Ukraine Crisis Webinar Series Session - VI
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This document summarizes the findings of a study on the effects of global vegetable oils market disruptions and price shocks. It finds that some countries like Mozambique, Malawi, and Uganda may experience negative food security outcomes, while Ghana may have positive outcomes. This is due to Ghana's local vegetable oils and oilseeds industries producing close substitutes. The study uses economic simulation models to analyze the impacts on household incomes, food inflation, and food consumption for different groups in selected countries under a baseline and Ukraine crisis scenario. Recent forecasts show a moderate increase in global vegetable oils prices for 2022 compared to earlier projections.
Ukraine Crisis Webinar Series Session - VI
- 1. Vegetable Oils Market Disruptions: The Income and Food Security Effects Dr. Ismael Fofana Director, Capacity & Deployment AKADEMIYA2063
- 2. Outline 1. Global Vegetable Oils Market Disruptions and Price Shocks 2. Country Exposure to Global Vegetable Oils Market Disruptions 3. Analytical Framework 4. Simulation Scenarios 5. Household Income Effects 6. Food Inflation Effects 7. Food Consumption Effects 8. Conclusion
- 3. 1. Global Vegetable Oils Market Disruptions and Price Shocks Source: Projection by the World Bank in October 2021 and April 2022, using the commodity price database (World Bank, 2022) Global oilseed prices projected to rise steeply in 2022, at the onset of the Ukraine crisis Percentage annual variation in global vegetable oils prices
- 4. 2. Country Exposure to Global Vegetable Oils Market Disruptions Lower dependency on Russia & Ukraine Share of Ukraine and Russia in country imports (%) Share of vegetable oils imports in domestic consumption (%) Higher dependency to the global market Source: Constructed from AATM Database (AKADEMIYA2063 & IFPRI,2022) Contagion through regional re-export markets Source: Constructed from FAOSTATS (FAO,2022)
- 5. Namibia Djibouti Senegal Niger Benin Togo Nigeria Ethiopia Angola South Africa DR Congo Some countries are exposed through re-exports by their neighbors 2. Country Exposure to Global Vegetable Oils Market Disruptions (Cont.)
- 6. 3. Analytical Framework • Simulation models (Akademiya2063/ReSAKSS Toolbox) Single-Country CGE Models • World Development Indicators database (World Bank) Macroeconomic data • Statistics on international trade (United Nations) Import and export data • Primary commodity price database (World Bank) Monthly price estimates for 46 primary commodities Annual price predictions (CMO released in April and October) Update the Simulation Models Build the Price Scenario Simulation Tools
- 7. 4. Simulation Scenarios “Baseline” scenario: no major changes in the economies’ trajectories in the absence of the crisis for the period 2022-2024. “Ukraine” scenario: disruptions to the individual country economies resulting from the changes in global commodity markets
- 8. 5. Household Income Effects • Ghana 3.0% • Malawi <1.0% • Mozambique 1.5% • Uganda 1.5% Driven by the weight of the vegetable oils and oilseeds industries in a country’s agricultural sector Percentage change in gross Income for RURAL households, Ukraine vs. Baseline Scenarios Percentage change in gross Income for URBAN households, Ukraine vs. Baseline Scenarios Percentage change in gross Income for ALL households, Ukraine vs. Baseline Scenarios
- 9. Income distribution: • Farmers > Non-farmers > Urban Percentage change in gross Income for RURAL FARMERS, Ukraine vs. Baseline Scenarios Percentage change in gross Income for RURAL NON- FARMERS households, Ukraine vs. Baseline Scenarios Percentage change in gross Income for RURAL households, Ukraine vs. Baseline Scenarios • Farmers: Bottom = Top quintiles • Non-farmers: Bottom > Top quintiles • Non-farmers: Bottom > Top quintiles 5. Household Income Effects (Cont.)
- 10. 6. Food Inflation Effects All countries and households • Mozambique > Ghana > Malawi > Uganda Percentage change in Food Consumption Price Index for RURAL households, Ukraine vs. Baseline Scenarios Percentage change in Food Consumption Price Index for URBAN households, Ukraine vs. Baseline Scenarios Percentage change in Food Consumption Price Index for ALL households, Ukraine vs. Baseline Scenarios • Mozambique Rural > Urban • Ghana Rural > Urban • Malawi Urban > Rural • Uganda Urban & Rural High food inflation pressure
- 11. Ghana • Farmers = Non-farmers = Urban • Bottom = Top Quintiles 6. Food Inflation Effects (Cont.) Food inflation pressure by household groups Malawi • Urban > Non-farmers > Farmers • Top > Bottom Quintiles Mozambique • Farmers > Urban > Non-farmers • Top > Bottom Quintiles
- 12. 7. Food Consumption Effects Negative food consumption outcomes (-) • Mozambique > Malawi > Uganda Percentage change in Food Consumption for RURAL households, Ukraine vs. Baseline Scenarios Percentage change in Food Consumption for URBAN households, Ukraine vs. Baseline Scenarios Percentage change in Food Consumption for ALL households, Ukraine vs. Baseline Scenarios • Mozambique Rural > Urban • Malawi Urban > Rural • Uganda Urban & Rural Positive food consumption outcomes (+) • Ghana (Rural)
- 13. Ghana (+) • Farmers > Non-farmers > Urban • Bottom > Top Quintiles 7. Food Consumption Effects (Cont.) Malawi (-) • Non-farmers > Urban > Farmers • Top > Bottom Quintiles Mozambique (-) • Farmers > Urban > Non-farmers • Top > Bottom Quintiles
- 14. 8. Conclusion Projections of high vegetable oils prices for 2022, at the onset of the Russia-Ukraine crisis. Negative food security outcomes for Mozambique, Malawi, and Uganda. Positive food security outcomes for Ghana driven by: • Existence of local vegetable oils and oilseeds industries, producing close substitute products; • Sizeable contribution of local vegetable oils and oilseeds industries to the agricultural sector, and the national economy.
- 15. 8. Conclusion (Cont.) Percentage annual variation in global vegetable oils prices, Comparing October 2021, April 2022, and October 2022 Forecasts Source: Projection by the World Bank in October 2021, April 2022, October 2022, using the commodity price database (World Bank, 2022) Recent forecasts, i.e. October 2022, show a moderate increase of global vegetable oils prices for 2022
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