Nota informativa FAO sui rischi per i mercati agricoli globali causati dal conflitto tra Ucraina e Federazione Russa
Executive Summary
- Market structure, trade profiles and recent price trends
1.1 Market shares
• The Russian Federation and Ukraine are among the most important producers of agricultural commodities in the world. Both countries are net exporters of agricultural products, and they both play leading supply roles in global markets of foodstuffs and fertilisers, where exportable supplies are often concentrated in a handful of countries. This concentration could expose these markets to increased vulnerability to shocks and volatility.
• In 2021, either the Russia Federation or Ukraine (or both) ranked amongst the top three global exporters of wheat, maize, rapeseed, sunflower seeds and sunflower oil, while the Russian Federation also stood as the world’s top exporter of nitrogen fertilizers and the second leading supplier of both potassic and phosphorous fertilizers.
1.2 Trade profiles
• Many countries that are highly dependent on imported foodstuffs and fertilizers, including several that fall into the Least Developed Country (LDC) and Low-Income Food-Deficit Country (LIFDC) groups, rely on
Ukrainian and Russian food supplies to meet their consumption needs. Many of these countries, already prior to the conflict, had been grappling with the negative effects of high international food and fertilizer prices.
2 Risk analysis: Assessing the risks emanating from the conflict
2.1 Trade risk
• In Ukraine, the recent escalation of conflict has already led to port closures, the suspension of oilseeds crushing operations and the introduction of export licensing requirements for some crops, all of which could take a toll on the country’s exports of grains and vegetable oils in the months ahead. It also uncertain whether Ukraine will be able to harvest its crops during protracted conflict. Much uncertainty also surrounds Russian export prospects going forward, given sales difficulties that may arise as a result of economic sanctions imposed on the country.
2.2 Price risk
• FAO’s simulations gauging the potential impacts of a sudden and steep reduction in grain and sunflower seed exports by the two countries indicate that these shortfalls could only be partially compensated by alternative origins during the 2022/23 marketing season. The capacity of many of these origins to boost output and shipments may be limited by high production input costs. Worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22 percent above their already elevated levels.
• If the conflict keeps crude oil prices at high levels and prolongs the two countries’ reduced global export participation beyond the 2022/23 season, a considerable supply gap would remain in global grain and
sunflower seed markets, even as alternative producing countries expand their output in response to the higher prices. This would keep international prices elevated well above baseline levels.
2.3 Logistical risks
• In Ukraine, there are also concerns that the conflict may result in damages to inland transport infrastructure and seaports, as well as storage and processing infrastructure. This is all the more so given the limited capacity of alternatives, such as rail transport for seaports or smaller processing facilities for modern oilseeds crushing
facilities, to compensate for their lack of operation.
• More generally, apprehensions also exist regarding increasing insurance premia for vessels destined to berth in the Black Sea region, as these could exacerbate the already elevated costs of maritime transportation, compounding further on the final costs of internationally sourced food paid by importers.
2.4 Production risks
• Although early production prospects for 2022/23 winter crops are favourable in both Ukraine and the Russian Federation, in Ukraine, the conflict may prevent farmers from attending to their fields, harvesting and marketing of their crops, while disruptions to essential public services could also negatively affect agricultural activities.
• FAO’s preliminary assessment suggeststhat, as a result of the conflict, between 20 and 30 percent of the areas under winter cereals, maize and sunflower seed in Ukraine will either not be planted or remain unharvested during the 2022/23 season, with the yields of these crops also likely to be adversely affected.
• In the case of the Russian Federation, although no major disruption to crops already in the ground appears imminent, uncertainties exist over the impact that the international sanctions imposed on the country will
have on food exports. Over the medium term, the loss of export markets that they may entail could depress farmer incomes, thereby negatively affecting future production decisions.
2.5 Humanitarian risks
• The conflict is set to increase humanitarian needs in Ukraine, while deepening those of millions of people that prior to its escalation were already displaced or requiring assistance due to the more than eight-year conflict in the eastern part of the country. By directly constraining agricultural production, limiting economic activity, and raising prices, the conflict will further undercut the purchasing power of local populations, with consequent increases in food insecurity and malnutrition.
• Humanitarian needs in neighbouring countries, where displaced populations are seeking refuge, are also set to increase.
• Globally, if the conflict results in a sudden and prolonged reduction in food exports by Ukraine and the Russian Federation, it could exert additional upward pressure on international food commodity prices to the detriment of economically vulnerable countries, in particular. FAO’s simulations suggest that under such a scenario, the global number of undernourished people could increase by 8 to 13 million people in 2022/23, with the most pronounced increases taking place in Asia-Pacific, followed by sub-Saharan Africa, and the Near East and North Africa.
2.6 Energy risks
• The Russian Federation is also a key player in the global energy market. As a highly energy-intensive industry, especially in developed regions, agriculture will inevitably be affected by the sharp increase in energy prices that has accompanied the conflict.
• Agriculture absorbs high amounts of energy directly, through fuel, gas and electricity use, and indirectly, by using agri-chemicals such as fertilisers, pesticides and lubricants.
• With prices of fertilizers and other energy-intensive products rising as a consequence of the conflict, overall input prices are expected to experience a considerable boost. The higher prices of these inputs will first translate into higher production costs and eventually into higher food prices. They could also lead to lower input use levels, depressing yields and outputs in the 2022/23 crop season, and giving further upside risk to the state of global food security in the coming years.
• Higher energy prices also make agricultural feedstocks (especially maize, sugar and oilseeds/vegetable oils) competitive for the production of bio-energy and, given the large size of the energy market relative to the food market, this could pull food prices up to its energy parity equivalent.
2.7 Exchange rate, debt, and growth risks
• The Ukrainian Hryvnia reached a record low against the US dollar in early March 2022, with likely repercussions for Ukrainian agriculture, boosting its export competitiveness and weighing on its ability to
import. Although their extent remains unclear at this stage, conflict-induced damages to the country’s productive capacities and infrastructure are expected to entail very high recovery and reconstruction costs.
• The economic sanctions imposed on the Russian Federation have also led to a significant depreciation of the Russian Rouble. Although this should make Russian exports of agricultural commodities more affordable, a lasting Rouble depreciation would negatively affect investment and productivity growth prospects in the
country.
• Weakening economic activity and a depreciated Rouble are also expected to have serious effects on countries in Central Asia through the reduction of remittance flows, as for many of these countries remittances
constitute a significant part of gross domestic product (GDP).
• Agriculture is the economic backbone of many developing countries, the majority of which rely on the US dollar for their borrowing needs. As such, a lasting appreciation of the USD vis-à-vis other currencies may have negative significant economic consequences for these countries, including for their agrifood sectors.
Moreover, the potential reduction of GDP growth in several parts of the world will affect the global demand for agrifood products with negative consequences for global food security, while also likely reducing the
availability of funds for development, in particular if military expenses increase globally. 3 Policy recommendations
• In order to prevent or limit the conflict’s detrimental impacts on the food and agricultural sectors of Ukraine and the Russian Federation, every effort should be made to keep international trade in food and fertilizers open to meet domestic and global demand. Supply chains should be kept fully operational, including the protection of standing crops, livestock, food processing infrastructure, and all logistical systems.
• In order to absorb conflict-induced shocks and remain resilient, countries that depend on food imports from Ukraine and the Russian Federation should diversify the sources of their food supplies by relying on other exporting countries, on existing food stocks or by enhancing the diversity of their domestic production bases.
• The food security impacts of the conflict on vulnerable groups necessitates timely monitoring and welltargeted social protection interventions to alleviate the hardship caused by the conflict and to foster a recovery from it. To assist the internally displaced, refugees, and groups directly affected by the conflict, the reach of Ukraine’s national social protection system should be expanded by registering additional population groups within the Unified Social Information System.
• In countries hosting refugees, access to existing social protection systems and job opportunities should also be eased by lifting legal access barriers and, where needed, by increasing the capacity of host countries’ social protection systems to absorb additional caseloads.
• Countries affected by potential disruptions ensuing from the conflict must carefully weigh measures they put in place against their potentially detrimental effect on international markets including over the longer term.
Particularly, export restrictions must be avoided; they exacerbate price volatility, limit the buffer capacity of the global market, and have negative impacts over the medium term.
• Market transparency and policy dialogue should be strengthened as they play key roles when agricultural commodity markets are under uncertainty and disruptions need to be minimised to ensure that international markets continue to function properly and trade in food and agricultural products to flow smoothly.
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https://www.fao.org/3/cb9013en/cb9013en.pdf
