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Impacts of the war on acute food insecurity remain highest near frontlines

  • Targeted Analysis
  • Ukraine
  • September 2023
Impacts of the war on acute food insecurity remain highest near frontlines

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  • Key Messages
  • Key Messages
  • In Ukraine
  • Globally
  • Current Situation in Ukraine
  • Current Status of Global Commodity Markets
  • Global Impacts through May 2024
  • Annex 1: Regional Impacts of BSGI Expiration
  • The following report on Ukraine is a targeted analysis conducted by the FEWS NET Early Warning Team in response to ongoing events in the region. FEWS NET does not have a presence in Ukraine and does not cover Ukraine through the standard mechanisms used for monitoring and projecting food insecurity in our 31 reporting countries. As such, analyses on Ukraine are based on available secondary data and analysis. Updated analyses will be produced on an ad hoc basis and can be found here.


    In Ukraine
    Key Messages
    • Comparatively little territory has changed hands over the past year. Meanwhile, the Ukrainian economy has stabilized and inflation has eased. Given these trends and the continued provision of government-provided social support, community support, and humanitarian assistance to vulnerable populations, most of the population of Ukraine is expected to be meeting their basic needs, at a minimum. However, after a year and a half of war, many poor households likely face eroded resources and coping capacity. The poorest households who are unable to access sufficient combined income and social assistance are likely not meeting all food and essential non-food needs, with Stressed (IPC Phase 2) outcomes likely.
    • On the other hand, high concern exists for acute food insecurity among populations in the most active frontline areas. Households near frontlines face threats to personal safety, damage to homes and critical infrastructure, disruptions to livelihoods, and gaps in the provision of electricity and essential services. In the most active frontline areas, these impacts are worse, and disrupted access to markets and financial services also continue to be reported. In these areas, a notable share of the population – with particular concern for the elderly and disabled – likely face food consumption gaps and Crisis (IPC Phase 3) outcomes during periods when humanitarian access is also prevented. 
    • After experiencing reduced profits last year, farmers’ low liquidity created challenges in accessing sufficient inputs for the 2022/23 production season. As the 2023 harvest season concludes, farmers will again face loss of export markets and low domestic selling prices, resulting in another year of reduced income. 

    Globally
    Key Messages
    • Prices of fuel, fertilizer, and agricultural commodities have generally declined to pre-invasion levels, and supply chains have adjusted. FEWS NET anticipates that high global humanitarian food assistance needs will persist into 2024, driven primarily by the impacts of local conflict, severe weather shocks, including droughts and floods, and poor macroeconomic conditions.       The war in Ukraine is no longer expected to play a major role in exacerbating the drivers of acute food insecurity in the countries that FEWS NET monitors. 
    • Though the expiration of the Black Sea Grain Initiative (BSGI) in July 2023 reduces prospects for Ukrainian exports, the decline will be less significant than what was experienced following the initial invasion, given improved capacity via alternative export routes as well as the likely continuation of some exports via the Black Sea ports. The reduced expectations for Ukrainian exports have resulted in some slight downward revisions to projections for global cereal trade in the coming 2023/24 marketing year; however, global markets are still anticipated to be adequately supplied, and global cereal prices are expected to continue their declining trend in 2024. The main impacts on global markets will be felt through greater price volatility and greater vulnerability to future supply and demand shocks. For additional analysis of the impacts of the expiration of the BSGI on the regions that FEWS NET monitors, see Annex 1.

    Current Situation in Ukraine

    Status of the Conflict

    • At the peak of Russia’s 2022 invasion, the Russian Armed Forces (RuAF) occupied approximately 163,000 km2 of Ukrainian territory. Following successful Ukrainian counteroffensives in Kherson (July–November 2022) and Kharkiv oblasts (September–October 2022) and localized gains in Ukraine’s summer offensive in Zaporizhzhia oblast, Russia now occupies an estimated 108,000 km2 as of September 2023. 
    • The Russian winter offensive, which began in early 2023, largely failed to secure significant territorial gains. 
      • After moving significant forces to the Bakhmut area and launching an offensive against Ukrainian lines near the city in August 2022, RuAF made territorial gains in the first half of 2023, despite heavy personnel losses. By mid-May, RuAF and Wagner forces controlled most of the city of Bakhmut. However, RuAF offensive operations around Vuhledar (Donetsk oblast) failed to penetrate Ukrainian lines, at the cost of heavy materiel and personnel losses. 
    • In June 2023, Ukrainian Armed Forces (ZSU) launched counteroffensive operations in Zaporizhzhia oblast and, to a lesser extent, in Kherson, Donetsk, and Luhansk oblasts. 
      • RuAF built extensive networks of defenses in occupied portions of Ukraine. Some 2,000 km of fortifications were built along the front lines, extending from Belarus to the Dnipro River, while minefields were expanded to cover 70,000 km2.

      • From June through September, ZSU launched offensive operations around Orikhiv, Klishchiivka, Velyka Novosilka, and Robotyne. As of September, Ukrainian territorial gains have been limited, with modest gains south of Bakhmut (Klishchiivka) and a 70 km2 breach of Russian lines near Robotyne.
        • The Ukrainian counteroffensive likely aims to pin Russian forces around Bakhmut and along the Svatove-Kreminna line and to sever the land bridge linking mainland Russia to Crimea, liberating Melitopol and Berdyansk or at least placing ground lines of communication and logistics along the land bridge under Ukrainian fire control.
      • Ahead of and during counteroffensive operations, Ukrainian forces escalated drone and missile strikes targeting military infrastructure, airfields, military production facilities, and naval infrastructure within Russia and Russian-occupied portions of Ukraine. 
    • On June 23, Wagner Private Military Company (PMC) forces staged a rebellion, seizing control of the city of Rostov-on-Don, which is host to the headquarters of Russia’s Southern Military District. Wagner forces subsequently moved through Voronezh oblast and into Lipetsk oblast toward Moscow. Following alleged mediation efforts by Russian and Belarussian officials, Wagner forces ceased their advance on June 24. Subsequently, Wagner fighters who had not participated in the rebellion were allowed to sign contracts with the Russian Ministry of Defense, while the bulk of Wagner forces were disarmed of heavy weaponry and moved to camps in Belarus. On August 23, a private jet crashed in Tver oblast, killing seven members of the Wagner PMC, including Wagner founder Yevgeny Prigozhin and cofounder Dmitry Utkin.
    • Russian strikes on Ukrainian civil infrastructure and urban centers continued through September 2023. However, an increasing number of Russian drones and missiles have been shot down by the ZSU, following deliveries of western air defense systems.
      • On June 6, suspected Russian forces blew up the Kakhovka dam, flooding some 600 km2 throughout Kherson oblast. According to Ukrainian officials, Russian forces destroyed the dam to hinder Ukrainian counteroffensive operations in Kherson oblast.
      • Romanian officials confirmed that a Russian drone penetrated Romanian airspace on September 4, detonating near the village of Plauru. It is very likely that the drone crashed while attempting to target Ukrainian port facilities along the Danube. 
    • On July 18, the Black Sea Grain Initiative expired, complicating maritime exports of foodstuffs and fertilizer through Odesa, Chornomorsk, and Pivdennyi ports, with Russian officials demanding that the West facilitate Russian agricultural exports before resuming the deal. Following the expiry of the deal, Russian authorities announced that vessels traveling to Ukrainian Black Sea ports could be considered as legitimate military targets. Subsequently, Russian forces significantly escalated drone and missile strikes on port facilities in Odesa, Mykolaiv, and Chornomorsk, as well as on port facilities along the Danube River in Izmail. 

      • According to the Ukrainian Ministry of Infrastructure, Russian strikes since July 18 have damaged or partially destroyed some 105 port facilities. Furthermore, Russian strikes against port facilities along the Danube River and the expiry of the Black Sea Grain Initiative have led to a 3-million-ton reduction in exports of grain to Asia, Africa, and Europe.

      • The United Kingdom’s Foreign office has claimed that Russian forces launched at least two cruise missiles against a Liberian-flagged civilian cargo vessel docked in Odesa port on August 24. According to British officials, the cruise missiles were intercepted by Ukrainian air defenses. 

    Population Displacement

    According to monitoring by UNHCR, an estimated 6.2 million Ukrainian refugees were recorded globally as of September 26, 2023, with the greatest numbers recorded in the Russian Federation (1.3 million)1,Germany (1.1 million), and Poland (1.0 million). Overall, humanitarian agencies, host country governments, and local communities are still expected to provide support sufficient to allow most refugees to meet their minimum basic energy requirements. However, over time, community support has likely declined amid fatigue from the protracted war effort. 

    Figure 1

    Location of internally-displaced persons (IDPs) in Ukraine, by oblast
    A map of Ukraine with different colored states

    Source: IOM General Population Survey

    The UNHCR conducted interviews2 and focus group discussions with refugee populations in April and May 2023. The majority of refugees (73 percent) have been displaced since the immediate aftermath of the invasion (February to April 2022) and a disproportionate share of refugees (39 percent) are originally from eastern Ukraine. According to the results, only 43 percent of refugee households reported being employed or self-employed. However, a much larger share – 67 percent of refugee households – reported receiving social protection or cash assistance. Nonetheless, only 35 percent of refugees reported that their income was sufficient to meet most of their basic needs. It should be noted, however, that older persons and those not working were more likely to report struggling to meet their basic needs. Given that approximately half of the sample was collected using a voluntary internet survey, it is highly likely that those not working – and who therefore have more free time – were more likely to complete the survey. As such, the results are likely subject to at least some degree of selection bias, resulting in higher levels of unemployment and overall need being reported than what is the case among the total refugee population. Additionally – in this and all surveys conducted in humanitarian contexts – respondents may be motivated to overreport need in the hopes of attracting additional assistance, particularly if they are not working, and many households may well be unable to afford a healthy and diverse diet even while they can meet their minimum basic energy requirements. Despite methodological limitations, results of the survey still indicate cause for concern for acute food insecurity among certain population groups among refugees – namely, the unemployed and the elderly – as some of these households are likely struggling to meet their minimum food needs given overall limited income and the pressures of inflation.

    The latest representative survey conducted by the IOM from May 11 to June 14 recorded a total 5.1 million internally-displaced persons (IDPs) in government-controlled areas of Ukraine (Figure 1) according to self-reported criteria.3 Most IDPs are experiencing protracted displacement: 60 percent reported having been displaced for more than one year. The results of the survey suggest that needs among IDP households remain higher than needs in the general population. For instance, approximately 29 percent of IDP households reported needing food, compared to 17 percent of returnee households (defined as those previously displaced, either abroad or within Ukraine, who have returned to their place of residence) and 13 percent of non-displaced households. However, results of the same survey also provide some suggestion that IDPs are earning slightly more income than non-IDPs, with 16 percent of IDP households compared to 21 percent of non-IDP households reporting earning monthly income of under 5,000 UAH. This may be because IDPs receive monthly government-provided assistance benefits, with 22 percent of IDP respondents reporting this as their primary source of income. However, self-reported income data is notoriously subject to bias, and results should be treated with caution. More recently, as of the end of August, IOM data indicate that the total number of registered IDPs in Ukraine continues to decline, though the number in southern and eastern oblasts has increased due to displacement from frontline areas. 

    Domestic Economy

    The Ukrainian economy has stabilized this year following a volatile 2022. According to the National Bank of Ukraine (NBU), the national annual inflation rate decreased to 8.6 percent in August 2023, down from the 30 percent high observed at the end of 2022 (Figure 2). The easing of inflation has occurred across nearly all categories of goods and services, and has been accelerated by sharp increases in the domestic supply of raw food – particularly fruits and vegetables – due to favorable weather conditions and improved harvests, which have driven down prices. However, though prices of vegetables and some fruits are significantly lower than at this time last year (by 26 percent for vegetables), prices of other goods and services are similar or higher than at this time last year. 

    Figure 2

    Annual inflation rate (%) as measured by the Consumer Price Index (CPI), plus forecast through 2025
    Annual inflation rate (%) as measured by the Consumer Price Index (CPI), plus forecast through 2025

    Source: National Bank of Ukraine

    Meanwhile, reduced interest rates in recent months are intended to increase available capital for investment and recovery, a pivot from the initial wartime monetary policy of strict capital controls to prevent large outflows. The NBU forecasts that Ukraine’s GDP will grow approximately 4 percent in 2023; however, due to a sharp contraction in 2022, the GDP is expected to be 25 percent below pre-war levels at the end of the year. Growth thus far in 2023, estimated by the NBU at 2.2 percent as of August, does suggest some positive developments. NBU indicates that the private sector and consumers have adapted more quickly than expected to wartime conditions, contributing to better-than-expected economic performance. The World Bank, on the other hand, estimates a more modest growth rate of 0.5 percent in 2023, reflecting conservative sentiments in foreign direct investment.

    Figure 3

    Sources of Ukraine budget financing in 2023 (billions of USD)
    Sources of Ukraine budget financing in 2023 (billions of USD)

    Source: Ukraine Ministry of Finance

    Despite this, the economy remains under significant strain as the cost of financing the war exceeds the supply of international aid and domestic resources. As such, budget financing remains a major concern as the increasing fiscal cost of sustaining and expanding forces is expected to drive a 40 billion USD budget deficit in 2024. Ukrainian finance officials are increasingly relying on external finance to support a planned 50 percent increase in its military budget (Figure 3). In August, public revenues benefitted from rebounds in grain harvests and employment in agriculture. Regional economic uncertainty, however, threatens to limit growth in the agriculture sector. In particular, Poland, Slovakia, and Hungary recently issued grain import bans, which Ukraine intends to challenge with the World Trade Organization. These bans, intended to support farmers’ incomes, affect supply chains beyond the borders of Poland, Slovakia and Hungary, as all three countries typically are part of transport routes to other European markets.

    Agricultural Production

    Ukraine is an important producer of wheat and maize for export.4 Wheat is primarily a winter crop, with planting occurring beginning around October, and harvesting beginning around July of the following year (Figure 4). Maize is a spring cereal crop, with planting around May and harvesting beginning around October. A marketing year (MY) is defined as the twelve-month period beginning with the first month of harvesting. In Ukraine, the marketing year for maize is from October to September of the following year; the marketing year for wheat is from July to June. When Russia invaded Ukraine in February 2022, planting of winter wheat for MY 2022/23 had already occurred, while planting of spring maize had yet to begin. 

    Figure 4

    Seasonal calendar for production of major crops in Ukraine
    Seasonal calendar for production of major crops in Ukraine

    Source: FAO GIEWS

    Currently, as the 2023 harvest nears conclusion, production levels for grains in MY 2023/24 are expected to be similar to MY 2022/23, which was also affected by the conflict (Figure 5). In MY 2022/23, USDA estimated that maize production declined 36 percent from MY 2021/22, and wheat production declined by 35 percent, despite favorable climatic conditions. Sunflower seed production declined at even higher levels in 2022/23, approximately 45 percent from 2021/22. In areas affected by conflict, reductions in crop production were driven by direct destruction of crops and restricted access to fields. In more widespread areas, labor shortages and an unstable economic climate contributed to reduced agricultural production for many farmers. However, beginning in 2022/23, only production from unoccupied territory is considered in USDA’s production estimates. According to USDA, the occupied areas that are no longer considered in national production estimates contributed more than 32 percent of total agricultural production of major crops in 2021 (MY 2021/22). As such, while both direct and indirect impacts of conflict likely did lead to localized production losses for affected farmers in unoccupied areas of Ukraine, the change in the total land area considered in the national production estimates is responsible for the largest share of the reduction in national-level production volumes year-on-year beginning in MY 2022/23. 

    However, even where production volumes were not reduced, farmers have faced numerous and significant challenges since the beginning of the war. These challenges include insufficient storage facilities, lower selling prices, and, in areas directly impacted by conflict, threats to safety due to active fighting and landmines, among other obstacles. Though the backlog in export volumes is lower than at this time last year, concerns are growing that there will be insufficient storage facilities available for maize crops, which are to be harvested in October, as much of the wheat that typically would have been exported will remain in storage. Reduced storage capacities are expected to constrain maize stocks for 2023/24.

    Figure 5

    Production volumes of wheat and maize in Ukraine, MY 2018/19 to 2023/24
    Production volumes of wheat and maize in Ukraine, MY 2018/19 to 2023/24

    Note: The marketing year for maize in Ukraine is from October to September, and that for wheat is from July to June. Production estimates for MY 2022/23 and 2023/24 only include production from unoccupied territory.

    Source: Source: USDA

    Analysis by USDA suggests that agriculture in occupied territory is faced with even greater challenges, including abuses of property rights, theft of agricultural equipment, and forced sale of grain to de facto authorities. Additionally, farmers in these territories are expected to have largely lost export markets, with notable reductions in profits expected as a result. 

    In both unoccupied and occupied territory, the economic repercussions of the war have been a key driver for reduced production and profits via multiple channels. Notably, a 60 percent drop in domestic crop prices since the conflict began has severely constrained farmers’ liquidity and challenged input procurement. FAO attributes approximately 56 percent of financial losses in the crop sector in MY 2022/23 to increased production costs, especially for fuel. USDA also highlights the impact of trade disruptions in MY 2021/22 on planting decisions in MY 2022/23. Farmers were left with an estimated 1.6 billion USD in unsold grains at the end of MY 2021/22, driving a shift towards crops like sugar beets and buckwheat that can be more easily sold on the domestic market.

    The breach of Kakhovka dam in June 2023 has also caused irreversible damage to irrigation systems, affecting 350,000 hectares of land in Mykolaiv alone. While favorable rainfall conditions are expected to support stable yields in this region, satellite imagery reveals significant abandoned agricultural land downstream in southwestern Kherson and Crimea following the loss of irrigation water. Long-term effects of flood damage are expected to be more impactful than short-term crop losses, as flooding likely damaged or destroyed pumping equipment that will require time-consuming repairs. Soil salinity will increase if irrigation systems remain dysfunctional for extended periods, adding another layer of complexity for agricultural recovery.

    Exports

    The expiration of the Black Sea Grain Initiative (BSGI) in July 2023 puts further pressure on Ukrainian agricultural exports. Since the BSGI was launched in August 2022, nearly half of Ukraine’s total agricultural exports—nearly 33 million tons of grain and sunflower seeds—have been shipped via the Black Sea ports. In terms of tonnage, approximately 78 percent of all agricultural products shipped via the BSGI consist of maize and wheat.

    Since allowing the BSGI to expire in July, Russia has intensified attacks on port infrastructure along the Danube River. More than 270,000 MT of grain have been reported destroyed due to these attacks between July and August 2023. Though damage has not meaningfully impacted export capacity, freight rates for shipments from the Ukrainian Danube port at Izmail to the Romanian Black Sea port at Constanta have surged by approximately 50 percent from July to September, and continued strikes targeting transport infrastructure are expected to further inflate these rates. Additionally, the pivot to alternative transport routes has put strain on the logistics sector. Thousands of trucks that formerly transported grain to the Odes     a port have overwhelmed smaller ports on the Danube, as the limited number of barge pilots and tugboats is constraining capacity. Larger agribusinesses have made investments in alternative transport routes, including Danube port terminals. However, infrastructure takes time to develop and, currently, Ukraine's export capacity through alternative routes like river, trucks, and rail is limited to about 2.5-3.0 MMT per month. This is only 12-14 percent of the 21.4 MMT monthly export capacity of Ukrainian Black Sea ports. Additionally, increased Ukrainian export flows into ports typically dominated by grain from neighboring producers has increased regional economic tensions, partially contributing to the aforementioned grain import bans from Poland, Slovakia, and Hungary.

     

    Figure 6

    Settlements (towns and villages) assessed by REACH, by overall level of need in the month prior to data collection in Round 10 (May 2023) and Round 11 (June/July 2023); box shows concentration of settlements with highest need in Round 11
    Settlements (towns and villages) assessed by REACH, by overall level of need in the month prior to data collection in Round 10 (May 2023) and Round 11 (June/July 2023); box shows concentration of settlements with highest need in Round 11

    Source: REACH

    Populations of Concern for Acute Food Security

    Frontline areas

    The Ukrainian counteroffensive that began in June 2023 has led to increased hostilities in frontline areas. According to ongoing monitoring by REACH, as of June/July 2023, key informants (KIs) from 93 percent of assessed settlements (towns and villages) in frontline areas (Figure 6) reported safety concerns, up from 80 percent in the prior May round. Other major concerns reported by key informants were: disruption to telecommunications (reported by KIs in 86 percent of settlements, up from 62 percent in the prior round), disruptions to utilities (76 percent, up from 53 percent), access to medicines (74 percent, up from 49 percent), access to healthcare services (46 percent, up from 31 percent), and access to housing (47 percent, up from 27 percent). On the other hand, a slight improvement in access to financial services was reported. In settlements 30-100 km from the front line, the percentage of settlements with KIs reporting that most people do not have access to cash, ATMs, or banking services decreased from 26 to 22 percent of settlements. However, in areas less than 30 km from the frontline, the situation remained unchanged. 

    Safety and security threats, destruction to infrastructure and assets, and disruptions to telecommunications and utilities services continue to disrupt typical livelihoods and income-earning activities in frontline areas. However, REACH monitoring indicates that, while safety concerns are widespread, notable disruptions to the provision of utilities are more limited to areas closer to the frontlines (less than 30 km). Additionally, significant disruptions to market access are now a relatively limited concern. Only in 14 percent of settlements were notable concerns around market access reported, with the most severe disruptions – characterized by most people being unable to access markets – reported in nine settlements within 30 km of the frontlines. Overall, KIs from 92 percent of settlements reported that most people were able to access non-food items. Additionally, in terms of access to sufficient food, KIs in the vast majority (85-87 percent) of settlements reported a manageable or normal situation with people able to access the necessary items. In areas where KIs reported that some people were unable to access sufficient food, lack of money was the most commonly reported obstacle. However, households without sufficient income sources – including the disabled and elderly – and who are not receiving sufficient social support are likely facing Stressed (IPC Phase 2) outcomes in the face of elevated market prices, with some worst-affected households facing Crisis (IPC Phase 3) outcomes.

    However, the situation is far more concerning in frontline areas of Donetsk oblast (Figure 6: callout box). In these settlements, key informants reported concerningly high levels of movement restrictions (including no movement possible in some settlements), and significant shares of the population (often more than half) facing lack of access to healthcare services, insufficient housing, lack of access to improved sanitation facilities, and disruptions to financial services. KIs reported that more than half of the population was unable to access sufficient food in the 14 days prior to data collection in several settlements of Donetsk oblast (Zvanivka, Siversk, Zalizne, Chasiv Yar, Vulhedar, Marinka, and Krasnohorivka, as well as in Dvorichna of Kharkiv oblast. In these areas, a significant share of the population is expected to be facing Crisis (IPC Phase 3) outcomes in the absence of humanitarian assistance. 

    Interestingly, while KIs in many settlements did report that some groups of people were less able to meet their needs compared to the rest of the population, no population group was identified across a majority of settlements. The population group that was most commonly identified as being less able to meet their needs was returnees, reported in 40 percent settlements. 

    General population of Ukraine

    Across Ukraine, much of the general population has likely benefited from stable or somewhat improved opportunities for income-earning alongside gradual economic recovery and the overall demonstrated resilience of Ukrainian businesses in the face of war-related disruptions. Fuel prices as of August 2023 were also similar to the same time last year, somewhat easing pressure on businesses and livelihoods dependent on fuel as a key input, including in the agriculture, transportation, and processing/manufacturing sectors. 

    However, farmers of key export crops (cereals and oilseeds) will likely continue to face reduced levels of income due to loss of export markets and, in the case of fruit and vegetable farmers – due to significant declines in domestic prices. While many farmers are likely currently experiencing seasonal increases in access to income during the harvest season, income from crop sales is likely to be exhausted earlier than normal, particularly given the likelihood that some farmers are facing higher-than-normal levels of debt due to the higher cost of agricultural inputs combined with low liquidity in the recent agricultural season. 

    Meanwhile, most households continue to face above-average expenditure requirements. While inflation has eased notably throughout 2023, food prices – except vegetables – remain higher than at the same time last year. Additionally, the resumption of the pre-war tax collection system is likely to place additional strain on many households. However, the Ukrainian government continues to provide social support for poor households and vulnerable groups. This is being supplemented by notable humanitarian and community support. As such, most households in non-frontline areas are likely able to meet their minimum food needs. However, the poorest households and those who are not receiving sufficient social support have likely exhausted available resources such as savings, and are reducing essential non-food expenditures or meeting their needs through strategies such as borrowing. Stressed (IPC Phase 2) outcomes are expected among these households. 

    Available monitoring data provides additional support. According to REACH monitoring, overall levels of humanitarian need in non-frontline areas of Ukraine remain mostly “limited” or “moderate,” indicating that most people are able to meet their basic needs. 


    Current Status of Global Commodity Markets

    Global energy markets

    In addition to supply and demand factors, global energy prices can be heavily influenced by market speculation and geopolitical events. In 2022, the Russia-Ukraine conflict and related sanctions on Russia exacerbated an existing global fuel shortage, causing a 100 point rise in the fuel energy price index between August 2021 and March 2022. Since peaking in mid-2022, global energy prices have declined significantly, but remain above the January 2017 index (Figure 7).

    Figure 7

    Price indices for global fuel commodities, January 2017 to August 2023
    Price indices for global fuel commodities, January 2017 to August 2023

    Source: FEWS NET calculations based on World Bank data

    Among energy commodities, crude oil is particularly important; crude oil serves as a crucial raw material and fluctuations in its prices can have far-reaching implications for economic performance that are immediately felt by consumers. In 2022, Brent crude oil prices averaged 101 USD per barrel, marking their highest level since 2013 as global oil consumption reached 97.3 million barrels per day (b/d). On the supply side, global oil production also rose, by 3.8 million b/d in 2022, with OPEC+ accounting for over 60 percent of the increase. Driven by reduced demand and increased production, global oil prices continued to decline from their early 2022 peak until mid-2023 with the Brent crude price averaging 79 USD per barrel in the first six months of 2023. As of mid-2033, however, prices have begun to increase again, driven by increased demand and production cuts in OPEC countries

    Figure 8

    Fertilizer (USD/ton) and natural gas (USD/metric million British Thermal Unit), January 2018 – July 2023
    Fertilizer (USD/ton) and natural gas (USD/metric million British Thermal Unit), January 2018 – July 2023

    Source: FEWS NET, based on World Bank data

    Global fertilizer markets 

    Meanwhile, natural gas and coal are vital as they are extensively used for electricity and heat generation. Price fluctuations often reflect shifts in electricity demand, as uncertainty over future supplies can result in price volatility. Following a significant rise in 2021 and peak in 2022, global energy prices have decreased, leveling off to slightly above average levels in mid-2023. On the supply side, following milder-than-anticipated weather conditions, prices began to drop in October 2022 as European nations successfully replenished their storage capacities, leading to a reduction in overall demand. 

    In 2022, global fertilizer markets experienced an unprecedented upheaval, primarily attributed to the impacts of Western sanctions imposed on Russia and Belarus, which significantly reduced fertilizer supply despite exemptions for agricultural commodities. Subsequently, rising fertilizer prices deflated demand in affordability-driven markets, forcing markets to contract. 

    Between January and September 2023, the nitrogen and phosphate fertilizer markets stabilized, while the potassium chloride (potash) market continued to face disruptions. According to the International Fertilizer Association (IFA), exports of urea and phosphates have returned to pre-war levels. In contrast, ammonia and potash exports have decreased due to pipeline closures and a decrease in global demand. Of note, Belarusian potash exports have declined due to a Lithuanian ban on transporting Belarusian potash, in place since February 2022. As such, global potash supply remains below average because the lost volume from Belarus in 2022 cannot be immediately replaced, as potash mining operations require several years to develop. 

    Given these supply shifts along with reduced demand due to the peak prices in 2022, fertilizer prices have generally declined in 2023 (Figure 8). In particular, this is attributed to better-than-expected nitrogen and phosphorus supply, demand erosion for phosphorus and potash due to delayed or skipped purchases, and falling gas prices. Although fertilizer affordability has increased in 2023 over 2022, fertilizers remain relatively more unaffordable than the January 2015 reference period      (Figure 9), which is currently the primary driver behind the global reduction in fertilizer demand

    According to IFA analysis, global fertilizer application in fertilizer year (FY)5 2021 and FY 2022 contracted by 7.6 percent, close to the 8.4 percent decrease experienced following the global food price spike in FY 2008. In relative terms, three regions significantly reduced their fertilizer consumption during this period: West Asia (down 17 percent), West and Central Europe (down 15 percent), and Africa (down 14 percent). Notably, in Africa, where farmers are particularly sensitive to higher fertilizer prices, potassium consumption decreased by almost half (44 percent), a more substantial decline compared to other regions. 

    Figure 9

    Fertilizer affordability index; reference period is January 2015
    Fertilizer affordability index; reference period is January 2015

    Note: Values >1 indicate greater affordability relative to base period. Values <1 indicate less affordability relative to base period. For example, an index value of 1.1 indicates that fertilizer is 110% as affordable as in January 2015.

    Source: FEWS NET calculation based on FAO Cereal Price Index and Federal Reserve Bank of St. Louis’ fertilizer manufacturing index

    The IFA further reports that, similar to FY 2008, there was a more significant decline in demand for potassium compared to phosphorus and a more substantial reduction in phosphorus demand compared to nitrogen in FY 2022 as opposed to FY 2020. Specifically, potassium consumption experienced a notable decrease of 12 percent, while phosphorus declined by 9 percent, and nitrogen saw a more modest 5 percent decrease. These varying declines in nutrient usage underscored the critical role of nitrogen in enhancing crop yields, as well as the soil's ability to retain phosphorus and potassium. Farmers tend to be more inclined to forgo applications of phosphorus and potassium, when necessary, particularly if their phosphorus and potassium applications have been sufficient in previous years. 

    Global agricultural commodity markets 

    In 2023, global grain markets continued to adapt to the effects of the war in Ukraine. According to data from the International Grains Council (IGC), global grain markets remain adequately supplied (Figure 10). However, markets are tight, with total consumption in MY 2022/23 slightly exceeding production. 

    Figure 10

    Estimated global production and demand of grains (wheat and coarse grains), MY 2017/18 to 2023/24
    Estimated global production and demand of grains (wheat and coarse grains), MY 2017/18 to 2023/24

    Source: FEWS NET, based on International Grains Council data

    Since May 2022, international wheat prices have steadily decreased after reaching near-record highs due to disruptions in Ukraine's exports caused by the war. The BSGI, which ended in July 2023, enabled Ukraine to resume grain exports from its Black Sea ports, reducing the market’s concerns for future global supply. At the same time, throughout 2023, ample supplies and strong competition among exporters, particularly Russia and Australia, continued to push world wheat prices downward. By mid-2023, wheat prices had returned to pre-invasion levels and have continued to decline since then (Figure 11). Similarly, wheat futures at the Chicago Board of Trade (CBOT) have been declining since mid-2022, reaching their lowest point since October 2021 in September 2023, driven by abundant supplies, fewer trade disruptions, and strong export competition.

    Similarly, after peaking in 2022 due to war-related trade disruptions, international maize prices have also returned to pre-war levels. The reopening of Ukraine's Black Sea ports in July 2022 under the BSGI initially led to price drops. Throughout 2022, prices remained relatively stable, with occasional temporary increases linked to uncertainty about the BSGI extension. In 2023, maize prices decreased further, mainly due to increased seasonal availability from South American maize harvests, expected record maize production in Brazil, and larger output in the USA. By September 2023, maize grain prices were 21 percent lower than in September 2022. Similarly, maize futures prices have also declined in 2023, reaching their lowest point since December 2020 in September 2023. 

    After reaching record high levels in early 2022, international oilseed prices also declined, driven largely by increased global supplies and reduced demand. In September 2023, the IGC's soybean price index was 25 percent lower than in January 2023. Vegetable oil prices have continuously declined since reaching historic high levels in March 2022. This decline is attributed to expanded exports from Indonesia, reduced global demand due to higher import costs, and an abundance of palm oil. World rapeseed and sunflower oil prices also fell due to ample global supplies, with the latter benefiting from Ukraine's sunflower oil shipments under the BSGI.

    In contrast to grains and oilseeds, global rice prices continue to rise in 2023, and in September 2023 have reached their highest levels recorded since October 2008, influenced by both demand and supply factors. On the demand side, Asian buyers made strong purchases to stabilize domestic prices and replenish reserves as exportable supplies tightened due to production disruptions caused by adverse weather conditions and increased production costs. On the supply side, India—the largest rice exporter—banned exports of non-basmati and broken rice alongside reduced crop output. Concerns about potential production impacts from an emerging El Niño phenomenon have also contributed to recent price increases.

    Figure 11

    Global prices of selected grains and oilseeds and IGC composite price index, January 2018 to September 2023, January 2018 = 100
    Global prices of selected grains and oilseeds and IGC composite price index, January 2018 to September 2023, January 2018 = 100

    Source: FEWS NET, based on International Grains Council indexes


    Global Impacts through May 2024

    Projected Scenario of Conflict Through May 2024 

    • The war in Ukraine is expected to continue through at least May 2024 and very likely beyond. Engagements will likely continue along the eastern front, in Donetsk and Luhansk oblasts, and continue to escalate in Kharkiv and Zaporizhzhia oblasts with the continuation of Ukrainian counteroffensive operations. 
    • A peaceful resolution, ceasefire, or peace talks remain very unlikely in the coming months, as both Russian and Ukrainian demands to commence peace talks remain mutually unacceptable. 
    • It is unlikely that Russian authorities will agree to reinstate the BSGI in a form resembling the agreement that expired in July, as Russian demands will likely remain unacceptable to Western partners. 
    • Tactical RuAF territorial gains in northern Donetsk and northern Kherson oblasts are expected to continue, though at a slow pace. It remains extremely unlikely that any localized Russian advances will result in any meaningful breakthroughs for the RuAF.
    • It is likely that the ZSU will continue offensive operations in Zaporizhzhia and southern Donetsk oblasts through 2023 and into early 2024, resulting in incremental territorial gains. 
      • However, the pace of Ukrainian counteroffensive operations is likely to remain slow, with expected localized breaches of Russian lines being offset by movement constraints during the bezdorizhzhya fall muddy season in November, shortages of ordinance following weeks of significantly above-average ammunition expenditure, and an overall culmination of the counteroffensive. 
      • A moderately likely alternative scenario would see Ukrainian forces break through the remaining portions of Russia’s heavily fortified defensive lines, exploiting breaches, and leading to a partial crumbling of Russian lines in Zaporizhzhia oblast. However, in this scenario, it remains highly unlikely that Ukraine would be able to liberate currently occupied parts of Kherson, Zaporizhzhia, and Donetsk (west of the pre-February 2022 line of contact) oblasts by May 2024.
      • It is highly likely that Ukrainian forces will continue to escalate drone and missile strikes targeting military infrastructure, airfields, military production facilities, and naval infrastructure within Russia and Russian-occupied portions of Ukraine.
    • While the RuAF continue to station troops and equipment on Belarussian territory, it remains unlikely that Belarus will commit its military forces to the Russian war effort or that RuAF will conduct offensive operations from Belarussian territory. However, Belarus will likely continue to play a role as a logistics hub while providing Russia with a base to launch air, missile, and artillery strikes into Ukraine. 
    • The threat of RuAF missile and drone strikes on civil and energy infrastructure is expected to increase in the fall and winter, with Russia likely seeking to strike the country’s energy grid ahead of and during high energy demands months. However, successful Russian missile and drone strikes on Ukrainian infrastructure are expected to remain below the peaks observed in late 2022 to early 2023. Indeed, the threat of RuAF strikes will continue to be mitigated by Russian difficulties in replenishing stocks of key missile systems, and due to continued deliveries of surface-to-air missile (SAM) and air defense systems to Ukraine. 

    Projected Scenario of Ukrainian Exports Through May 2024

    In the most likely scenario, the BSGI will not be renewed. While some export shipments will likely continue through the Black Sea ports via the corridors established under the BSGI, it is assessed that Russia will likely maintain the capabilities to interdict maritime trade using long-range fire capabilities. However, Russian capabilities to maintain this blockage will face mounting difficulties over time, given increasing Ukrainian naval strike capabilities and expected high levels of diplomatic backlash associated with the successful targeting of civilian shipping. Overall, while the number of export shipments leaving the Black Sea ports is expected to increase in the course of the coming months, it remains unlikely that Ukraine will be able to export grain through the Black Sea ports at levels comparable to the peak levels recorded under the BSGI (around 5-7 million MT of grains and oilseeds per month, reached in late 2022/early 2023) due to the increasing insurance costs and the reluctance of ship owners and operators. Should Russia strike a ship – particularly at sea – then risk tolerance is likely to decrease further. 

    The expiration of the BSGI is a key factor contributing to the downward revision of the World Bank’s GDP growth forecast for Ukraine. The IMF projects reduced exports following the expiration of the BSGI, as well as a 20 percent increase in imports, contributing to a widening current account deficit. USDA projects a 32 percent decline in Ukrainian agricultural exports in MY 2023/24 from the previous year, driven by a reduction in coarse grain (maize and barley) exports from 31 million metric tons (MMT) 2022/23 to 21 MMT in MY 2023/24. These forward-looking estimates sharply contrast with forecasts from the NBU for a 7 percent increase in total exports in 2024. The NBU forecasts, however, assume full access to Black Sea ports, increased external financing, and sustained economic growth. 

    Projected Food Security Outcomes in Ukraine Through May 2024

    Given expectations for the evolution of the Ukrainian counteroffensive, high concern exists for acute food insecurity in frontline areas along the eastern front, in Donetsk and Luhansk oblasts, as well as in Kharkiv and Zaporizhzhia oblasts, where escalation of conflict is likely. In areas where frontlines are most active, impacts are expected to be similar to what was recently observed in many parts of Donetsk oblasts, where large segments of the population were cut off from utilities, communications and sanitation      infrastructure, as well as markets and financial services. With progress of the counteroffensive expected to be slow, some affected frontline      areas are likely to face prolonged periods of negative impacts, including due to disruptions to the provision of electricity and essential services. However, greatest concern exists for areas where shifting frontlines – or notable escalations of conflict – destabilize the situation and result in access constraints. In these areas, many affected households are likely to face Crisis (IPC Phase 3) outcomes for periods of time when restrictions on movement prevent access to markets and/or restrict humanitarian access. In a less-likely alternative scenario where the counteroffensive in Zaporizhzhia oblast progresses more quickly than what is currently anticipated, the frontline is expected to shift southward, improving the situation for areas near current frontlines, but causing access constraints and other negative impacts – including destruction of infrastructure, property, and crops – in newly affected areas. 

    In the rest of the country, an increase in Russian missile and drone strikes on civil and energy infrastructure during the coming fall and winter months is expected to cause disruptions to livelihoods and businesses, as was the case last year. However, with improved air defense capabilities and better preparedness among the population (for example, higher ownership of generators), impacts are expected to be less severe than during the prior winter season. And, even last season, Ukrainian businesses proved to be fairly resilient and adapted quickly. As such, negative impacts on livelihoods and income-earning are likely to be overall limited and localized. 

    Across the country, essential expenditure requirements will increase with the onset of winter, given the need to purchase fuel for heating. At the same time, income-earning from farming and construction activities will slow. Given this and expectations for persistent (though stable) inflation, some of the worst-off households across the country – including the elderly and disabled – who are not receiving sufficient combined income and social support are at risk of facing food consumption gaps or damage to livelihoods characteristic of Crisis (IPC Phase 3) outcomes without humanitarian assistance. This population is expected to be concentrated in frontline areas, with high concern for the elderly and disabled who are not able or willing to relocate to safer locations. In total, the number of people who will require immediate humanitarian food assistance to prevent food consumption gaps and further damage to livelihoods is expected to peak within the range of 1.0-2.49 million people (3-7 percent out of a total population of 39.4 million people6) during late winter. 

    International Commodity Market Outlook Through May 2024 

    Fuel

    Projections made by the US Energy Information Administration (EIA) in September 2023 indicate that the Brent crude oil price is expected to average 93 USD per barrel (USD/b) in the fourth quarter of 2023, marking an increase from the 86 USD/b observed in August. The price increases are largely attributed to an anticipated reduction in global oil inventories in the coming months following Saudi Arabia’s announcement in September 2023 of a production cut of 1 million barrels per day through the end of 2023. However, the projected price of 93 USD/b remains below the 2022 average of 101 USD/b and well below the peak of over 110 USD/b recorded in the second quarter of 2022 in the aftermath of the invasion. In the first half of 2024, prices are expected to decline slightly as global inventories increase. However, the potential for continued voluntary production cuts creates some upside risk for oil prices. 

    Fertilizer

    Global fertilizer prices are expected to continue to decline in 2024 compared to 2023, on average. The emergence of new sources for nitrogen-based fertilizers in Turkey and potassium fertilizers in Brazil are anticipated to reduce the risk of supply shortages and alleviate price pressures. Improved fertilizer affordability is expected to drive some recovery in fertilizer use in 2023 and 2024.

    Agricultural Commodities

    According to forecasts made by the USDA, FAO, and IGC, global cereal production is expected to increase slightly in 2023 (MY 2023/24) compared to the prior year. According to FAO’s latest projections made in September, global cereal production is expected to total 2,815 million tons, a slight 0.9 percent increase from the prior year similar to the record production levels of 2021. Global wheat production is expected to total 781 million tons after downward revisions to the estimate in recent months, mainly due to dry weather that reduced yields in Canada and the European Union. This total is a 2.6 reduction from 2022 production levels. Meanwhile, maize production is projected at a record high 1,215 million tons, with better-than-anticipated production in Brazil and Ukraine responsible for increased production estimates in recent months. Rice production is also projected to increase slightly in MY 2023/24.

    Projections by the FAO and IGC indicate that global trade in cereals is expected to decline slightly in My 2023/24 compared to the prior year, while USDA projections reflect stability. Projections agree that global wheat trade is expected to decline slightly in MY 2023/24 compared to the record high levels of the prior year, with FAO attributing the slight year-on-year decline to reduced production and exports in Australia and trade disruptions in Ukraine. However, reduced import demand for wheat from China, the European Union, and Turkey is also cited, which may at least partially offset reduced global supply in the balance that will influence global prices in MY 2023/24 with respect to the prior year. Meanwhile, FAO and IGC project that global trade volumes of coarse grains will decline slightly in MY 2023/24, while the USDA projects a slight increase. The IGC and USDA project similar trends for maize as for coarse grains overall. Global trade in rice is also expected to increase slightly in MY 2023/24 compared to the prior year, though India’s export restrictions have resulted in a reduction in the year-on-year increase anticipated.

    Global cereal stocks are expected to increase by 2.2 percent, from beginning to end of MY 2023/24, according to FAO projections. Global wheat, coarse grains, and rice stocks are all expected to increase, by a marginal 0.3 percent for wheat, 4.3 percent for coarse grains, and 1.4 percent for rice, according to FAO. However, USDA and IGC projections suggest that global wheat stocks will decline slightly from record high levels of last year.

    In the oil crops sector, very early forecasts also suggest a sustained rise in production in MY 2023/24. With international oilseed prices remaining above recent averages, total planting area is expected to expand. Additionally, barring significant weather-related challenges, yields are also expected to increase. Global supplies are expected to be sufficient to meet the projected demand for vegetable oils and oil meals, with the subsequent effect of improving global stocks.

    Heading into MY 2023/24 with anticipated adequate global supplies, world grain prices will start the 2023/24 season at lower levels than at the same time last year (except for rice) but above five-year average values. In general, global grain prices are expected to continue declining in 2024. According to the most recent World Bank estimates, global wheat prices in 2023 are expected to average 355 USD/MT, down 17.4 percent from the record high average of 430 USD in 2022. Global wheat prices in 2024 are expected to continue their downward trend, averaging 335 USD, down 5.6 percent from the 2023 average and 22 percent below the 2022 average. Maize prices are expected to follow similar patterns. The World Bank estimates that global maize prices will average 270 USD/MT in 2023, down 15.3 percent from the 2022 average. In 2024, maize prices are expected to decline further, averaging 240 USD/MT, an 11.1 percent decline from the prior year. Moreover, wheat and maize futures in September 2023 (for deliveries in late 2023 and into 2024) are nearly 30 percent and 25 percent lower than the September 2022 average. 

    However, global food production systems remain vulnerable to weather conditions, geopolitical tensions, and trade policies, among other factors.

    Concern for Global Food Security Impacts Through May 2024

    The main drivers of global acute food insecurity are local conflicts, weather shocks, and poor economic conditions – factors largely unrelated to the war in Ukraine. While the initial impacts of the invasion resulted in a shock to global cereal supply that did cause temporary disruptions to importation supply chains in several countries dependent on imports from Ukraine, market actors adjusted and supply chains stabilized relatively quickly. Rising global fuel, food, and fertilizer prices in the first half of 2022 had somewhat more lasting impacts, as domestic prices were driven upward in countries where many acutely food insecure households were already struggling to meet their basic needs. However, prices have declined to pre-invasion levels since their mid-2022 peak, and this has eased upward pressure on domestic prices globally (though it should be noted that domestic prices have not declined in many countries, as domestic prices are influenced by a variety of factors other than global prices, including, for instance, the value of the local currency in import-dependent countries). 

    However, some farmers continue to struggle with high costs of agricultural inputs, including fertilizer. Despite reductions in global fertilizer prices and some resulting recovery in fertilizer consumption, full recovery of fertilizer consumption will take time given the lengthy cycles of crop production that determine fertilizer affordability and consumption, and in turn influence prices, in the subsequent production cycle. 

    The expiration of the BSGI is not expected to have significant impacts on global commodity prices and, therefore, is not expected to impact domestic prices in acutely food insecure countries around the world. While some countries that      were still dependent on commercial imports from Ukraine will need to adjust supply chains, impacts are expected to be relatively minimal – limited to slightly higher importation costs – given that most countries had already significantly reduced their importation volumes from Ukraine in the aftermath of the invasion. However, WFP sourced substantial amounts of in-kind food assistance – especially wheat – from Ukraine under the BSGI and the Grain from Ukraine Initiative. It remains to be seen how successfully WFP is adjusting supply chains to avoid disruptions to the provision of in-kind wheat in countries like Yemen and Somalia. As WFP sources from alternative markets, procurement costs linked to transportation may increase, though increased global wheat supply given the recent northern hemisphere harvests and declining global prices may offset this.

    Country-specific impacts 

    Overall, the war in Ukraine is no longer expected to be playing a major role in exacerbating      the drivers of acute food insecurity in the countries that FEWS NET monitors. The following summarizes FEWS NET’s key concerns for acute food insecurity in its 31 monitored countries, including any key impacts related to the effects of the war in Ukraine. For more information on  acute food insecurity in the countries that FEWS NET covers, inclusive of the drivers of that acute food insecurity, please see each country's monthly reporting.

    Table 1: Key concerns for acute food insecurity, including any impacts related to the war in Ukraine, as relevant 

    EthiopiaThe long-term impacts of the 2020-2022 conflict in northern Ethiopia and the 2020-2023 drought in southern and southeastern Ethiopia have sharply eroded livelihoods, limiting access to food and income for millions of households. Poor macroeconomic conditions are also driving acute food insecurity across the country more broadly, particularly among households affected by conflict and/or rainfall deficits who have insufficient income to meet their minimum food needs. Ethiopia's low foreign reserves continue to contribute to high inflation despite declining global fuel and food prices. The annual headline inflation rate has decreased marginally in mid-2023 to 28.2 but remains substantially elevated. Millions of households across the country are expected to face difficulty coping with high prices as they also struggle to rebuild livelihoods in the aftermath of the severe shocks occurring from 2020 to early 2023. While the acutely food insecure population is expected to decrease markedly once the meher harvest becomes available in September/October, this year's harvest is expected to be below average and needs are expected to remain higher than usual for the harvest period. The meher harvest typically provides households with up to six months of food stocks; however, this year, households are expected to exhaust below-average stocks as early as January 2024, leading to an early start to the 2024 lean season in many areas.
    South SudanThe protracted impacts of consecutive years of flooding, episodic conflict, and displacement, amid long-term macroeconomic challenges, continue to drive the very high levels of acute food insecurity persisting within South Sudan. In areas that have been heavily affected by conflict and flooding, particularly in the north and east, typical livelihoods have been heavily eroded, while trade and market functionality have been repeatedly disrupted, contributing to very low food availability and access for the majority of the population. The outbreak of conflict in Sudan has resulted in a large influx of returnees into many of these already very stressed areas, further straining available resources of food and income and disrupting trade flows and markets. Prices are high and rising due to the impact of conflict, tightening of regional markets, and continued currency depreciation. At the same time, funding shortages are limiting the ability of humanitarians to adequately respond to the rising needs.
    Burkina FasoPolitical instability, conflict, and insecurity in Burkina Faso have hindered agricultural and livestock production and reduced economic investments. Households in some areas of northern Burkina Faso will face below-average food and income from the upcoming harvest, as conflict and high fertilizer prices continue to constrain agricultural activities. Despite declining global prices since mid-2022, high domestic prices persist, largely driven by below-average 2022/23 production and disrupted regional trade flows due to conflict. As the 2023 harvest starts, staple food prices remain 30-40 percent above the five-year average in accessible markets, while prices in blockaded areas are more than double the five-year average. Reductions in household food availability and access are most severe in the conflict-affected Sahel Region, especially in the town of Djibo, where food prices remain over 200 percent above average.
    YemenIn Yemen, declining global fuel and food prices since the peak in mid-2022 have eased upward pressure on domestic prices and contributed to declining food prices in areas controlled by the Sana'a-based authorities (SBA). On the other hand, in areas controlled by the internationally-recognized government (IRG), food prices continue to rise, though more gradually than in recent past years, due primarily to depreciation of the currency. Overall, however, staple food prices in Yemen remain significantly above average across the country. In August 2023, the price of imported staple wheat flour in IRG areas - though only 6 percent higher than last year - was 80 percent above the 2019-2022 average and 566 percent above pre-conflict levels. In SBA areas, the price of imported staple wheat flour in August - though 19 percent less than last year - remained 7 percent higher than the 2019-2022 average and 173 percent above pre-conflict levels. Overall, conflict and poor macroeconomic conditions continue to limit income-earning opportunities and, in combination with above-average food prices, drive significantly below-average purchasing power coupled with notable declines in humanitarian assistance provision due to funding shortages. Though Yemen did source a meaningful share of total wheat imports from Ukraine prior to the invasion, the expiration of the Black Sea Grain Initiative is not expected to meaningfully impact wheat flour supply or prices in Yemen, given that Yemen's supply chains shifted away from Ukrainian wheat following the initial invasion. 
    NigeriaIn Nigeria, ongoing conflict in the north and the escalating macroeconomic crisis continue to limit access to food and drive acute food insecurity for millions of vulnerable households. Due to poor domestic fuel production, Nigeria remains highly dependent on imported fuel. However, despite the overall declining trend in global food and fuel prices since mid-2022, domestic prices of food, fuel, and other commodities remain on the rise due to consecutive domestic macroeconomic shocks in 2023. Notably, in late May, the lifting of the state fuel subsidy drove a 200 percent spike in fuel prices. The impacts of this were compounded by the over 75 percent devaluation of the currency in June, with the exchange rates reaching record low levels in August and September. As such, fuel prices have continued to increase through August, reaching 1,000 NGN per liter in some of the inaccessible areas of the far north. Rising fuel prices are in turn driving rising food prices due to elevated transportation costs. In August, annual headline inflation      reached an 18-year high of 25.8 percent, largely driven by food inflation, which was recorded at 29.3 percent. Additionally, the reduction in cross-border trade with Niger following border closures in July is expected to drive further price increases of imported food commodities (such as rice and cowpeas) and livestock. Projected below-average national crop production in the wet season harvest starting in September will likely continue to drive unseasonably high market reliance among poor households amid high food prices through the harvest and post-harvest periods. 
    SudanThe ongoing conflict in Sudan is expected to continue to severely disrupt trade flows, market functionality, and household economic activity, particularly in urban areas such as Khartoum, El Obeid, Nyala, Zalingei, and El Geneina where fighting has been predominately concentrated. This shock comes on top of already poor macroeconomic conditions characterized by persistent currency depreciation, very high inflation, and slow economic growth. Severe      disruptions to trade flows, particularly in and out of Khartoum as well as from eastern supply areas to western consumption markets, have caused prices in affected consumption markets to rise sharply. Prices are also expected to remain atypically high in the harvest period (October/November) given anticipated reductions in production this year driven by disruptions to farmers' financial and physical access to inputs as well as limited physical access to fields for cultivation in areas of high insecurity. Production of irrigated wheat starting in November is similarly anticipated to be below average due to the impacts of the conflict. This is expected to increase Sudan's dependence on wheat imports from the already relatively high level of 3.6 million MT following the 2022/23 production year, making it vulnerable to any future global price shocks.
    SomaliaDeclining global food and fuel prices since the peak in mid-2022, alongside recent increased domestic cereal supply from the 2023 gu harvest, have eased upward pressure on the prices of imported foods (such as vegetable oil, wheat flour, and rice) in Somalia. As of August 2023, prices of imported foods across import-dependent pastoral areas were lower than at the same time last year and ranged from average to above-average levels. In the Hargeisa reference market, the price of imported rice in August 2023 was 13 percent lower than the same time last year and only 5 percent above the five-year average. Meanwhile, prices of domestically-produced maize and sorghum have declined to levels significantly lower than last year (by 48 percent and 54 percent, respectively, in key national reference markets of Qorioley and Baidoa, respectively, in August 2023) and have even reached levels near or lower than the five-year average (by 2 percent and 7 percent, respectively). However, millions of households continue to struggle with the prolonged impacts of the historic five-season drought, which include high levels of debt and significant livestock losses. While many rural areas experienced seasonal improvements in access to food and income during the 2023 April to June gu season, with further improvement expected during the October to December 2023 deyr season, concern exists for the negative impacts of flooding in riverine and low-lying areas due to the above-average deyr rainfall forecast. Though the expiration of the BGSI has led to some concern for disruption to WFP's supply chains of wheat flour destined for in-kind food assistance, including to Somalia, most of Somalia's food assistance is provided in the form of cash transfers and the overall provision of humanitarian assistance is being scaled down amid gradual drought recover and funding shortages; as such, any disruptions to WFP's wheat flour supply chains are not anticipated to have significant or lasting impact on food security in Somalia.
    HaitiIn Haiti, insecurity related to gang activities, weather shocks, and poor macroeconomic conditions are the main drivers of food insecurity. Haiti remains highly dependent on imports for its supply of food and other basic commodities, and markets are the main source of food for poor households. Overall, gang activities coupled with high food prices continue to disrupt livelihoods and limit household access to food. However, since April 2023, the Haitian gourde (HTG) has continued to appreciate against the dollar, from 152.6 HTG/USD to 134.5 HTG/USD as of September 2023. This and declining global prices have contributed to declining domestic fuel and food prices, slightly easing pressure on household purchasing power; however, prices remain above five-year average levels and concern for acute food insecurity remains high across the country.
    MaliConflict continues to be the main driver of acute food insecurity in Mali, particularly in the Liptako-Gourma region where levels of conflict have reached record highs. Despite declining global prices, persistent high domestic prices of food, fuel, and agricultural inputs are limiting access to food for many poor households. Staple food prices are highest in insecure areas due to disrupted market functioning and trade flows. While access to food is expected to seasonally improve with the start of the 2023 harvest in October, expected below-average crop production in 2023 will reduce availability of food and income for many rural households, pressure the country's foreign exchange reserves, and contribute to maintaining high food prices.
    AfghanistanIn September, millions of households across Afghanistan are accessing food from their own crop production as well earning income from the second-season harvest, livestock production, and labor that will be used to stock cereals for winter. Additionally, the annual headline inflation rate has significantly declined to negative 6.5 percent in June 2022. As such, food prices, including prices of staple wheat flour, are up to 20 percent below average. Declining inflation is attributed to the easing of international food and fuel prices, declining market demand as the harvest becomes available, and the stabilization of the exchange rate. However, millions of people in Afghanistan continue to experience overall insufficient access to food and income due to the impacts of the multi-year drought and economic shocks – including the Taliban takeover in 2021 and the Russian invasion of Ukraine – on livelihoods and income-earning opportunities.
    DRCConflict and insecurity remain the key drivers of acute food insecurity in the DRC, where violence not only directly disrupts household livelihood activities but also limits market functioning and supplies in the worst conflict-affected areas, such as Ituri and North Kivu. Despite declining global food prices, conflict-related factors, along with chronically poor road conditions, are primarily responsible for elevated domestic staple food prices. 
    KenyaThe historic 2020-2023 drought remains a major driver of high levels of acute food insecurity in Kenya, especially in pastoral and marginal agricultural areas. Despite declining global food prices, the depreciation of the Kenyan shilling, high fuel prices, as well as Kenya's reduced agricultural output continues to drive high domestic food prices, despite some easing of inflation in recent months. According to the Kenya National Bureau of Statistics, annual food inflation was 7.5 percent in August 2023. Annual headline inflation was 6.7 percent in August, the lowest since April 2022. High prices of staple foods – particularly maize – and below-normal household income continue to constrain household purchasing power and limit household access to food across the country. This is particularly concerning for pastoral households who experienced large-scale livestock losses during the recent multi-year drought and are currently relying heavily on government safety net programs and some limited income from labor opportunities.
    ZimbabweIn Zimbabwe, the main drivers of acute food insecurity include below-average crop production in 2023 (especially in the typical deficit-producing areas of the south) and long-term macroeconomic challenges that continue to result in below-normal income-earning opportunities for many households. The poor macroeconomic conditions are also maintaining high importation costs of food and fuel despite declining global prices. From July to August 2023, the local currency has stabilized somewhat, with parallel and official exchange rates declining slightly, but the exchange rate remains high, trading at around 6,100 ZWL/USD on the parallel market in August. In the same time period, domestic prices of basic commodities such as maize meal, sugar, and vegetable oil have also declined in ZWL terms (though prices in terms of USD remained relatively stable) but remain well above prices last year. In September 2023, the government authorized a duty-free maize import policy for private companies to boost national stocks ahead of the upcoming 2023/24 agricultural season given expectations for below-average crop production due to the impacts of below-average rainfall linked to El Niño. 
    VenezuelaPoor macroeconomic conditions are the primary driver of acute food insecurity in Venezuela, particularly among populations that depend on income in the local currency (VED) to purchase food. In August 2023, staple food prices (in VED terms) were more than 300 percent above levels recorded at the same time last year. Informal dollarization continues to mitigate the impacts of price increases among the majority of households, who generally earn their income in USD, with monthly food costs in USD declining compared to last year, supported by declining global food prices; however, income levels remain low overall, limiting purchasing power. Meanwhile, given high dependence on imports, the country remains vulnerable to global supply and price shocks. Notably, wheat products (flour and pasta) are typically the most consumed staple food. 
    MalawiDespite declining global prices, prices of staple maize have continued to rise across the country, even during the harvest period for winter production in certain areas, driven by cyclone impacts and limited access to agricultural inputs, including fertilizer. On average across monitored markets, maize grain prices increased by 15 percent from August to September, to reach levels 120 percent higher than the previous year and around 250 percent higher than the five-year average. The highest increase was recorded in the Lilongwe market, where prices were approximately 30 percent higher than last month. Moreover, prices for substitute food commodities have also significantly increased. While Ukraine was previously Malawi's main source of fertilizer, traders have been able to find alternative sources; the main challenge to fertilizer imports is now the government's shortage of foreign currency reserves, which is in turn limiting traders' access to sufficient hard currency for imports of fertilizer and improved seeds. 
    NigerThe main driver of acute food insecurity in Niger remains conflict, particularly in the regions of Diffa, Maradi, Tahoua, and Tillabery. The coup d'état on July 26th led to economic and financial sanctions from the regional bloc ECOWAS and other bilateral and multilateral partners. Sanctions include border closures between Niger and ECOWAS member states Nigeria and Benin, and the closure of the port of Cotonou for products imported to Niger. This has resulted in a decline in availability and rise in prices of imported rice, edible oil, sugar, and wheat flour. In an effort to contain the rising food prices, on September 22, 2023, the government reduced the import taxes by 25 percent for ten food products, including these products and other processed foods. 
    MadagascarHouseholds across the Grand South and Grand Southeast are now in the midst of the lean season, having exhausted their sweet potato and cassava stocks. They are now fully dependent on markets for increasingly expensive food purchases. Headline inflation peaked in March 2023 at 12.4 percent and remained high at 9.5 percent as of the latest update in July. Fuel price increases, elevated global rice prices, and further local currency depreciation continue to drive rising prices of imported goods and challenge limited household purchasing power. The ongoing strong El Niño is predicted to lead to below-average rainfall across southern Madagascar as the rainy season begins between November and December. This will likely negatively affect cropping conditions for the next agricultural season in a region that already experienced significant crop losses due to dry spells in 2023 and cyclones in 2022 and 2023.
    MozambiqueConflict and recent weather shocks are the main drivers of acute food insecurity in Mozambique, resulting in locally significant crop losses across the country. However, government investments in agricultural production in high-production areas, coupled with government interventions to stimulate the economy and contain inflation, have generally helped to mitigate the impacts of high global food and fuel prices. In August, the annual inflation rate in Mozambique declined to 4.9 percent, reaching its lowest point since January 2021. Overall, household purchasing power and access to food are lowest in the areas affected by conflict, drought, or cyclones/storms in the north and south. Needs are expected to increase during the upcoming typical lean season (October to February) as households increasingly rely on markets while, at the same time, the ongoing El Niño is expected to lead to below-average rainfall, limiting area planted and income from agricultural labor opportunities.
    GuatemalaAlthough local production and regional imports continue to mitigate negative impacts from the war in Ukraine in Guatemala, subsistence farmers across the Dry Corridor, the Altiplano, and Alta Verapaz have been significantly affected by the impacts of the ongoing El Niño event on cropping conditions. Subsistence farmers are worst affected as they lack financial access to adequate irrigation and have faced high production costs due to disruptions to the region's fertilizer supply chain. Much of the subsistence farming population have faced multiple consecutive years of weather shocks, leaving them without carryover stocks, and with low incomes      and high levels of debt incurred in order to invest in production and purchase their basic needs. However, commercial production is expected to be near average. The pace of food inflation has also slowed to 4.5 percent in August. Given that maize and beans are the main staple foods, and given strong commercial ties within the Americas, the end of the Black Sea Grain Initiative is not expected to have a significant impact on food prices.
    CARFood and fuel prices remain high in the Central African Republic (CAR), particularly in the northern zone. The closure of the CAR-Chad border in the north resulted in significant trade disruptions and increased transportation costs. Additionally, as the lean season peaks in northern CAR, food prices are seasonally high and households are now purchasing most of their food from the market. Nationally, headline inflation remains high at 6.3 percent. Despite a decrease in the total number of conflict incidents and forecast improvements in GDP, levels of acute food insecurity remain concerning in conflict-affected eastern areas of the country and among urban populations who have limited capacity to produce their own food.
    ChadConflict and weather shocks are the main drivers of food insecurity in Chad. Conflict in the Lac region, the northern provinces bordering Libya, and neighboring Sudan is disrupting livelihoods and cross-border trade and driving an influx of refugees and returnees, particularly in the eastern provinces. Despite the declining global fuel and food prices, supply disruptions and atypically high demand is resulting in high food prices ranging from 10 to 15 percent above the five-year average. Meanwhile, dry spells early in the season and during the key growing period have delayed planting, reduced planted area, and reduced demand for agricultural labor, decreasing labor income among poor households. Concerns for a below-average harvest in the south are increasing.
    HondurasSubsistence farmers across the Dry Corridor and northern Honduras have been significantly affected by the impacts of the ongoing El Niño event on cropping conditions. National harvests starting in October are expected to be near average due to irrigation use among commercial producers, but subsistence farmers have limited financial access to irrigation and already faced atypically high production costs due to disruptions to the regional fertilizer supply chain. Crop yield losses are expected to reach up to 25 percent of typical production levels. Additionally, the pace of inflation remained stubbornly high in Honduras for much of 2023, with annual food inflation ranging between 14-17 percent each month through July. Annual food inflation finally dropped in August to 5.3 percent, with seasonal declines in staple grain prices expected as the harvest becomes available. Given that maize and beans are the main staple foods, and given strong commercial ties within the Americas, the end of the Black Sea Grain Initiative is not expected to have a significant impact on food prices.
    UgandaDespite being a surplus food producer, Uganda has experienced several consecutive seasons of poor rainfall and below-average crop production. Below-average first season production in northern and eastern Uganda in June and July 2023 amid high regional demand has sustained above-average staple food prices through August. However, declining global fuel and food prices, reduced transportation costs, and tighter domestic monetary and fiscal policies in Uganda have contributed to a reduction in inflation. In August, annual headline inflation decreased for a seventh consecutive month, reaching 3.5 percent, down from 10.4 percent in January. Given expected above-average rainfall from October to December linked to the strong El Niño, second season harvests are anticipated to be average to above-average, resulting in seasonal increases in income-generating opportunities and improved financial access to food through January 2024. 
    CameroonWhile most of the country does not face acute food insecurity, the Northwest, Southwest, and Far North regions remain of concern due to the combined impacts of conflict and reduced purchasing power. Cameroon remains subject to high inflation because of sustained high global rice prices and high transportation costs, among other domestic and regional dynamics. For one thing, food prices in markets near the border between Cameroon and Nigeria have been impacted by Nigeria’s removal of its fuel subsidy, leading to increased local fuel prices and transportation costs. Additionally, though exports of staple foods are currently banned in Cameroon, there is high demand in Nigeria for informally traded, relatively cheaper staple foods from Cameroon. High prices of imported rice also continue to drive increases in the prices of locally-produced substitutes, especially in urban areas. While no timeline has been set, the government plans to remove tax exemptions for imported consumer products, including rice, fish, and wheat, which will lead to further price increases. 
    AngolaThe negative impacts of the Ukraine crisis in Angola remain limited. Although economic factors are driving acute food insecurity, they are not directly tied to the impacts of the war in Ukraine. An        additional main driver of current and projected acute food insecurity is weather shocks; the forecast El Niño is likely to drive poor crop production in 2024.   
    BurundiLocal food production is the main source of food for the population in Burundi. However, high fuel and transportation costs continue to sustain high prices. Staple food prices remain significantly elevated despite the recent harvest, ranging from 30 to 75 percent above the previous year's prices and 80 to 120 percent above the five-year average. In addition to significant fuel price increases, depreciation of the local currency continues to increase the cost of importation and sustain rising domestic prices of imported goods.
    MauritaniaProducing only an estimated 20-30 percent of total national food requirements, Mauritania is heavily dependent on imports and is therefore vulnerable to global food price shocks. In September, prices remain seasonally high in advance of the main harvest, with high transportation costs also contributing to high price levels. However, declining global food prices have eased inflationary pressures; the annual food inflation rate has declined from 10 percent in January 2023 to 3.7 percent in August.
    LesothoLesotho is highly dependent on imports from South Africa. As such, declining global food prices and a near-average 2023 harvest have likely contributed to the stabilization of food prices. In July, the annual food inflation rate declined for the third consecutive month, reaching 6 percent, the lowest since early 2020. However, retail prices of staple maize meal ranged from around 7.8 to 11.2 LSL/kg (0.44 to 0.62 USD/kg) in July, still around 15 percent higher than last year. 
    El SalvadorIn El Salvador, national harvests starting in October are expected to be near average despite the impacts of the ongoing El Niño event on rainfall due to irrigation use among commercial producers. However, subsistence farmers in the Dry Corridor who have limited financial access to cover the high costs of irrigation and fertilizer are expected to lose up to 25 percent of their crop yields this year. The pace of inflation has eased since March 2023, and annual food inflation stood at 6.1 percent in August. Given that maize and beans are the main staple foods, and given strong commercial ties within the Americas, the end of the Black Sea Grain Initiative is not expected to have a significant impact on food prices.
    NicaraguaNicaragua benefitted from more favorable agricultural production in both 2021/22 and 2022/23 compared to the rest of the Central American region. National harvests starting in October are expected to be near average, despite the impacts of the ongoing El Niño event on rainfall, due to irrigation use among commercial producers. However, subsistence farmers are expected to lose up to 25 percent of their crop yields this year. The pace of inflation has eased compared to the strong increases reported in 2022 and early 2023, and, in August, annual food inflation stood at 9.0 percent. Given that maize and beans are the main staple foods, and given strong commercial ties within the Americas, the end of the Black Sea Grain Initiative is not expected to have a significant impact on food prices.
    RwandaThe recently concluded Season C harvest has increased food availability (though the total contribution to national annual food requirements is only around 15 percent) and above-average income from cross-border trade/employment has supported some improvements in household food consumption. Additionally, the government of Rwanda removed its value-added tax (VAT) on staple crops (maize, rice, Irish potatoes) in April 2023, which has contributed to declining food prices. As such, more households have been able to afford staple food items and meet their basic food requirements. However, the annual inflation rate remains very high at nearly 25 percent, mainly driven by higher fuel prices. Additionally, with the recent start to the October to December lean season, food prices are expected to increase somewhat in the coming months. 

    Annex 1: Regional Impacts of BSGI Expiration

    The following analysis summarizes expectations for impacts of the expiration of the BSGI across the regions that FEWS NET monitors. Note that this analysis was completed in August 2023 using data and information available as of July/August. 

    Central Asia

    The end of the BSGI is expected to impact minimally wheat supply into the Central Asian Region. Between August 2022 and July 2023, a total of 318,900 MT of wheat was imported into Afghanistan, Iran, and Pakistan within the Central Asia region through the initiative, including 130,900 MT (41 percent) which was imported into Afghanistan by the World Food Program for humanitarian assistance. The total volume of wheat imported into the Central Asia region through the BSGI accounted for only two percent of the five-year average. Similarly, 259,600 MT of wheat imported into Yemen through the BSGI accounted for only seven percent of the five-year average and included 151,000 MT (58 percent) imported by WFP for humanitarian assistance. While markets in Central Asia are integrated with the international markets, other factors including local wheat production, conflicts, fuel prices, and currency depreciation tend to have more influence on food prices within the region. For example, the 30 percent drop in international price of wheat between July 2022 and June 2023, partly driven by the BSGI, had mixed results in the Central Asia region where wheat prices declined on average by 37 percent in Kazakhstan and Afghanistan but increased by up to 55 percent in Pakistan. However, Kazakhstan is an important reference market which significantly influences the prices in the other deficit countries within the Central Asia region.   

    Figure 12

    Central Asia wheat production, stocks, and demand by marketing year. 2017/18 – 2023/24
    Central Asia wheat production, stocks, and demand by marketing year. 2017/18 – 2023/24.

    Source: United States Department of Agriculture

    The end of the BSGI is not expected to have a significant impact on the wheat market in the Central Asia Region due to current and projected ample market supply and subdued demand. The wheat supply in the region during the ongoing 2023/24 marketing year is estimated to be 101.5 million MT which is four percent and nine percent higher than the previous year and five-year average, respectively. The strong market supply of wheat in the region is attributed to nine percent above average carryover stocks (from the 2022/23 marketing year), and the projected six percent above average wheat production during the current marketing year. Overall, the aggregate net wheat surplus is projected to be 34 percent higher than the previous year with the Region’s self-sufficiency level at 110 percent. Moreover, aggregate regional demand is expected to be 13 percent lower than the aggregate regional supply which is likely to keep prices near the current level over the next 2-3 months before they seasonally start to rise (Figure 12). Close monitoring of key indicators including the evolving weather situation and its impact on the wheat production, fuel prices which have started to rise gradually, and the currency exchange rates will be necessary due to their significant impact on wheat prices in the region.

    East Africa

    Under the BSGI, East Africa has not been a primary destination for Ukrainian wheat and maize, constituting less than 9 percent of total exports. Within the grain initiative, Kenya imported 438,000 metric tons of corn and wheat, while domestically producing 2.9 million metric tons of corn and 275,000 metric tons of wheat in MY 2022/23. Ethiopia, the sub-Saharan region's top wheat producer, received 282,000 metric tons through the deal after yielding 8 million metric tons in 2022/23.

    Moreover, due to high global prices and shipping costs amid depreciating local currencies, the import parity prices for maize from overseas into East Africa are quite high, having led most traders to source regionally rather than from overseas. As higher global prices and depreciating local currencies have reduced consumer demand for wheat products in the region, consumers have substituted towards other commodities, including locally produced maize, potatoes, rice, millet, and sorghum. Moreover, production of these wheat-substitute commodities is expected to be above average in Rwanda, Burundi, Tanzania, Uganda, and Kenya due to El-Nino induced better rainfall performance and exert downward pressure on staple commodity prices from October through early 2024. Thus, the end of the BSGI will only reinforce regional trade and have marginal effects on regional maize prices in East Africa as many countries have adapted to sourcing wheat at higher prices or substituted away from wheat.

    In East Africa, wheat and maize prices are expected to follow seasonal patterns but trend higher than last year and the recent five-year average driven primarily by factors unrelated to the end of the BSGI. Conflict-related trade disruptions and deteriorating economic conditions will likely sustain above-average prices across many markets. The gap between East African countries’ interest rates and US and European rates has narrowed, making the US dollar more attractive and putting local currencies on a path of depreciation and high inflation. Following the St Petersburg Africa Economic Summit in July, there is increased possibility of discounted wheat and fertilizer reaching East Africa from Russia in the second quarter of 2023 through early 2024, especially Somalia and Eritrea which may lower prices.

    West Africa

    The termination of the Black Sea Grain Initiative (BSGI) is projected to amplify the effects of global wheat market instability in West Africa. Although possessing considerable maize surpluses despite seasonal variations, the region's structural reliance on internationally imported wheat, including a significant share from Ukraine and Russia, makes it highly vulnerable to fluctuations in the global wheat market. The reduction in wheat exports into the region and escalating global prices resulting from the prolonged war in Ukraine have so far strained the region's supplies and pushed up prices. Nevertheless, it's important to note that wheat constitutes a minimal portion of daily calorie intake outside urban areas in several part of West Africa, where locally produced grains like millet, sorghum, and tuber crops play more significant roles in calorie consumption as wheat production in West Africa is generally limited due to the region's climate, which is not well-suited for wheat cultivation.

    The end of BSGI is likely to exacerbate this downturn in the wheat market, as other global suppliers only partially offset the export declines from Ukraine and Russia. Moreover, with the end of BSGI, other countries with moderate surpluses could potentially withhold exports which will likely result in the strengthening of wheat prices across West Africa, particularly affecting countries grappling with economic setbacks, currency depreciation, severe inflation, and the removal of import and/or fuel subsidies. While Russia's commitment to provide 25,000 to 50,000 MT free wheat to selected African countries, including three from West and Central Africa (Burkina Faso, Central African Republic, and Mali) is anticipated, the quantity and timing of these provisions may fall short of stabilizing markets and preventing price rises in the immediate future. 

    Latin America and the Caribbean

    The end of the BSGI is expected to have limited impacts on grain supply and prices in Latin America and the Caribbean due to several factors such as stronger commercial ties within the Americas, adequate export supply in the United States, Brazil, and Canada, and lower wheat product consumption and demand in Central America compared to other regions. Nonetheless, the region was highly dependent on Russia to fulfill fertilizer demand and further disruptions in the supply chain are likely to result in persistently high production costs in 2023.

    Figure 13

    Wheat and maize imports in Central America and Colombia by exporter, 2022 and 2023*
    Wheat and maize imports in Central America and Colombia by exporter, 2022 and 2023*

    *Data available up to March 2023

    Source: Source: United Nations COMTRADE

    According to the United Nations, Latin America did not receive any grain shipments as part of the Black Sea Agreement. The United States and Canada are the main wheat suppliers to Central America, and Colombia, accounting for more than 90 percent of imports in 2022 and 2023 in the latter (Figure 13). In Haiti, a more diversified wheat import structure includes the Dominican Republic (28 percent), Argentina (7 percent) and the European Union (9 percent). In Venezuela, wheat is the most consumed cereal and is critical to meet the daily calorie intake, however, given the limited industrial capacity, the country imports wheat products such as pasta and flour -mainly from Turkey- instead of grain. Therefore, prices are anticipated to increase tracking international trends.

    Wheat products (flour and pasta) import availability is expected to remain adequate from well-supplied international markets, and prices are likely to increase marginally and linger above average levels tracking international trends. In Venezuela, wheat derivatives are anticipated to strengthen due to higher import costs from rising wheat prices in the international market.

    Yellow maize is mostly imported from the United States and Brazil to Central America and Colombia (more than 90 percent). Rising yellow maize international prices could press animal protein prices, such as chicken and eggs, to rise slightly owing to feed costs and increased demand during the end of the year season. However, higher yellow maize prices could also add pressure on the white maize supply for industrial use. Moreover, favorable international prices could benefit regional exporters such as Brazil and Argentina.

    Southern Africa

    Southern Africa is a surplus producer of maize and a key player in meeting the global demand for maize (Figure 14). However, except for South Africa, the domestic maize markets in the region are relatively insulated and weakly integrated into the global marketplace due to local marketing policies. Outside of South Africa, the key determinants influencing maize meal prices will encompass exchange rate depreciation, transportation expenses, and non-food inflation rates. 

    In South Africa, where maize production is oriented towards the international market, local prices are expected to be primarily influenced by export parity prices. In the short term, the impact of the end of BSGI on the maize market in South Africa is predicted to be positive, as it capitalizes on the surplus in maize and the potential for redirected trade. Consequently,the end of the Black Sea Grain Initiative is poised to benefit South African maize as it is expected to step in as a maize supplier for China, bridging the gap created by decreased US corn exports to China. 

    Conversely, the BSGI played a role in supporting food importers within the region by mitigating the impact of soaring prices that ensued after Russia's invasion. Given the region's status as a net wheat importer, it is susceptible to the effects of tight markets and the rise of global wheat prices. Despite a recent shift away from importing Ukrainian and Russian wheat, the repercussions of the Black Sea Grain Initiative's cancellation will likely manifest across Southern Africa through elevated wheat prices globally. 

    Figure 14

    Southern Africa maize production, stocks, and demand by marketing year. 2017/18 – 2023/24
    Southern Africa maize production, stocks, and demand by marketing year. 2017/18 – 2023/24.

    Note: The Southern Africa region includes Botswana, Lesotho, Namibia, Eswatini, Tanzania, South Africa, Zimbabwe, Malawi, and DRC but excludes Madagascar, Mauritius, and Angola.

    Source: FEWS NET

    Recommended citation: FEWS NET. Ukraine Targeted Analysis September 2023: Impacts of the war on acute food insecurity remain highest near frontlines, 2023.

    1

    This figure includes Ukrainians under all forms of stay; only 5 percent were granted refugee or asylum status.

    2

    Non-representative sampling methods were used due to the absence of sampling frames, among other challenges

    3

    This is higher than the 3.7 registered IDPs the IOM recorded around the same time at the end of June.

    4

    For further information, please refer to pages 3-7 of FEWS NET’s initial analysis found here.

    5

    According to IFA definitions: “FY 2022 refers to the year starting in January 2022 for most countries in Latin America, Africa, East and Southeast Asia and EECA. For other regions including North America, WCE and South Asia, FY 2022 started in Q2 or mid-2022 and will end in Q2 or mid-2023.”

    6

    The World Bank is now expected to account for refugee flows in population estimates.

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