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RUHR-UNIVERSITÄT BOCHUM
Faculty of Management and Economics
Seminar paper
for the Seminar in Development Economics
about the topic
«Food crisis revisited under Covid 19 and Russian-Ukraine war:
Agro-Commodities-Prices – Demand and Supply Determinants, FAOglobal Index Trend Analysis and Consequences in Developing Countries»

Summer term 2023
Submitted to
Dr
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Sc
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06
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II
List of Acronyms
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1
Supply and demand-side determinants
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4
The impact of COVID-19 and Russian-Ukraine war in developing countries
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11
Conclusion
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IV

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List of Figures
Figure 1: FFPI in 1990-2022
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List of Acronyms
FAO

Food and Agriculture Organization

FFPI

FAO Food Price Index

UNDP

United Nations Development Programme

UNEP

United Nations Environment Programme

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Introduction
The global agri-food market has been in a shock state since the beginning of Covid-19 and the
Russian-Ukraine war
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Russia and
Ukraine are leading exporters on the world market of agricultural products
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On the one hand, there is an excess of statistical information about the situation of the trade relations between Russia and Ukraine on the
global agri-food market, during the recent years
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The aim of the paper is to conduct the research of the worldwide agro-food system in the conditions of Covid-19 and the arisen political conflict between Russia and Ukraine
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The urgency of the research is dictated by the analysis of the situation
of the global food security system
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Recent events have
accelerated the rise in food prices, while reinforcing existing risks
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In the course of the study, media sources, author's works on the topic of research and the analysis of scientific research already conducted by other scientists were used, and the existing
approaches were supplemented with a toolkit of scenario planning
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According to FAO, the overall global prices of food supplies are expected to

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increase in the years 2022-2023 between 8% and 22%, before the conflict is contained or alternative sources are found
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From the supply-side factors, these include the availability of arable land, the degree of technical and biological progress in agriculture, the low elasticity of supply of agricultural raw materials, the cost of resources, the cost of the font of energy utilized and the weather conditions
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It often happens during political conflicts and escalations, considered one of the most unpredictable causes of high volatility of prices of agricultural commodities and all those products that rely on them as raw materials
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2 This state of unavailability of arable land has also resulted from
the on-going war, which caused the destruction of numerous irrigation systems, agricultural
infrastructures, natural resources and numerous farming fields, whose restoration will require
long-term projects
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Transportation expenses are a huge
component of the price of food imports and are especially high in the case of cross-border
transports, but during the war they increased even further because of higher insurance costs in
the Black Sea area and the non-operational status of many of its ports, which accounted for
about 90% of Ukrainian grain trade flows
...
The
situation was different for goods that are usually imported or exported: a negative spiral effect
on supply chains, due to the closure of borders of many countries, transportation restrictions
and reduced activities in major sectors, was put into effect and international trade for some time
interrupted
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15
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1990-2022
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D
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, and Wheeler C
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12
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M
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, (2014), p
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2

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supply pressures
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From the demand-side factors, the actual demand can be influenced for different reasons going
from the change in food habits at the global level, as can be mentioned the increased consumption in protein derived from animals due to increased incomes in developing countries and economic development, and variation in global demographic trends, starting from the increased
demand in food in Asia, especially China and India
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At the current moment, world population is
increasing by 0
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5 The demand for agro-commodities increases as the world's
population grows
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6
As for the other factors, state interventionism and the adoption of protectionist measures and
bans are common influential conditionalities, which may also result in spillovers and reactions
from other government’s actions
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One
other situation that affected price stability and falls into this category has been the decision of
India to stop its exports of rice, as well as the rise of palm oil prices for lower production in
Malaysia, a major producer, due to experienced migrant labor shortages
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In recent years, food prices rose again, and this pressured governments into
imposing new trade restrictions, for example as the case Russia with wheat, Argentina with
beef, Indonesia with palm oil, and China with fertilizers
...
, Ritchie H
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, and Rodés-Guirao L
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Borychowski M
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(2015), p
...

7
Hanson K
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, Schluter G
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98
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M
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, (2014), p
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6

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example trade policies, apparently bring short-term effects of fluctuations in global agricultural
markets, which however in the long term can affect prices
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As evidenced in the analyses of price determinants, the causes of instability can have multiple
origins, some resulting from human behaviors, more appropriately of States and governments,
and some that are completely unpredictable, resulting from environmental catastrophes
...
S
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From higher wheat costs, in this case, to
higher prices for flour, therefore bread, pasta, and cereals
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The increase in domestic prices in Asia, due to the depreciation of goods, and the
stop in income growth, ended up influencing the demand of the affected countries even more
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Further unpredictable catastrophes impacted food security over the years, namely the 2006
drought in Australia, which resulted in the production of only 9
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11 In the same year, heat waves in California, which killed
large numbers of farm animals, and the unseasonable rains in Kerala, India, which destroyed
swathes of grain in 2008, or the Cyclone Nargis in Burma in the same year, are additional
similar phenomena
...
, Shevlin T
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3
...
W
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, (2000), p
...

11
Guénette J
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, Kenworthy P
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(2022), p
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12
Obadi S
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, Korcek M
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420
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The products more affected, according to the FAO Indexes, are cereals, diary
and vegetable oils
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3, 137
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1 points (compared to 2006 values – 73
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2 and 70
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13 In the meantime, sugar prices remained comparatively low and meat prices went
through an inconstant but relatively controlled growth
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The prices never fully recovered from this phenomenon, as the crisis soon reached Europe and
developed in the European Sovereign Debt Crisis
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7 points, in the following years raised once again, involving all five
groups of food commodities that FAO takes into consideration
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The indexes were way
13

FAO Food Price Index
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higher during the 2008 Financial Crisis, the category of diary reached 140
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2 points in 2011 and vegetable oils 156
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14 2013 values for
cereals include also the increase due to shifts in trade policies and restocking by major rice
producers, which set prices to double compared to the beginning of the century
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In the late 2017, notably, an increase in energy prices and transportations produced the so-called producer inflation, that produced a slight rise in the indexes of
that year
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9
point and 98
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15
Prices of rice, for example, increased before the start of the pandemic, pushing countries out of
their export bans, and after the end of the pandemic have fallen back to pre-Covid-19 levels,
reflecting positive harvest and production prospects
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In the case of wheat, lower production
levels manifested as consequences of the droughts in the last years in several major production
areas, namely the United States, Canada, in the European Union, Turkey, and Iran
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16
After this quiet period, prices encountered a dramatic rise with the Coronavirus pandemic that
started in 2020 and resulted in prolonged lockdowns all over the world, during which prices
kept rising for the unavailability of products and the impossibility to increase production processes in the time being

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