Impacts of the Russian invasion of Ukraine on the global wheat market

Abstract

The Russian invasion of Ukraine that began in February 2022 has caused significant disruption to global agricultural markets. As Ukraine is the world's ninth largest producer and fifth largest exporter of wheat, the widespread, destructive effects of the war have serious implications for food prices and global food security. We analyze the impacts of this war on production, consumption, trade, and prices of wheat using a global spatial equilibrium model (SEM). Our results suggest that this conflict causes wheat prices to increase in every country (by around 2%) except Ukraine where prices fell by about 27%. Though other wheat exporting countries augment their exports to capture the market share lost by Ukraine in major importing countries, many of these importing countries suffer from reduced wheat consumption. Not surprisingly, Russia benefits by exporting wheat at the expense of Ukraine to importing countries that traditionally relied on Ukrainian wheat. Because of the war, we estimate that Ukraine's wheat producers experience a $1.4 billion loss in producer surplus.