World Grain - March 2023 - 36

FEATURE: FOOD INFLATION, SUPPLY WORRIES THREATEN STABILITY
and maybe we have to wait a little bit more in Europe. "
The world was far from regaining its pre-pandemic
momentum, she said, pointing to a downward trend in
productivity.
" The growth prospect will remain bleak in the medium
to long term, " Job-Bazille said.
Black Sea war's impact
In a panel discussion examining how grain trade patterns
changed fundamentally on the back of the conflict
and how global buyers are steering their grains procurement,
Nikolay Gorbachev, president of the Ukrainian
Grain Association, discussing the conflict in his country,
stressed that the Russian invasion is " not a special
operation. It's not some kind of other action. It's a real
war. What will happen in the next stage nobody knows.
In any case, Ukraine continues to grow grain. "
The invasion, which was launched in February 2022,
Isabelle JobBazille,
chief
economist of
Credit Agricole
SA, spoke about
the impact
inflation was
having on global
agriculture and
food prices.
On the short-term outlook for inflation, she differentiated
between the United States and Europe.
" The US has suffered mostly from the first wave of
inflation, " she said. That caused " a great disruption of
the global value chain fueled by the oversized fiscal
stimulus, (and) private consumption recovered dramatically
to the point of overheating. "
" The US has mainly faced a positive demand shock
linked to the strong recovery after COVID, " she said.
" In Europe the recovery was not excessive, with
consumption levels that have not recovered in many
Member States to pre-pandemic levels, so it was especially
after the outbreak of the war in Ukraine that we
experienced an acceleration in inflation.
" Europe was a major consumer of Russian gas and
oil but also a consumer of agricultural products exported
by the belligerent countries, and so Europe was hit
hard by the supply shock. "
The peak in inflation has passed, but Job-Bazille
believes " the disinflation process will probably take
slightly different paths on both sides of the Atlantic. "
The effect of the energy price will push food prices
down, " almost everywhere and maybe faster than we
have anticipated months ago, but in Europe the passthrough
effects are uncompleted, " she said. The " passthrough
effect " referred to the speed at which inflation
passes through the supply chain to the consumer.
Inflation in Europe would be " stickier, " than the United
States, she said.
" We are going to have a little bit different situation
in the US where this inflation trend is already on track
36
had led to a fall in exports from the usual 6 million
tonnes a month to 200,000 in March, which Gorbachev
described as " an incredible decrease, " in an " absolutely
unpredictable situation for farmers. "
" We, as Ukrainian farmers, don't get any subsidies
from the state, " he said.
The war meant that Ukrainian farmers had a big crop
and nowhere to store it. Before the war, 99% of exports
were through the Black Sea ports.
" Afterwards, we had to remove this grain through an
alternative way - railway or trucks and small Danube
ports, " he said. " To Romania, we sent before the war
about 3,000 tonnes of grain per year and now we can
send about 50,000 a week. "
There's a problem with moving grain by rail. Ukraine
uses a wider rail gauge than the EU countries.
" You have to change the axles or you have to remove
the wheels, " he said. " Even if Ukrainian farmers will
bring this grain by bucket to the European side, nobody
there knows what to do with this grain.
" Ukraine would like to export through European
countries 50 million or 70 million tonnes. It is
just impossible. "
The problem was that farmers were faced with enormously
increased transportation costs for the alternative,
the Romanian port of Constanța, with the logistic
chain to fob now costing $150 instead of the pre-war
level of $25 to $30. Gorbachev expected Ukrainian
farmers to respond by decreasing planted area.
" For the national food security of Ukraine, no problem, "
he said. " We will have enough grain and oilseeds,
but unfortunately we will not export big numbers. "
That would mean higher global prices and create a
problem for developing countries, with the potential to
trigger increased migration.
" Millions of people will migrate, " he said. " They
March 2023 / World Grain / World-Grain.com
http://www.World-Grain.com

World Grain - March 2023

Table of Contents for the Digital Edition of World Grain - March 2023

World Grain - March 2023 - Intro
World Grain - March 2023 - 1
World Grain - March 2023 - 2
World Grain - March 2023 - 3
World Grain - March 2023 - 4
World Grain - March 2023 - 5
World Grain - March 2023 - 6
World Grain - March 2023 - 7
World Grain - March 2023 - 8
World Grain - March 2023 - 9
World Grain - March 2023 - 10
World Grain - March 2023 - 11
World Grain - March 2023 - 12
World Grain - March 2023 - 13
World Grain - March 2023 - 14
World Grain - March 2023 - 15
World Grain - March 2023 - 16
World Grain - March 2023 - 17
World Grain - March 2023 - 18
World Grain - March 2023 - 19
World Grain - March 2023 - 20
World Grain - March 2023 - 21
World Grain - March 2023 - 22
World Grain - March 2023 - 23
World Grain - March 2023 - 24
World Grain - March 2023 - 25
World Grain - March 2023 - 26
World Grain - March 2023 - 27
World Grain - March 2023 - 28
World Grain - March 2023 - 29
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World Grain - March 2023 - 33
World Grain - March 2023 - 34
World Grain - March 2023 - 35
World Grain - March 2023 - 36
World Grain - March 2023 - 37
World Grain - March 2023 - 38
World Grain - March 2023 - 39
World Grain - March 2023 - 40
World Grain - March 2023 - 41
World Grain - March 2023 - 42
World Grain - March 2023 - 43
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World Grain - March 2023 - 82
World Grain - March 2023 - 83
World Grain - March 2023 - 84
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