The war in Ukraine has aggravated existing tensions on the agricultural commodities market. Since late 2021, prices for commodities such as grains and vegetable oils have reached record highs, surpassing even the levels of the global food price crises of more than a decade ago. Now, the invasion of Russian forces in Ukraine has sent prices soaring even higher. This has above all affected import-dependent countries in the MENA region and sub-Saharan Africa, which rely heavily on Russian and Ukrainian wheat. Disruptions to exports from the Black Sea region and high prices are further destabilizing food security in these regions. However, global demand for wheat is expected to be met in the current marketing year since countries such as Australia, India and the USA will increase exports to fill the gap left by Russia and Ukraine. It is difficult to predict what will happen beyond this marketing year, as this will be determined by the development of the current conflict in addition to agricultural fundamentals in key supply and demand regions. Global food systems and competitive international trade structures, in particular, are key to dealing with crises and mitigating the risks of food shortages. That way, disruptions in some exporting regions can be compensated for by exports from another. However, this requires greater collaboration in international trade. Any calls to move towards a centrally planned economy or autarky are strongly advised against, as this would only be to the detriment of food security in the Global South.

Trade restrictions; export controls; food crisis policy; Former Soviet Union countries; functioning of agricultural markets; efficiency of food supply chains; price transmission; price volatility; extreme weather events; global food security

We investigate wheat price relationships between the import-dependent countries in Central Asia and the South Caucasus and the Black Sea wheat exporters to assess wheat market efficiency which is crucial for ensuring availability and access to wheat and for reducing food insecurity. Results of linear and threshold error correction models suggest strong influence of trade costs on market integration in Central Asia, while those costs are of minor importance in the South Caucasus. In particular, wheat trade in Central Asia is characterized not only by higher transportation costs but also unofficial payments play a large role. In addition, wheat price volatility is substantially higher in the wheat importing countries of Central Asia compared to the South Caucasus. To foster market functioning, wheat trade should be facilitated by policies reducing trade costs. This includes investments in grain market infrastructure, eliminating unofficial payments, but also resolving geopolitical conflicts. However, wheat trade in this region is characterized by large distances, low scope for import diversification and repeated export restrictions by Black Sea exporters. Therefore, trade enhancing policies should be complemented with policies increasing wheat self-sufficiency to enhance food security.

Utilizing a price transmission approach, we focus on price relationships between the countries of the Commonwealth of Independent States (CIS) and how price changes on the world agricultural market are transmitted to the domestic CIS markets. In this study, we establish a unique price data set on five different agricultural products (id est wheat, pork, beef, poultry and whole milk powder) observed in eight different CIS countries. The results of the price transmission analysis indicate that regional integration within the CIS is strongest for pork and beef, followed by poultry and whole milk powder. The integration of CIS markets in world agricultural markets is strongest for wheat and beef, whereas it is relatively low for pork and poultry. Furthermore, beef markets in the CIS countries are the strongest integrated within the region, with the EU and the world market. Overall, our results indicate that domestic market support and trade policies, physical trade flows between countries, infrastructure, and bilateral or multilateral trade agreements play a key role in market integration of the CIS countries. These determinants should be particularly considered when designing recommendations for improving agri-food supply chain competitiveness in the CIS countries.