Vegetable Oils Market Disruptions: The Income and Food Security Effects

1. Vegetable Oils Market Disruptions: The Income and Food Security Effects
Dr. Ismael Fofana
Director, Capacity & Deployment
AKADEMIYA2063

2. Outline
1. Global Vegetable Oils Market Disruptions and Price Shocks
2. Country Exposure to Global Vegetable Oils Market Disruptions
3. Analytical Framework
4. Simulation Scenarios
5. Household Income Effects
6. Food Inflation Effects
7. Food Consumption Effects
8. Conclusion

3. 1. Global Vegetable Oils Market Disruptions and Price Shocks
Source: Projection by the World Bank in October 2021 and April 2022, using the commodity price database (World Bank, 2022)
Global oilseed prices projected to rise steeply in 2022, at the onset of the Ukraine crisis
Percentage annual variation in global vegetable oils prices

4. 2. Country Exposure to Global Vegetable Oils Market Disruptions
Lower dependency
on Russia & Ukraine
Share of Ukraine and Russia in country imports (%)
Share of vegetable oils imports in domestic consumption (%)
Higher dependency
to the global market
Source: Constructed
from AATM Database
(AKADEMIYA2063 &
IFPRI,2022)
Contagion through
regional re-export
markets
Source: Constructed from
FAOSTATS (FAO,2022)

5. Namibia
Djibouti
Senegal
Niger
Benin
Togo
Nigeria
Ethiopia
Angola
South Africa
DR Congo
Some countries are exposed through re-exports by their neighbors
2. Country Exposure to Global Vegetable Oils Market Disruptions (Cont.)

6. 3. 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

7. 4. Simulation Scenarios
“Baseline” scenario: no major changes in the
economies’ trajectories in the absence of the
crisis for the period 2022-2024.
“Ukraine” scenario: disruptions to the individual
country economies resulting from the changes in
global commodity markets

8. 5. Household Income Effects
• Ghana 3.0%
• Malawi <1.0%
• Mozambique 1.5%
• Uganda 1.5%
Driven by the weight of the vegetable
oils and oilseeds industries in a country’s
agricultural sector
Percentage
change in
gross Income
for RURAL
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
gross Income
for URBAN
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
gross Income
for ALL
households,
Ukraine vs.
Baseline
Scenarios

9. Income distribution:
• Farmers > Non-farmers > Urban
Percentage
change in
gross Income
for RURAL
FARMERS,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
gross Income
for RURAL
NON-
FARMERS
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
gross Income
for RURAL
households,
Ukraine vs.
Baseline
Scenarios
• Farmers: Bottom = Top quintiles
• Non-farmers: Bottom > Top quintiles
• Non-farmers: Bottom > Top quintiles
5. Household Income Effects (Cont.)

10. 6. Food Inflation Effects
All countries and households
• Mozambique > Ghana > Malawi > Uganda
Percentage
change in
Food
Consumption
Price Index
for RURAL
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
Food
Consumption
Price Index
for URBAN
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
Food
Consumption
Price Index
for ALL
households,
Ukraine vs.
Baseline
Scenarios
• Mozambique
 Rural > Urban
• Ghana
 Rural > Urban
• Malawi
 Urban > Rural
• Uganda
 Urban & Rural
High food inflation pressure

11. Ghana
• Farmers = Non-farmers = Urban
• Bottom = Top Quintiles
6. Food Inflation Effects (Cont.)
Food inflation pressure by household groups
Malawi
• Urban > Non-farmers > Farmers
• Top > Bottom Quintiles
Mozambique
• Farmers > Urban > Non-farmers
• Top > Bottom Quintiles

12. 7. Food Consumption Effects
Negative food consumption outcomes (-)
• Mozambique > Malawi > Uganda
Percentage
change in
Food
Consumption
for RURAL
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
Food
Consumption
for URBAN
households,
Ukraine vs.
Baseline
Scenarios
Percentage
change in
Food
Consumption
for ALL
households,
Ukraine vs.
Baseline
Scenarios
• Mozambique
 Rural > Urban
• Malawi
 Urban > Rural
• Uganda
 Urban & Rural
Positive food consumption outcomes (+)
• Ghana (Rural)

13. Ghana (+)
• Farmers > Non-farmers > Urban
• Bottom > Top Quintiles
7. Food Consumption Effects (Cont.)
Malawi (-)
• Non-farmers > Urban > Farmers
• Top > Bottom Quintiles
Mozambique (-)
• Farmers > Urban > Non-farmers
• Top > Bottom Quintiles

14. 8. Conclusion
Projections of high vegetable oils prices for 2022, at the onset of the
Russia-Ukraine crisis.
Negative food security outcomes for Mozambique, Malawi, and Uganda.
Positive food security outcomes for Ghana driven by:
• Existence of local vegetable oils and oilseeds industries, producing
close substitute products;
• Sizeable contribution of local vegetable oils and oilseeds industries
to the agricultural sector, and the national economy.

15. 8. Conclusion (Cont.)
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)
Recent forecasts, i.e. October 2022, show a moderate increase of global vegetable oils prices for 2022

16. THANK YOU