Miller Magazine Issue: 148 April 2022

24 MILLER / APRIL 2022 NEWS The World Bank said in its latest Trade Watch report that Gambia, Lebanon, Moldova, Djibouti, Libya, Tunisia, and Pakistan are the most exposed to the disruptions of wheat exports from Ukraine, which make up roughly 40% or more of their wheat imports. “These importers will have trouble quickly switching to alternative sources, possibly leading to supply shortages in the short run,” the World Bank said. “While the outlook for global food supplies remains favor- able, food prices increased sharply due to elevated input prices which, combined with high transport costs and trade disruptions due to the war in Ukraine, are raising import bills. That hits poor and developing countries hardest, as they depend on food imports the most. As of March 24, 2022, the Agricultural Commodity Price Index is up 32% year on year. Maize and wheat prices are 37% and 79% higher, respectively, year on year, while rice prices are about 17% lower. Although economies are slowly starting to recover, uncertainties and disruptions continue, and with worsening fiscal capacity, the outlook for food and nutrition security for many low- and middle-income countries is of significant concern.” The war in Ukraine is a major shock for global commodity markets, reflecting the region’s importance in those mar- kets. Food prices were already high before, and the war is driving food prices even higher. Commodities that have been most affected are wheat, maize, edible oils, and fertil- izers. Global commodity markets face upside risks through the following channels: reduction in grain supplies, higher energy prices, higher fertilizer prices, and trade disrup- tion due to shutting down of major ports. Over the coming months, a major challenge will be access to fertilizers which may impact food production across many crops in different regions. The grain supply situation has been worsened by Rus- sia’s imposition of export curbs on wheat and other cere- al grains to countries outside of fellow Eurasian Economic Union members Armenia, Belarus, Kazakhstan, and Kyr- gyzstan. Russia was the top wheat exporter in 2018 and Ukraine the fifth-largest, according to World Bank data. The two countries together make up about a quarter of world exports. Western sanctions on Russia over its invasion of Ukraine do not specifically target Russian grain exports, but sanctions that prohibit dollar and euro transactions with top Russian banks make trade finance more difficult. Aside from the direct supply shortages to Ukraine’s biggest grain customers, higher market prices for wheat will affect middle-income countries across the globe, the World Bank report said. The United Nations Food and Agricultural Orga- nization’s Cereal Price Index in February was up 14.8% from a year earlier, and the World Bank said wheat futures prices had surged 60% since the start of the conflict. “Disruptions to exports of wheat will affect markets for corn and rice, which are wheat substitutes, benefiting net exporters and harming net importers of those products,” the bank added. World Bank says the impact of the war in Ukraine adds risk to global food security The World Bank said a number of developing countries face near-term wheat supply shortages due to their high dependence on Ukrainian wheat exports that have been disrupted by Russia’s invasion.