Global Agricultural Trade: Robust Safety Net to Reduce the Risk of Hunger –

Agricultural & Food Policy 08/2023
Prof. Dr. Dr. h.c. mult. Thomas Glauben, Dr. Miranda Svanidze

Even in times of crisis, competitive international agricultural trade is proving to be a robust aid to food security – regional supply shortages resulting from the war in Ukraine have been overcome.

Hunger, wars, global warming – phenomena and risks that are closely linked – are the scourge of humanity, especially in the Global South. The Food and Agriculture Organization of the United Nations (FAO et al., 2022) estimates that the number of people affected by hunger has recently increased by about 150 million, probably in relation to the COVID-19 crisis. South Asia and sub-Saharan Africa are most affected by hunger and risks to nutrition. At the same time, 700 million people, or nearly 10 percent of the world’s population, are still expected to be undernourished in 2030: putting UN development goals further out of reach. Looking at the World Hunger Index, it becomes clear that the continuous decline in hunger has come to a virtual standstill over the past two decades.

As a result of the war in Ukraine, the food situation is likely to have worsened, particularly in poor countries of the Global South. Global market prices for agricultural commodities such as cereals and vegetable oils, which since the fall of 2021 had already reached the high price levels of the 2007/2008 and 2010/2011 food crises, rose even further by May/June 2022. Wheat importers in the MENA region and in regions of sub-Saharan Africa, where demand boomed, were particularly affected. Russia and Ukraine had been their main suppliers. Bottlenecks in supply from the Black Sea region, coupled with high prices, put additional pressure on the already critical food situation in these regions.

However, as expected, the situation had already eased a few months after the start of the war (Glauben, 2023; Vos et al., 2023). Shortfalls in supplies to Africa from Ukraine, for example of wheat, one of the most important staple foods, were largely offset by supplies from other countries, such as France, India, and Australia (Glauben et al., 2022; Götz and Svanizde, 2023). In the first six months after the start of the war, the amount of wheat shipped to Africa was already almost equal to that of the same period (March to September) in the pre-war year 2021 (Eurostat, 2022; UN Comtrade, 2022; Refinitv-Eikon, 2022, see Figure 1).

As a result of the markets calming down in the 2022/2023 marketing year, not least as a result of good harvests and increased exports from Canada, the EU, Australia and Russia, wheat prices on international marketplaces such as the Paris commodities futures exchange EURONEXT have fallen significantly, despite noticeably lower supplies from Ukraine as well as drought-related reductions from Argentina (Vos et al., 2023): from a peak of 450 EUR per ton of wheat in March 2022 to 230 EUR per ton in May 2023, i.e. by almost 50 percent and thus to pre-war levels. Insecurity regarding developments in Ukraine was already reflected in these prices.

These recent developments indicate once again that international agricultural trade based on competitive markets is proving to be a suitable strategy for dealing with risks resulting from regional supply bottlenecks – be they related to weather, crises or political developments. In sum: The “safety net of global agricultural markets” is proving to be robust in the fighting hunger.