Market-related

The Uruguay Round of international trade negotiations, which started in 1986 and concluded in 1994, advanced trade liberalization and led to the formation of the World Trade Organization (WTO). The Uruguay Round Agreement on Agriculture (URAA) stands out as a hallmark, since it brought agriculture—until then mostly not covered by international trade disciplines—into a rules-based framework.

On June 6, the Nova Kakhovka dam in southern Ukraine, located about 70 km upstream of Kherson, a port city on the Dnipro River, collapsed, sending an uncontrollable flow of water from its reservoir downstream. Futures markets reacting to the news sent wheat futures up almost 3 percent before falling back later that day. 

Following fierce farm protests over gluts of Ukrainian grain and other food items in their domestic markets, four European Union countries—Poland, Slovakia, Bulgaria, and Hungary—have temporarily imposed import restrictions on key agricultural products from Ukraine. Restrictions in Bulgaria entered into force on April 24, and Romania, another EU member, has considered similar measures. The countries’ governments have stressed that these bans are temporary and imposed out of concern for their own farmers, who are seeing prices and incomes fall.

The FAO Food Price Index continued to decline in March, dropping by 2.1 percent from the previous month. The Index has fallen by almost 21 percent since March 2022.

The Russia-Ukraine war has focused global attention on the key economic roles that those countries play as major exporters of agricultural commodities. Over 2019-2021, they accounted for 12% of global agricultural trade on a kilocalorie basis, with a combined market share of 34% for wheat, 26% for barley, 17% for maize, and 75% for sunflower oil. The war has scrambled this picture, with Ukraine’s exports falling dramatically, and Russia’s falling, then recovering.