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How Best (Not) to Address the Ukraine Crisis

June 6, 2022

Russia's invasion of Ukraine has disrupted global wheat, corn, and other markets. Given relatively low global stocks for major staple foodstuffs, many analysts predict that food insecurity will increase among poor households in low-income countries. Understandably, many world leaders, including the Biden administration, are concerned about how to best address a potential global hunger crisis. However, in the rush to "do something," leaders need to consider the most efficient policies to address the crisis and avoid ill-considered policies that may do little to address the actual problems and could result in unintended consequences that may linger well past the crisis itself.The most effective way of addressing global food supply concerns would be an immediate end to the war and rebuilding critical infrastructures such as rail lines, storage facilities, and port facilities to allow Ukraine's agricultural sector access to global markets. To that end, the UN secretary general's efforts to end the blockade of Ukraine grain shipping and support the establishment of a blue corridor by sea or a green corridor overland to move foodstuffs from Ukraine should be supported. Unfortunately, the likelihood of a quick end to the war looks increasingly faint, and Russia has given no signs that it would consider granting safe passage of Ukraine food exports through the Black Sea.The Biden administration has recently put forward a set of proposals aimed at increasing US agricultural production, lowering fertilizer costs, and providing humanitarian food aid to those hurt by the sharp increase in agricultural prices. Here we consider these proposals and other questionable policies such as opening the Conservation Reserve Program (CRP) and conclude by discussing policies that could provide more immediate relief by addressing and mitigating constraints in the vegetable oil market.

How Russia’s Invasion of Ukraine Is Affecting Global Agricultural Markets

May 2, 2022

The war in Ukraine has roiled commodity markets and raised concerns about global food security. Ongoing fallout from the COVID-19 pandemic and other factors had already driven up food prices before Russia's invasion. Poor harvests in South America, strong global demand, and supply-chain issues reduced grain and oilseed inventories, driving prices to their highest levels since 2011–13. Vegetable oil prices have also been at record levels, reflecting a short South American soybean crop, reduced palm oil supplies due to harvest problems in Malaysia, and sharply increased use of palm and soybean oil for biodiesel production. Prices of key energy-intensive inputs such as fuel, fertilizer, and pesticides have also been at near-record levels.Russia's invasion of Ukraine will further disrupt global markets, hurt global grain supplies in the short term, and, by disrupting natural gas and fertilizer markets, negatively affect producers as they enter a new planting season. This could further increase already high food prices and have serious consequences for low-income net food–importing countries, many of which have seen an increase in malnourishment rates3 over the past few years in the face of pandemic disruptions.