Agricultural Outlook

The RF`s invasion of Ukraine, the world`s one of the biggest agricultural producers, led to skyrocketing of the world market prices of grains and oilseeds. The FAO Price Index has updated the historical maximum with the record value of 159.7 in March 2022 and 154 in June 2022. During the 2020-2021 pandemic years the Index did not exceed 125.7. This makes the world facing unprecedented inflationary pressure. (FAO, 2022) Employing the AGMEMOD model under the assumptions stated below, the paper estimates Ukraine`s crop and meat production in 2022-2030 and addresses the issue of export flows impact on sowing and harvesting campaigns.

Agricultural Outlook

Scenarios: projections for open & blocked export

METHODOLOGY

To assess the future perspectives of the Ukrainian agricultural sector and markets under different war-related scenarios, the AGMEMOD model is applied. It is an econometric, dynamic, partial-equilibrium, multi-country, multi-market model. It covers all EU Members States, some non-EU countries, such as Ukraine, Balkan countries, and Kazakhstan, and a stylized version of the rest of the world (RoW). The model provides annual projections until the year 2030 for markets of the main agricultural commodities. The markets are represented by equations for supply and demand, stocks, international trade, and market prices. They reflect behavioral responses of economic agents to changes in prices and exogenous variables such as agricultural policy instruments, GDP, currency exchange rate, import tariffs, etc. The equations’ parameters are usually estimated as time series regressions. Following the partial equilibrium approach, commodity prices adjust to clear each commodity market. Lagged endogenous variables introduce (recursive) dynamic behavior when entered as determinants in the next period’s equilibrium supply and/or demand (Nykolyuk et al. 2021).