Global Fertilizer and Wheat Trade and Market Disruptions: Impacts on Agricultural Productivity, Growth, and Food Security for Rwanda.

1. The Ukraine Crisis & African Economies
Global Fertilizer and Wheat Trade and Market Disruptions:
Impacts on Agricultural Productivity, Growth, and Food Security for Rwanda
Dr. Ismael FOFANA
Director, Capacity & Deployment
AKADEMIYA2063

2. Outline
1. Global Wheat and Fertilizer Price Shocks
2. Country Exposure to Wheat and Fertilizer Markets Disruptions
3. Analytical Framework
4. Simulation Scenarios
5. Food Security Effects of Wheat Market Disruption
6. Agricultural Productivity and Growth Effects of Fertilizer Market Disruption
7. Government Response to the Global Fertilizer Market Disruption

3. 1. Global Wheat and Fertilizer Price Shocks
• Global wheat and fertilizer prices increased steeply in 2022,
and high prices are expected to stay into 2024
Percentage Changes in Global Wheat Prices,
Compared to 2021 Price

4. 1. Global Wheat and Fertilizer Price Shocks (Cont.)
• Global wheat and fertilizer prices increased steeply in 2022,
and high prices are expected to stay into 2024
Percentage Changes in Global Fertilizer Prices,
Compared to 2021 Prices

5. 2. Country Exposure to Wheat and Fertilizer Markets Disruptions
• Relatively high exposure of Rwanda to the global markets of wheat and fertilizers
Wheat (AATM, 2020)
Import dependency (to Russia and Ukraine) rate 44%
Import penetration rate (Import/Consumption) > 100%
Fertilizer (AATM, 2011-2020)
Import dependency (to Russia and Ukraine) rate 13%
Import penetration rate (Import/Consumption) = 100%

6. 2. Country Exposure to Wheat and Fertilizer Markets Disruptions (Cont.)
• Rwanda exposes indirectly DRC to global wheat market shocks through regional re-exports
Exporter
COMESA Importer
Comoros DR Congo Eswatini Kenya Madagascar Malawi Mauritius Rwanda Seychelles Zimbabwe
Burundi 10.702 0.094 0.039
Botswana 0.038
Mozambique 0.394 0.143 0.427 0.686
Mauritius 1.330 0.563 0.989
Malawi 0.021 0.180
Namibia 0.001
Rwanda 29.399 0.161
Uganda 0.011 1.502 0.002
Wheat re-exportation within the Common Market for Eastern and Southern Africa (COMESA) in 2020, million USD
Source: AATM 2022 Database

7. 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
• World Economic Outlook (International Monetary Funds)
 Economic Growth Outlook
• Primary commodity price database (World Bank)
 Annual price predictions for 46 primary commodities
(released in April and October)
Update the
Simulation
Models
Build the
Simulation
Scenarios
Simulation
Tools

8. 4. Simulation Scenarios
“Baseline” scenario
No major changes in the economies’ trajectories in the absence of the crisis
for the period 2022-2024.
 Economic Growth Outlook 2022-2024 (IMF, October 2021)
 Commodity Market Outlook 2022-2024 (World Bank, October 2021)
“Ukraine” scenario
Disruptions to the individual country economies resulting from the changes
in global commodity trade and markets
 Commodity Market Outlook 2022-2024 (World Bank, October 2022)
 Economic Growth Outlook 2022-2024

9. 5. Food Security Effects of Wheat Market Disruption
• Small increase in
rural households’
income in 2022 but
decrease in all areas
over 2023-2024.
• Small increase in
food prices in all
areas over 2022-
2024.
• Small decline in food
consumption over
the period 2022-
2024.
Household
Category
Household
Income
Food Price
Index
Food
Consumption
2022
Rural 0.2 0.3 -0.1
Urban 0.0 0.3 -0.2
All 0.1 0.3 -0.2
2023
Rural 0.0 0.2 -0.2
Urban -0.1 0.2 -0.2
All -0.1 0.2 -0.2
2024
Rural -0.3 0.2 -0.4
Urban -0.1 0.3 -0.2
All -0.2 0.2 -0.3
• Modest increase in food insecurity induced by the wheat trade and market disruptions
Wheat in Rwanda’s economy:
- 1.2% agricultural GDP
- 0.3% economywide GDP
Wheat products share:
- 1% food consumption budget

10. 6. Agricultural Productivity and Growth Effects of Fertilizer Market Disruption
• Fertilizer use tends to be concentrated among few crops, i.e., rice, maize, pulses, etc.
Crop type Share Total Fertilizer Share Agricultural Value Added
Wheat 2.2 1.2
Maize 10.4 8.8
Paddy rice 5.1 2.5
Sorghum 2.6 4.6
Irish potatoes 6.2 9.2
Sweet potatoes 4.3 8.3
Cassava 3.5 7.4
Other roots 0.5 0.8
Pulses 13.4 14.2
Other crops 51.9 32.0
Percentage Shares of Fertilizer Use and Value-Added by Type of Crop in Rwanda
Source: 2018 SAM for Rwanda

11. 6. Agricultural Productivity and Growth Effects of Fertilizer Market Disruption (Cont.)
-40
-35
-30
-25
-20
-15
-10
-5
0
Wheat
Maize
Paddy
rice
Sorghum
Irish
potatoes
Sweet
potatoes
Cassava
Other
roots
Pulses
Other
crops
2022 2023 2024
Fertilizer Use by Type of Crop, Percentage Changes Ukraine Compared to Baseline Scenarios
Source: Simulation Results (2022)
• Fertilizer higher prices projected to reduce fertilizer use by 28-36 percent annually over 2022-2024.

12. -3.5
-3.9
-3.8
-3.3
-3.7
-3.5
2022 2023 2024
Crop Productivity Agriculture Productivity
Agricultural Productivity, Changes Ukraine Compared to Baseline Scenarios (%)
6. Agricultural Productivity and Growth Effects of Fertilizer Market Disruption (Cont.)
• Decline in crop and agricultural productivity persists and sharpens in 2023 and 2024

13. Output Growth, Changes Ukraine Compared to Baseline Scenarios (%)
-5.5
-6.4 -6.5
-5.0
-6.0
-6.3
-2.1
-3.8
-6.1
2022 2023 2024
Value Added, Crops Value Added, Agriculture Gross Domestic Product
6. Agricultural Productivity and Growth Effects of Fertilizer Market Disruption (Cont.)
• Growth of the agricultural sector and the national economy projected to slow
• Lingering economywide effects of the global fertilizer supply chain disruptions
Crop activities
contributed to 89%
of agricultural value-
added in 2018
(Source: 2018 SAM)

14. 7. Government Response to the Global Fertilizer Trade and Market Disruptions
Type of fertilizer Price without state
subsidy (FRW/kg)
Level of Government
subsidy (Frw/ kg)
What a subsidized
farmer pays (Frw/kg)
Urea 1257 503 (40%) 754
DAP 1428 600 (42%) 828
NPK 17:17:17 1530 648 (42%) 882
KCL/MOP 1307 431 (33%) 876
Fertilizer prices Season 2023A (August 2022-January 2022)
Fertilizer prices Season 2023B ( February-June 2023)
Type of fertilizer Price without state
subsidy (FRW/kg)
Level of Government
subsidy (Frw/kg)
What a subsidized
farmer pays (Frw/kg)
Urea 1143 503 (40%) 640
DAP 1322 600 (45%) 722
NPK 17:17:17 1302 648 (50%) 654
KCL/MOP 1257 431 (34%) 826

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