War has limited impact on world grain and oilseed output

Commodity prices soared when Russia invaded Ukraine in February 2022 amid fears of grain shortages with two of the world’s leading grain exporters engaged in war. Instead, global production of grains and oilseeds has exceeded forecasts based on production before the invasion, said four agricultural economists on Monday.

“The Ukraine-Russia war has so far been an example of the resiliency of the world crop sector, although the potential role of favorable weather can never be dismissed,” said economists, writing at the farmdoc daily blog. “More broadly, the maintained hypothesis should be that the world crop production system will adjust to untoward shocks in a timely manner, until evidence exists to the contrary.”

For their analysis, the economists, Carl Zulauf of Ohio State University and Nick Paulson, Gary Schnitkey and Joana Colussi of the University of Illinois, looked at world production of major crops from 2017-2021, the period before the war, and the average year-to-year increase. They used the average annual rate of increased production to forecast global output in 2022 and 2023. Harvests have run above those levels, they said.

As expected, production fell in Ukraine, where a sizable portion of land is out of production. But the production of food grains, feed grains and oilseeds in Russia exceeded expectations. “An interesting speculation is whether an unintended consequence of the Ukraine-Russia war will be to incentivize Russia to more aggressively expand its crop production sector, just as an unintended consequence of the Russian-U.S. grain deal of the early 1970s was to incentivize Brazil to develop its soybean production sector.” said the economists.