Global Agricultural Market Risks: Ukraine-Russia Conflict Update.pdf

Key points include:

- Market Structure and Trade: Both countries are leading global exporters of essential agricultural commodities like wheat, maize, rapeseed, sunflower seeds, and oil. They supply a large portion of worldwide demand, making their exports critical for many food-importing nations, especially Least Developed Countries (LDCs) and Low-Income Food-Deficit Countries (LIFDCs).

- Risk Analysis:
- Trade Risks: The conflict disrupts Ukrainian agricultural activities, potentially reducing grain and oilseed exports. Russia also faces trade challenges due to economic sanctions.
- Price Risks: Simulations suggest a 8-22% increase in global food and feed prices if exports from Ukraine and Russia are significantly reduced. Prolonged disruption could keep prices elevated.
- Logistical Risks: Infrastructure damage in Ukraine may hinder transport and storage, impacting agricultural output and increasing maritime transportation costs for importers.
- Production Risks: The conflict threatens Ukrainian winter crop production, with up to 30% of sown areas potentially unharvested. Russia's sanctions could also reduce food exports and disrupt agricultural input imports, affecting yields and quality.
- Humanitarian Risks: The conflict increases humanitarian needs in Ukraine and neighboring countries, exacerbating food insecurity and malnutrition globally, particularly in Asia-Pacific, sub-Saharan Africa, and the Near East and North Africa.
- Energy Risks: Higher energy prices impact agriculture due to its high energy consumption for fuel, gas, electricity, and agri-chemicals. This leads to increased input costs, potentially lower yields, and higher food prices.

- Consequences: A sudden reduction in Ukrainian and Russian exports could result in a global increase of 8-13 million undernourished people in 2022/23, emphasizing the urgent need for agricultural stability amidst the ongoing conflict.