Increase In World Prices Research Articles

Black Sea region in world grain trade and problematic aspects of development

The research objective is an analysis of the participation of the Black Sea Basin countries (Ukraine, Russia, Kazakhstan, Bulgaria and Romania) in world grain trade. We started this research before the start of Russia’s military actions in Ukraine, and completed it during these actions, so we have a vision of the situation before and after start of war. Subject of research: stability of grain supplies (wheat, corn, barley) from the Black Sea region as a whole and from some of its countries. Results of the research: The research revealed the growing role of the Black Sea region in the pre-war period in the world grain market and identified its key leaders. The share of the Black Sea region in world trade in wheat increased to 34%, barley – to 40,6%, corn – to 25,3% in 2019/2020 marketing year. The calculated coefficients of variation confirmed the decrease in the scattering of grain exports in 2015-2020 vs. 2010-2015, which indicates an increase in stability and reliability of supply in this period. The situation changed radically after the Russian invasion of Ukrainian territories. The maritime logistics corridors of Ukraine that is the one of the key players in this region, were blocked and started working only five months later, but not at full capacity. All these events had its destructive consequences for world trade, in particular, the increase in world prices, disruption of the stability of grain supplies from the Black Sea region and the destruction of established logistics corridors, etc.

ЗЕРНОВИЙ ЕКСПОРТ УКРАЇНИ В УМОВАХ ВІЙНИ

Досліджено шляхи і проблеми зернового експорту України в умовах війни. Основними шляхами відновлення експорту зерна є «смуги солідарності» Україна – ЄС і Чорноморська зернова ініціатива. Проте ці заходи лише частково вирішили проблему експорту зерна з України у 2022 – на початку 2023 р. У 2022 р. відбулося зменшення обсягів експорту українського зерна на 32,6 % порівняно з обсягами попереднього року. Повномасштабна воєнна агресія РФ проти України спричинила різке зростання світових цін на пшеницю, а започаткування «смуг солідарності» й морського зернового коридору посприяли їх суттєвому зниженню, зокрема на зерно. Проте вітчизняні виробники зерна і експортери не змогли скористатися зростанням світових цін на зерно у 2022 р. через збільшення транспортних видатків при перевезенні до портів, зростання маржі посередників з урахуванням ризиків воєнного часу, підвищення вартості фрахту суден тощо. Відповідні втрати в ціні зерна при експорті з України перекладаються по зерновому ціновому ланцюгу переважно на нижню його ланку – виробника зерна. Частка виробника (на умовах EXW) у експортній ціні пшениці 2-го класу зменшилася з 80 % на початку дії морського зернового коридору до 67 % при експорті морським зерновим коридором у лютому 2023 р. Серйозні ризики для повоєнного відновлення українського експорту зерна становлять процеси релокації торговельних потоків на традиційних ринках експорту зернових з Чорноморського регіону, пов’язані, насамперед, із заміщенням українського зерна російським. Розвитку українського зернового експорту сприяло б максимальне дистанціювання від РФ у торговельній політиці щодо експорту продукції у межах Чорноморського регіону за рахунок залучення до торговельних потоків Середземноморського регіону з використанням конвенції щодо правил походження Пан-Євро-Мед.

The impact of the war in Ukraine on economic development, consequences for world trade

The war in Ukraine created a humanitarian crisis of enormous proportions and also a serious blow to the world economy. From a macroeconomic point of view, rising food and energy prices will reduce real incomes. CNUCED's express assessment of the impact of the war on trade and development in Ukraine confirms that the outlook for the global economy is rapidly deteriorating due to rising food, fuel and fertilizer prices. This study examines the impact of the crisis in Ukraine on global trade and development, highlights the importance of supplies of food, energy and certain industrial resources from Russia and Ukraine, and examines how the war poses significant risks to food and energy security and exacerbates the difficulties associated with with the supply chain. This study also shows that if a war were to split the world economy into separate blocs, the loss of income would be significant, especially for developing countries. Furthermore, it underscores the importance of a rules-based multilateral trading system, if only because the World Trade Organization provides functions that can help mitigate the effects of the crisis. It is important for international trade to better understand, analyze and monitor the nature, magnitude and implications of war for trade and development. Only with a clear understanding of these impacts can we create reliable supply chains, limit further losses in trade and economic development, and prevent the deepening of inequality between developed and developing countries. The purpose of the study is to analyze the impact of the war in Ukraine on economic development and determine the consequences for world trade. The research used the methods of induction and deduction and comparative analysis. The study shows that among the main threats and risks that arise for the world economy are destabilization, rising inflation, unemployment, the emergence of a food crisis and famine in some countries of the world, and an increase in world prices for raw materials. The consequences of the war in Ukraine will be felt by most countries of the world, and their scale will depend on the course and duration of the war on the territory of Ukraine. The biggest loss and the biggest problem of the war is human loss, but there are also huge economic problems that are felt far beyond the borders of Ukraine.

ENSURING FOOD SECURITY UNDER SANCTIONS PRESSURE

The relevance of the research has been substantiated. Russia is under unprecedented external pressure from a wide range of economic sanctions. The agricultural sector is particularly vulnerable in such conditions. In this connection, there is an objective need for a systematic analysis and forecasting of measures taken to protect the domestic food market. The article outlines the main directions of the state economic policy of the Russian Federation. The main factors influencing the rise in food prices have been identified. These factors include an increase in the cost of the production cycle of crops and livestock due to import dependence, disruption of supply chains, mandatory labeling of certain goods, an increase in the price of mineral fertilizers, an increase in electricity tariffs and packaging costs, the exhaustion of limits on preferential loans to agricultural producers, an increase in world prices for food products deterioration of natural and climatic conditions. The level of self-sufficiency in basic foodstuffs and the main factors of growth in food prices have been considered. In addition, food inflation in the Russian Federation has been studied. Particular attention is paid to the measures taken by the Government that will help stabilize prices for important agricultural products and thereby ensure the country's food security: a temporary ban on the export of sunflower and rapeseed seeds; a quota for deliveries abroad of sunflower oil and cake, as well as solid residues from sunflower seeds; limiting the number of checkpoints for the export of soybeans and soybean meal from Russia; introduction of duties on the export of sunflower meal and oilseed flax. The purpose of the research is to study the measures taken by the Government to protect the domestic food market and stabilize prices for important agricultural products, as well as to identify the main factors affecting the rise in food prices. This study was conducted using the methods of statistical analysis, synthesis, comparison and deductive method.

THE INFLUENCE OF THE RUSSIAN UKRAINIAN WAR ON GLOBAL AND DOMESTIC FOOD SUPPLY

Under fictitious pretexts, Russia has unleashed an unprovoked war against Ukraine that is spreading beyond our country. One of the most tragic consequences of this war is the intensification of the global problem of hunger. Ukraine and Russia are among the leading suppliers of food to the global market – they account for 25.4% of world wheat exports and 17.6% of coarse grain. Forecasts of declining exports of their grain products have provoked an unprecedented rise in global food prices. The critical dependence of the global food market on Ukrainian agri-food exports has formed in the segment of sunflower oil – Ukraine accounts for almost 50% of the relevant market. As Ukraine’s share in the structure of global sunflower oil production is 30.6%, it is impossible to find a replacement in the short term. Together with the risks of sanctions restrictions on Russian exports, this led to an increase in world prices for sunflower oil from 1,700 to 2,250 dollars for 1 t. Many poor countries that are currently facing a catastrophic food shortage are buyers of Ukrainian grain products – until recently, Ukraine was the main supplier of wheat grain to Ethiopia, Lebanon and Pakistan. Ukraine has been a major supplier of corn grain to China – in 2021 it accounted for 78.3% of Chinese imports of these products. Blocking the export of Ukrainian corn threatens to reduce the number of pigs in China and reduce the production of relevant products. The resumption of Ukrainian agri-food exports in the previous volumes is possible only if the cessation of hostilities, the return of control over all ports and the unblocking of Azov and Black Sea civilian shipping. Because the possibilities of logistics of transport communications on land do not exceed 1 million tons of grain per month. There are grounds for restrained optimism about Ukraine’s domestic food security on the following basis: – the country has stocks of wheat, corn, sunflower oil, basic products for 3-5 years; – according to various forecasts in Ukraine this year is expected to produce cereals and legumes, technical and other crops in sufficient quantities for domestic food supply; – the forced sharp reduction in exports of Ukrainian grain products may lead to its redirection to the feeding of farm animals and increase meat production in areas where there is no fighting.

LATIN AMERICAN COUNTRIES IN WORLD TRADE IN FOOD PRODUCTS

During the COVID-19 pandemic, there has been a marked increase in world prices for agricultural commodities, which has increased the value of international food trade. In other words, the coronavirus crisis, which has caused a decline in global trade, has hardly affected the interests of food producing and exporting countries. Many agricultural enterprises have become beneficiaries of the boom in international food markets. This was most clearly manifested in the markets for grains and oilseeds, as well as meat and meat products, where the positions of Latin American business structures are particularly strong. As the current trends demonstrate, the situation on the world food market favors the further growth of companies producing agricultural products in Latin America, primarily Brazil, which has firmly taken its place among the leading food exporting countries. These phenomena are of considerable interest to the Russian Federation, which, on the one hand, is a traditional importer of food products from Latin America, and on the other hand, itself is becoming an increasingly large producer and exporter of agricultural products, which leads to a reduction in purchases of certain types of food on the world market, including from Latin American countries.

Effects on Global Forests and Wood Product Markets of Increased Demand for Mass Timber

This study evaluated the effects on forest resources and forest product markets of three contrasting mass timber demand scenarios (Conservative, Optimistic, and Extreme), up to 2060, in twelve selected countries in Asia, Europe, North America, and South America. Analyses were carried out by utilizing the FOrest Resource Outlook Model, a partial market equilibrium model of the global forest sector. The findings suggest increases in global softwood lumber production of 8, 23, and 53 million m3 per year by 2060, under the Conservative, Optimistic, and Extreme scenarios, respectively, leading to world price increases of 2%, 7%, and 23%, respectively. This projected price increase is relative to the projected price in the reference scenario, altering prices, production, consumption, trade of forest products, timber harvest, forest growth, and forest stock in individual countries. An increase in softwood lumber prices due to increased mass timber demand would lead to the reduced consumption of softwood lumber for traditional end-use (e.g., light-frame construction), suggesting a likely strong market competition for softwood lumber between the mass timber and traditional construction industries. In contrast, the projected effect on global forest stock was relatively small based on the relatively fast projected biomass growth in stands assumed to be regenerated after harvest.

Revival of the resource potential of cattle breeding as a factor in the development of competitiveness of enterprises of the dairy product subcomplex of the agro-industrial complex of Ukraine

Permanent crises in the Ukrainian economy, the devaluation of the hryvnia, the decline in incomes of the population and its purchasing power, increased competition on the world market, and the constant increase in world prices for food and non-food products created new realities of functioning of enterprises of the dairy sub-complex of the agro-industrial complex of Ukraine and led to its transformation. Therefore, the study of the reasons for the existence of these trends is very relevant. The purpose of the study is to assess the current state of the sub-complex and the development of practical recommendations for improving the efficiency of its functioning. The performed study was based on the use of methods: qualitative analysis and synthesis, economicstatistical analysis, comparisons, analytical and logical generalisations, etc. At the beginning of 2021, the total number of cattle in Ukraine was 2.874 million heads and over the past 10 years decreased by 1.952 million heads, including cows by 0.958 million heads. Milk production remains small-scale. In 2020, 9.263 million tonnes of milk were produced (17.66% less than in 2010). A substantial reduction in the volume of milk supplies for processing led to a reduction in the number of processing enterprises in 2020 by 69.14% compared to 1990. The main factors of transformation of the dairy sub-complex in Ukraine include: reduction of the number of cows, insufficient quantity of high-quality dairy raw product and their non-compliance with the regulations and standards of the European Union, low technological level of milk production, insufficient control over the quality of raw product, lack of modern equipment, high capital and labour intensity of production processes, rising prices for energy and other resources, reduced consumption of dairy products due to low purchasing power, increased competition in the world and internal markets of dairy products, etc. The conducted research should help to solve and highlight the main functional problems of milk processing enterprises that operate in the agro-industrial complex of Ukraine, the results of the above-mentioned studies can be useful and relevant for the revival of dairy cattle breeding in the post-war period

МИРОВОЙ СЫРЬЕВОЙ КОМПЛЕКС И 14-Й ПЯТИЛЕТНИЙ ПЛАН КИТАЯ

The article analyzes the features of the new stage of globalization in the world mining complex: deepening specialization, increasing concentration, sectoral unevenness, increasing government management, accelerating convergence, the cyclical nature of the global conjuncture. Since China is a leading player in the globalization in the global mining complex, the assessment of the 14th five-year plan adopted for 2021–2025 becomes important. The result of the implementation of the 14th five-year plan of China will be a sharp increase in demand for metals, for raw materials for their production, for food resources and, accordingly, a cyclical increase in world prices for all raw materials.

Domestic and international impacts of the rice trade policy reform in the Philippines

Faced with high domestic rice prices that have fueled inflation above the 2018 target and penalized poor consumers the most, the government of the Philippines has decided to abandon the quantitative restrictions on imports and replace them with tariffs. This paper uses a global rice model based on a partial equilibrium framework to assess the possible impacts of this reform on imports, production, consumption and prices. In contrast with past similar studies, we address three key concerns (i) the heterogeneity in farm price across 16 regions in response to the combined effect of the tarriffication and the average historical trend in productivity increase at 1.5% between 2001 and 2018, (ii) the differentiation of imports by origin partly due to the different tariffs applied to countries within and beyond the Association of South East Asian Nations, and (iii) the effect on domestic prices in third countries. The simulation results suggest that the reform would increase imports by 2.47 million tons (20.7%) in 2019. We also find a large decline in farm prices and retail prices respectively by PhP 6.1/kg (30.1%) and PhP 7.6/kg (17.4%) in 2019 that explains an increase in rice consumption. We estimate the fall in total inflation at 1.2% in 2019 but less over time. Further, the large fall in farm prices in 2019 is shared quite evenly among regions in the short term but returns to pre-reform levels in the near term. Using a higher price elasticity of supply for one region obtained from panel data surveys, we show a more pronounced decline in production than the national average. Such differentiated results confirm the relevance of using a regionally disaggregated model to design more targeted policies. We also show a slight increase in world prices, which led to small increases in the domestic prices of South and Southeast Asian rice markets. While this reform is largely pro-poor consumers, policy makers would need to use the additional tariff revenue to help rice growers either increase their competitiveness and modernize their rice production or shift to other crops.

The character of transformation of the threats to Russia’s energy security as the basis for evaluating the possibilities to meet the prospective demand for primary energy resources

The paper analyses the situation with ensuring energy security in Russia over the past five years and provides an assessment of the nature of the transformation of the most significant threats to Russia’s energy security until 2030. It is shown that by 2030 the annual potential of fuel and fuel in the country Energy complex for the production of primary fuel and energy resources together with the import of fuel and energy to Russia will significantly exceed its domestic needs. At the same time, the ability to export Russian natural gas could be significantly reduced. The paper shows that the situation with the decline in opportunities for the production and export of natural gas in Russia is not very encouraging. There are no prerequisites for a significant increase in world prices for hydrocarbons until 2030. And at the same time, there is a constant increase in the cost of oil and gas production and transportation on average across Russia. The paper concludes that the possibilities for the development of the Russian economy through the sale of only natural resources are practically exhausted by now.

THE CHANGE IN WORLD PRICE AND EXPORT TAX OF CRUDE PALM OIL AND THEIR IMPACT ON THE ECONOMY AND WELFARE IN INDONESIA: USING A COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODEL

The research aimed to analyze the impact of change in world price and export tax of crude palm oil on the export and domestic production performance of some selected economic sectors, as well as households’ welfare in Indonesia. The analyses were carried out by a Computable General Equilibrium (CGE) static model with data taken from Indonesian Social Accounting Matrix (SAM) 2008. The results showed that the increase in world price accompanied by the increase in export tax of crude palm oil and rupiah depreciation have positive impact on the export and domestic production performance of palm oil manufacture sectors and other related economic sectors. Prevailing progressive tax on crued palm oil export does not have negative impact resulted in decreasing palm oil export because export unit price received by producers remains higher than the price at baseline. Due to the increasing of export performance and domestic production, production sectors have economic ability to meet the demands of paying higher value-added upon primary production factors owned by households so that households’ factor income increase and eventually, it leads households’ welfare increase as well.

Rents in the era of resource scarcity: global payment flows under alternative scenarios

Resource prices rise when more costly sources need to be exploited. When the world price increases, owners of low-cost sources receive scarcity rents. The magnitude of the rents depends on the range of resource qualities being simultaneously exploited and can represent a substantial transfer of wealth to those with property rights to large stocks of high-quality, easily accessible resources. These rents are bound to increase in the future along with the size of the human population, raised consumption expectations, and deployment of technologies that depend on a wider range of natural resources for their unique properties. We report results for a set of scenarios for a three-region, four-sector, three-resource world economy, where progressively increased consumer demand requires a second and then a third region to extract ore. This numerical example illustrates how the amount of rents transferred to the low-cost producers depends on the size of the low-cost endowments relative to world demand and on the differential costs of extraction relative to the highest-cost producer. The paper develops a framework for tracing global money flows from payments for specific consumer goods in one or more economies to receipts by owners of the embodied factors of production under alternative scenarios about the future. This objective requires a substantial generalization of methods utilized for ex post analysis of input-output databases for past years. For a world economy of m regions, n sectors, and k factors of production, we first compute scenario results using the World Trade Model with Bilateral Trade, then generate the Multiregional Input-Output database corresponding to each scenario, and finally compute a new Consumer-to-Factor Matrix from which the payment network is derived. JEL Classification: F18, O13, C67, C61

Trade Policy Inconsistency and Maize Price Volatility: An ARCH Approach in Kenya

AbstractThe 2007–2008 food crisis and current food price swings led economists to re‐evaluate the potential for policy instruments to manage food price volatility, including tariff policy. The use of tariffs in importing countries to stabilize price is theoretically not recommended because of its domestic and international costs but in practice many countries use import tariffs with the intention to stabilize their domestic prices. Among them, some achieve price stabilization, some do not. We address the reason why it sometimes works, sometimes not. In the context of Kenya, we show that while domestic price levels are mainly explained by seasonal cycles, and international prices, domestic price volatility is mainly explained by inconsistent moves of trade policy. Thus, the ability of a policy regime to lower food price volatility does not depend on the nature of the policy instrument only, but also on the government ability to implement it. We define a consistent policy adjustment as a tariff decrease when world price increases and a tariff increase when world price is decreasing. We use an autoregressive conditionally heteroscedastic model of price determination in which prices and prices volatility are jointly estimated, using monthly data over the 1994–2009 period in Kenya.

Improving food security in developing countries: a role for the IMF

The focus of the present paper is upon the problem of short-term food insecurity, as manifested in variability in year to year per capita consumption. The author argues that fluctuations in per capita food consumption levels are the direct result of a shortage of foreign exchange which limits the capacity of low income countries to obtain the level of food imports necessary to offset a sudden shortfall in domestic production and/or an increase in world prices. It is suggested, therefore, that the international community could play a significant role in the alleviation of the food insecurity problem in LDCs through the provision concessionary finance for the funding of exceptional food import requirements.

Policy reforms and asymmetric price transmission in the Zambian and Tanzanian coffee markets

Several governments in sub-Saharan Africa have embarked on various market reforms to improve commodity market performance. However, the success of such market reforms depends partly on the strength of the transmission of price signals between spatially separated markets and between different levels of commodity value chains. This study employs momentum threshold cointegration and error correction models to examine the impact of policy reforms on the transmission of prices between the world coffee market and domestic prices in Zambia and Tanzania. The findings show that in the case of Zambia, where policy reforms liberalized coffee markets, the producer prices respond more swiftly to decreases than increases in world market prices, and this swiftness increased after the policy reforms. For Tanzania, where reforms resulted in increased government intervention, producer prices were found to respond quicker to increases than decreases in world market prices over the period under consideration. However, the period before reforms showed domestic prices responding more swiftly to decreases than increases in world prices, while the post-reform period was characterized by faster responses to increases than decreases in world prices.

World food prices and poverty in Indonesia

Spikes in international food prices in 2007–2008 worsened poverty incidence in Indonesia, both rural and urban, but only by small amounts. The paper reaches this conclusion using a multisectoral and multihousehold general equilibrium model of the Indonesian economy. The negative effect on poor consumers, operating through their living costs, outweighed the positive effect on poor farmers, operating through their incomes. Indonesia's post‐2004 rice import restrictions shielded its internal rice market from the temporary world price increases, muting the increase in poverty. But it did this only by imposing large and permanent increases in both domestic rice prices and poverty incidence. Poverty incidence increased more among rural than urban people, even though higher agricultural prices mean higher incomes for many of the rural poor. Gains to poor farmers were outweighed by the losses incurred by the large number of rural poor who are net buyers of food, and the fact that food represents a large share of their total budgets, even larger on average than for the urban poor. The main beneficiaries of higher food prices are not the rural poor, but the owners of agricultural land and capital, many of whom are urban based.

“Moving” land across borders: spatial shifts in land demand and immiserizing effects

The rush for land acquisition has attracted considerable attention from the scientific community, although actual research on the topic remains thin. This paper attempts to break new ground by studying the potential effects of land deals in the context of a small open economy subject to exogenous shocks. In particular, it makes three main arguments: first, an increase in world prices of the agro-business sector causes skewed effects in the subsistence sector; second, an attractive premium offered by hosts to lure investors may have immiserizing effects; and third, technological efforts will have favorable effects if host countries adopt policies to revitalize agriculture.

The poverty implications of high oil prices in South Africa

AbstractAn energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa. The first scenario assumes that increases in international oil prices are passed on to end users with no changes in government policy instruments. In this scenario, poverty indicators increase. The second scenario assumes that the world price increases are nullified by a price subsidy by the government. This scenario still leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households’ income induced by the financing method used. While revenue generated from a 50 per cent tax on windfall profit of the petroleum industry helps to minimize the loss in government revenue, it does not contribute to mitigating the increasing poverty trend, since the decline in saving and investment under this scenario restricts the country's growth, employment and income distribution perspectives.

Trans-Border Land Acquisitions: A New Guise of Outsourcing and Host Country Effects

The rush for land acquisition — primarily driven by food shortages, food price volatility, and the run for agrofuel — has drawn considerable attention, as documented by reports published in late 2009, 2010, and 2011. Terminological differences aside, it is — quite distinct from material or service outsourcing — a kind of off-shoring farm production across borders to relatively land-abundant nations and exporting it back to mitigate the adverse effects of food insecurity. While the academic literature is not capacious, this paper, the first of its kind, attempts to study its (potential) effects in the context of a small open economy subject to exogenous shocks. The presence of a sector subject to land acquisition is central to the analysis. In particular, the paper notes that: (i) an increase in world prices of agro-business sector causes skewed effects (shrinkage) in manufacturing or innovative sectors, and subsistence sector (via forward and backward linkages), causing price change vulnerability; (ii) with attractive premiums offered by host country, land acquisition will undermine the avowed objective of mitigating food shortages and aggravate income inequality; (iii) technological progress or inducing technological efforts via skills, capacity building, and infrastructure development will have positive effects if host countries adopt a policy climate favourable to fostering governance and education for revitalizing agriculture. Further extensions to address pertinent (stylized) facts are also explored.