1. Leysa Maty SALL
Economist
Centre d’Etudes Prospectives et
d’Informations Internationales (CEPII)
Exposure and Vulnerability to Global Wheat and Vegetable
Oils Trade and Market Disruptions: Case Study of Malawi

2. Introduction
• The Russia-Ukraine conflict raises numerous concerns about global trade: transmission through various channels.
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Coal,
Australia
Crude
oil,
Brent
Natural
gas,
Europe
Natural
gas,
U.S.
Liquefied
natural
gas,
Japan
Cocoa
Coffee,
Arabica
Coffee,
Robusta
Tea,
average
Coconut
oil
Groundnut
oil
Palm
oil
Soybean
meal
Soybean
oil
Soybeans
Barley
Maize
Rice,
Thailand,
5%
Wheat,
U.S.,
HRW
Bananas,
U.S.
Meat,
beef
Meat,
chicken
Oranges
Shrimp
Sugar,
World
Logs,
Africa
Logs,
S.E.
Asia
Sawnwood,
S.E.
Asia
Cotton
A
Index
Rubber,
RSS3
Tobacco
DAP
Phosphate
rock
Potassium
chloride
TSP
Urea,
E.
Europe
Aluminum
Copper
Iron
ore
Lead
Nickel
Tin
Zinc
Gold
Silver
Platinum
Before Ukraine Crisis After the onset of Ukraine crisis

3. Introduction
• Wheat occupies a relatively small place in the agricultural sector of African countries, as of 2019, almost 60% of African
countries (30 countries) imported wheat products directly from Ukraine and Russia.
• Globally, for African countries dependency on Russia and Ukraine Vegetable oils is much lower than for wheat (It reaches
5% for only one country, Sudan)
• For Malawi
Import dependency from Russia and Ukraine (%)* Import penetration ratio (%)**
Wheat 46.60 100.10
Vegetable oils 0.08 64.05
• Size within the economy will determine the changes at a macroeconomic level, and the related effects on income,
inflation, and food security.
* Source: AATM (2022); ** FAOSTAT(2022)

4. Outline
1. Exposure and vulnerability to trade and market disruptions
2. Analytical framework and simulation scenarios
3. Effects on households' incomes, food inflation and food consumption
4. Conclusion

5. 1.Exposure and vulnerability

6. 1. Exposure and Vulnerability: wheat
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01/07/2005
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10/20/2017
03/30/2018
09/07/2018
02/15/2019
07/26/2019
01/03/2020
06/12/2020
11/20/2020
04/30/2021
10/08/2021
03/18/2022
08/26/2022
INTERNATIONAL PRICES, Export, US (Gulf), Wheat (US No, 2, Hard Red Winter), US Dollar/tonne
Commodity Code: CMM100108
Source: Food and Agriculture Organization [FAO], 2022, Food Monitoring Price Analysis tool.
Weekly wheat export prices, US market, US Dollar/tonne
 The prices of wheat and corn increased by
more than 40% between February and
May 2022 .
 On May 20, 2022, the price reached an all-
time high of US $560 per metric ton (India
imposed an embargo on wheat exports in
May )
 Since May 2022, average monthly prices
decreased from US $520 to around US
$380 per ton on August (In the third
quarter, commercial exports from Ukraine’s
Black Sea ports have resumed).

7. 1.Exposure and Vulnerability:
Source: FAOSTAT bilateral trade data, 2022.
Malawi main trade partners on wheat
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Import partners
Export values (million USD)
2019-2020 Share
Argentina 1.5 3%
Canada 10.4 22%
Germany 0.6 1%
India 0.5 1%
Latvia 0.4 1%
Lithuania 2.7 6%
Morocco 0.0 0%
Mozambique 0.8 2%
Poland 3.2 7%
Russian Federation 18.2 39%
South Africa 0.2 0%
Ukraine 2.9 6%
United Arab
Emirates 4.7 10%
United Republic of
Tanzania 0.0 0%
Zambia 0.0 0%
Grand Total 46.3 100%
Export partners
Export values (million USD)
2019-2020 Share
Botswana 0.006 1%
Mauritius 0.072 9%
South Africa 0.468 58%
Tanzania 0 0%
Zimbabwe 0.264 33%
Total 0.81 100%

8. Source: AATM database, 2022.
Main partners: on vegetable oils
Export partners
Export values
(million USD) 2019-
2020 Share
Africa 0.19 91%
Botswana 0.03 12%
Mozambique 0.02 11%
Tanzania 0.01 4%
Zambia 0.11 51%
Zimbabwe 0.03 13%
Outside Africa 0.02 9%
Georgia 0.02 9%
Total 0.21 100%
Import partners
Import values (million
USD) 2019-2020 Share
Africa 24.01 15%
South Africa 12.66 8%
Kenya 9.99 6%
Mauritius 0.51 0%
Egypt 0.40 0%
Zambia 0.35 0%
Mozambique 0.10 0%
Zimbabwe 0.01 0%
Outside Africa 135.92 85%
Malaysia 98.29 61%
Argentina 31.47 20%
Indonesia 3.89 2%
Thailand 0.57 0%
USA 0.48 0%
Russian Federation 0.37 0%
Singapore 0.36 0%
Italy 0.18 0%
China 0.13 0%
India 0.08 0%
Ukraine 0.05 0%
United Arab Emirates 0.03 0%
Spain 0.02 0%
Lebanon 0.01 0%
Portugal 0.00 0%
Germany 0.00 0%
Belgium 0.00 0%
Total 159.93 100%
1.Exposure and Vulnerability:
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9. 2. Analytical Framework and
simulation scenarios

10. 2. Analytical framework
• Simulation models (Akademiya2063/ReSAKSS Toolbox)
 Single-Country CGE Models
• World Development Indicators database (World Bank)
 Macroeconomic data
• Statistics on international trade (United Nations)
 Import and export data
• Primary commodity price database (World Bank)
 Monthly price estimates for 46 primary commodities
 Annual price predictions (CMO released in April and
October)
Update the
Simulation
Models
Build the
Price
Scenario
Simulation
Tools

11. 2. Analytical framework
“Baseline” scenario: no major changes in
the economies’ trajectories in the absence
of the crisis for the period 2022-2024.
Price forecasts for the year 2021, 2022, 2023
and 2024 in October 2021 (before the crisis)
World Bank’s commodity price estimates before and after the start of the crisis are
compared,
“Ukraine” scenario: Disruptions from the
changes in wheat commodity markets
after the during the crisis for the period
2022-2024.
Price forecasts for the year 2021, 2022, 2023
and 2024 in April 2022 (After the crisis)

12. 2. Simulation scenarios: Wheat
Changes in International Price of Wheat, US HRW*, Percentage Annual Changes
Source: World Bank commodity markets outlook. Retrieved in April 2022.
Note: World Bank forecasts released in October 2021 and April 2022 (in percent).
-2.0 -2.0 -2.6
42.9
-15.6
-2.6
2022 2023 2024
October 2021 Forecasts (Baseline Scenario) April 2022 Forecasts (Ukraine Scenario)

13. 2. Simulation scenarios: Vegetable oils
Source: World Bank commodity markets outlook. Retrieved in April 2022.
Note: World Bank forecasts released in October 2021 and April 2022 (in percent).
2 1 1
34
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0
2022 2023 2024 2022 2023 2024
October 2021 Forecast April 2022 Forecast
Coconut oil Palm oil Soybean oil
Global oilseed prices projected to rise steeply in 2022, at the onset of the Ukraine crisis
Percentage annual variation in global vegetable oils prices

14. 3.Effects on households' incomes,
food inflation and food consumption

15. 3. Effects of Rising Wheat Prices on Household Incomes
2022 2023 2024
Rural FQ1 -0.450 -0.307 -0.288
Rural FQ2 -0.392 -0.270 -0.255
Rural FQ3 -0.375 -0.261 -0.248
Rural FQ4 -0.244 -0.171 -0.165
Rural FQ5 -0.279 -0.190 -0.180
Rural NFQ1 -0.051 -0.030 -0.032
Rural NFQ2 -0.058 -0.034 -0.035
Rural NFQ3 -0.103 -0.060 -0.054
Rural NFQ4 -0.210 -0.121 -0.104
Rural NFQ5 -0.663 -0.263 -0.109
Urban Q1 -0.329 -0.227 -0.219
Urban Q2 -0.253 -0.180 -0.177
Urban Q3 -0.894 -0.576 -0.524
Urban Q4 -0.276 -0.186 -0.181
Urban Q5 -0.058 -0.046 -0.064
Rural -0.348 -0.219 -0.192
Urban -0.096 -0.070 -0.085
All -0.228 -0.150 -0.143
 Decrease in incomes across all household categories
(equivalent to a tax on incomes)
 Decrease in income is more pronounced among poor urban
and rural farm households, while rural non-farm households
experience smaller declines in income.
Households Income, Percentage Changes Ukraine vs. Baseline (%)
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.

16. 3. Global Wheat Price Increases and Food Price Inflation
2022 2023 2024
Rural FQ1 0.574 0.382 0.347
Rural FQ2 0.304 0.209 0.192
Rural FQ3 0.130 0.098 0.094
Rural FQ4 0.025 0.033 0.036
Rural FQ5 0.134 0.100 0.096
Rural NFQ1 0.729 0.477 0.430
Rural NFQ2 0.842 0.556 0.502
Rural NFQ3 0.547 0.364 0.329
Rural NFQ4 0.572 0.377 0.342
Rural NFQ5 0.383 0.259 0.238
Urban Q1 1.048 0.681 0.614
Urban Q2 0.660 0.443 0.404
Urban Q3 1.561 0.989 0.879
Urban Q4 0.460 0.306 0.279
Urban Q5 0.300 0.207 0.193
Rural 0.208 0.149 0.139
Urban 0.383 0.259 0.239
All 0.268 0.186 0.173
• Higher wheat prices have a significant impact on rising food prices
• A sharper increase in food prices is seen among low-income
households in rural areas, for both farm and non-farm households.
• Rural non-farm households are more affected than farm
households.
Food Price Index, Percentage Changes Ukraine vs. Baseline (%)
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.

17. 3. Impacts of Rising Wheat Prices on Food Consumption
2022 2023 2024
Rural FQ1 -0.800 -0.545 -0.503
Rural FQ2 -0.511 -0.356 -0.333
Rural FQ3 -0.365 -0.263 -0.251
Rural FQ4 -0.190 -0.146 -0.144
Rural FQ5 -0.276 -0.196 -0.187
Rural NFQ1 -0.659 -0.434 -0.395
Rural NFQ2 -0.811 -0.536 -0.488
Rural NFQ3 -0.528 -0.349 -0.316
Rural NFQ4 -0.555 -0.359 -0.323
Rural NFQ5 -0.653 -0.335 -0.229
Urban Q1 -1.007 -0.666 -0.608
Urban Q2 -0.722 -0.493 -0.458
Urban Q3 -1.755 -1.125 -1.007
Urban Q4 -0.436 -0.291 -0.270
Urban Q5 -0.192 -0.133 -0.132
Rural -0.390 -0.267 -0.246
Urban -0.297 -0.201 -0.193
All -0.358 -0.245 -0.228
• All categories of households experience a drop in food
consumption, particularly among low-income rural and urban
households
 differences in consumption baskets and pre-crisis purchasing
power among poor rural and urban households, identical or
lower price changes may trigger stronger food consumption
effects .
Food Consumption, Percentage Changes Ukraine vs. Baseline (%)
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.

18. 3. Effects of Rising vegetable oils Prices on Household Incomes
• Driven by the weight of the vegetable oils and oilseeds industries in a country’s agricultural sector (Malawi <1.0%)
• Income effects negligible for all household groups, urban as well as rural, except for higher income groups among
rural non-farm households
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.
Households Income, Percentage Changes Ukraine vs. Baseline (%)

19. 3.Global Vegetable oil Price Increases and Food Price Inflation
• Food inflationary pressures noticeable only in 2022
• Urban > Non-farmers > Farmers
• Top > Bottom Quintiles
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.
Food Price Index, Percentage Changes Ukraine vs. Baseline (%)

20. 3. Impacts of Rising Vegetable oil Prices on Food Consumption
Negative effects
• Food consumption effects are noticeable only in 2022
• Non-farmers > Urban > Farmers
• Top > Bottom Quintiles
Source: Data are based on results from authors’ simulations. Retrieved in April 2022.
Food Consumption, Percentage Changes Ukraine vs. Baseline (%)

21. 4.Conclusion

22. 4.Main findings
 Given the small size of the wheat production sector and the small weigh of vegetable oils in the
agricultural sector in Malawi, the disruptions to global trade are unlikely to have major macroeconomic
ramifications.
 Disruptions in global markets also are likely to have Negative food security outcomes for Malawi.
 Negative income effects among rural and urban households: higher among low-income urban and rural
farm households, as well as among high-income rural non-farm households
 Food price inflationary pressures tend to be more pronounced among low-income households:

23. 4.Some policy implications
• Lower-income households need to be protected from the inflationary pressures arising
from higher global prices and the expected effects on food consumption.
• It is important to anticipate some degree of transmission to prices of local staples as
consumers gradually turn to them in the near term as substitutes for wheat products.
• The crisis could create some contagion across staple food markets

24. 4.Conclusion
Percentage annual variation in global vegetable oils prices, Comparing October 2021, April 2022, and October 2022 Forecasts
Source: Projection by the World Bank in October 2021, April 2022, October 2022, using the commodity price database (World Bank, 2022)
Moderate increase of global vegetable oils prices for 2022
2.3 0.6 0.7
34.5
-13.6
-0.9
1.5 0.6 0.1
-2.3 -2.3
0.4
45.9
-15.2
-2.0
12.7
-17.6
0.4
3.6
-5.3
1.0
30.0
-22.2
0.0
20.9
-7.5
-0.8
2022 2023 2024 2022 2023 2024 2022 2023 2024
October 2021 Forecast April 2022 Forecast October 2022 Forecast
Coconut oil Palm oil Soybean oil
Price level October 2022
Vegetable oils Unit 2020 2021 2022f 2023f 2024f
Coconut oil $/mt 1,010 1,636 1,660 1,670 1,672
Palm oil $/mt 752 1,131 1,275 1,050 1,054
Soybean oil $/mt 838 1,385 1,675 1,550 1,537

25. Conclusion
Changes in International Price of Wheat, US HRW*, Percentage Annual Changes
Source: Projection by the World Bank in October 2021, April 2022, October 2022, using the commodity price database (World Bank, 2022)
-2.0 -2.0 -2.6
42.9
-15.6
-2.6
36.5
-4.7
-1.2
2022 2023 2024
October 2021 Forecasts (Baseline Scenario) April 2022 Forecasts (Ukraine Scenario) October 2022 Forecasts (Ukraine Scenario)
Price level October 2022
Unit 2020 2021 2022f 2023f 2024f
Wheat$/mt 232 315 430 410 405

26. THANK YOU