywhere near occupied areas.

Michela Tindera
OK. And so, as you said, the Russian company listed in the documents as the buyer of this grain denies that this shipment ever even happened. So how are you sure that it did?

Polina Ivanova
So every vessel that goes into our seas and oceans publicises its location using a transponder system. This kind of signalling system called the AIS — boats use this to make sure that their location is constantly known. Now, the AIS system does not show any vessel pulling up at the Berdyansk port at the time that the documents tell us that there’s a boat there. So we had this mystery to kind of understand, you know, signalling system does not show a boat there. What could it be?

Michela Tindera
OK. So the signalling system says that there’s no boat. But the documents you had said that a boat should be there. What else did those documents tell you?

Polina Ivanova
The documents give us the name of a vessel. So we started using this signalling system to track the historic movements of a ship called the Pawell. This boat sits about a day’s travel away from the occupied port in question and it switches off its signalling system suddenly. This is called “going dark”, and it’s not very common for boats to do this. But we have seen vessels do this when they want to, you know, disappear, when they want to do something that maybe some some, some dodgy deals. So the Pawell, this particular vessel, goes dark and disappears for five days. And exactly the period when the documents state that it would be at this, at this port.

Michela Tindera
OK. So at this point, you probably felt like you were on to something here then, right? And so you also saw that boat through satellite images.

Polina Ivanova
We do see a vessel of the same size and the right colouring arriving to the occupied port of Berdyansk and loading up with grain on exactly the days that the documents state would be happening. And we see this, you know, the first day it’s this, it’s sort of half empty, but you can see that it’s a green-coloured substance being loaded on to the boat. And on the second day, it’s much more full and then it disappears again. Which, which all goes to show that a vessel was loaded at the occupied port of Berdyansk with grain in the middle of August. And these documents give us very strong reason to suspect that that was grain that was sold by this State Grain Operator.

Michela Tindera
So the boat heads to Turkey from Ukraine. What happened there?

Polina Ivanova
The boat comes to this port and it stands there for a really long time, which is where we grab a picture of it from the coast. From what we know, it tries to sell the grain on board. But Turkish buyers are hesitant for various reasons. There may be suspicions around what the provenance of this grain is, you know. Turkish buyers are not keen to be buying grain from occupied areas, and Turkish authorities are, you know, increasingly cracking down or trying to prevent this from happening. And customs officials are getting much more rigorous. And this is something that we’ve heard from traders across the board.

Michela Tindera
Mmm. So then what happens? Are they able to sell it?

Polina Ivanova
So after a long time of it sort of loitering off the coast of this port of Samsun in northern Turkey, you know, switching its signalling system on and then off and then on again and then off again. Suddenly we find that it switches its signalling system back on after a while and it is much higher in the water, which means, you know, basically the thing weighing it down, the grain had been removed or at least part of it creating this shift in where it sits in the water and that’s how we realised that it must have shifted at least some of its cargo and we started trying to work out where it might have done that. And with Chris Cook, who’s a fellow writer on the story, incredibly managed to spot it in the port of Hopa in another part of northern Turkey. And then, you know, this was corroborated by the fact that we also found an image taken by the port where you can see its name and everything. So we knew that, that the boat had docked there. And then the Russian businessman, whose grain it was, who was the shipper, told us that he had managed to, he had managed to sell the cargo and that there was no problems with it, nor with his paperwork. And as he points out to us, Turkish customs officials checked his paperwork, the Russian documents, which make no mention of Ukraine and found that it was clear and, and allowed the sale.

Michela Tindera
Wow. Now, what did all these various parties say about what you had found in your reporting?

Polina Ivanova
I tried to reach the State Grain Operator on multiple phone lines and got absolutely nowhere with that. I also tried to contact Mr Busel on social media, by emailing his various companies. I also called the hotels that he had set up where I was told that he had either never been seen before or had not been seen for a long time and no one knew how to even get a message to him. So it was all a little bit unclear about that. But, but their position is, is really evident in this promotional video, which we quote to give a sense of how they see things, which is that, you know, this is Russian territory. These businesses, these agricultural businesses have been abandoned. And so what are we to do? But just to take them over and start exporting grain and getting farmers working again, that’s how they see it. But of course, the initial fact is that Russian troops came and seized this area.

Michela Tindera
So, Polina, what does this example of smuggling show about the food crisis that’s happening now? How are these two things connected?

Polina Ivanova
I guess it’s a difficult you know, it’s a difficult dilemma for policymakers and people observing the situation. Because on the one hand, you know, everybody wants grain going into the market and ensuring that, that you know, the food shortages that we’re seeing around the world and this escalating food crisis is alleviated by the export of grain as much as possible. The problem is that global policymakers, again, looking at this situation, don’t want Russia to then be profiting from its occupation of Ukrainian areas. And it’s the seizure of Ukrainian businesses, which is why they’re turning these boats around and trying to limit this trade and why customs officials are not accepting boats with paperwork that indicates that the grain might have come from occupied areas or that the vessels might have stopped at occupied ports. So it’s a, it’s a kind of a dilemma in some way.

Michela Tindera
What long-term effects will Russia’s invasion of Ukraine have on the world’s supply of grain, looking more, even more broadly?

Polina Ivanova
Looking ahead, I mean, it’s really hard to predict what is going to happen with the war. A lot of people talk about how it’s gonna be a long and protracted war over this winter, for example, that quite a few battlefield watchers say that it’s really gonna get kind of dug in and stuck in for a while. This will inevitably mean that the longer this continues, the longer Ukraine is unable to continue properly fulfil its role as a major grain exporter. So obviously, supplies will always be hampered both by the ability of its farmers to actually sow and comfortably harvest grain, but also for exporters to actually be able to get it out. And the longer that continues, the less grain there is on the market, the more issues there are for traders and, you know, the less bread people have on their tables around the world.

Michela Tindera
Well, Polina, thanks for being on the show.

Polina Ivanova
Thanks so much for being interested in the story.

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Michela Tindera
Behind the Money is hosted by me, Michela Tindera. Saffeya Ahmed is our producer. Topher Forhecz is our executive producer. Sound design and mixing by Sam Giovinco. Special thanks to Ben Hall. Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.

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