How Cereal Exports Can Boost the Economy: A Case Study of the EU and Ukraine

Cereal exports are a vital source of income and food security for many countries around the world. Cereals, such as wheat, barley, maize, rice and millet, are among the most traded agricultural commodities globally. According to the Observatory of Economic Complexity, cereals were the world’s 25th most traded product in 2021, with a total value of $163 billion. The top exporters of cereals in 2021 were the United States ($30.9 billion), Ukraine ($13 billion), Argentina ($12.9 billion), India ($12.8 billion), and Russia ($10.8 billion).

In this article, we will focus on the case of the European Union (EU) and Ukraine, two major players in the global cereal market. We will examine how cereal exports can boost the economy of both regions, as well as the challenges and opportunities they face.

The EU is the world’s largest producer and consumer of cereals, with an annual production of about 300 million tons and a consumption of about 280 million tons. The EU is also a net exporter of cereals, with a trade surplus of €4.9 billion in July 2022. The main destinations for EU cereal exports are North Africa, the Middle East, China and Turkey.

The EU’s cereal exports have increased significantly in recent years, especially for wheat, which is the most exported cereal by value and volume. The EU exported 1.9 million tons of wheat to the Middle East and North Africa (MENA) region in July 2022, which represents a 300% increase compared to July of last year. In July 2022, wheat total exports to the world reached 3 million tons, a 74% increase compared to last year.

The main factors behind this surge in EU wheat exports are:

• The high quality and competitiveness of EU wheat, which meets the demand of importers for food and feed purposes.
• The disruption of the market caused by Russia’s war in Ukraine, which reduced Russia’s wheat exports and increased its domestic prices.
• The temporary trade liberalization measures implemented by the EU to support Ukraine’s economy and food security, which allowed duty-free access for Ukrainian wheat to the EU market.
• The improvement of the functioning of the Solidarity Lanes, which facilitated the transport of cereals from Ukraine to the EU via rail and road.

Cereal exports can boost the economy of the EU by:

• Generating income and employment for farmers, traders, processors and transporters.
• Enhancing food security and resilience for both exporters and importers.
• Strengthening trade relations and cooperation with strategic partners.
• Supporting sustainable development goals and climate action by promoting low-carbon and circular agriculture.

Ukraine is one of the world’s leading producers and exporters of cereals, especially maize, wheat and barley. Ukraine’s cereal production reached a record high of 75.1 million tons in 2022, while its cereal exports amounted to $13 billion in 2021. The main destinations for Ukraine’s cereal exports are China, Egypt, Saudi Arabia and the EU.

Ukraine’s cereal exports have also increased significantly in recent years, despite the challenges posed by the war with Russia, the Covid-19 pandemic and climate change. The main factors behind this growth are:

• The favourable weather conditions and high yields achieved by Ukrainian farmers.
• The diversification of export markets and products, especially towards Asia and Africa.
• The modernisation and expansion of storage and logistics infrastructure.
• The implementation of reforms and standards to improve quality and safety.

Cereal exports can boost the economy of Ukraine by:

• Generating income and foreign exchange for farmers, traders, processors and transporters.
• Enhancing food security and resilience for both exporters and importers.
• Attracting investments and innovations in the agricultural sector.
• Supporting democratic transition and integration with the EU.

However, both the EU and Ukraine face some challenges and risks that could affect their cereal exports in the future. These include:

• The volatility of prices and demand in the global market, influenced by factors such as weather, pests, diseases, trade policies and geopolitics.
• The competition from other major exporters, such as the US, Argentina, India and Russia.
• The impact of climate change on crop production and quality, as well as on water availability and soil health.
• The need to balance cereal exports with domestic consumption and food security needs.
• The need to comply with environmental and social standards and regulations in both domestic and foreign markets.

To overcome these challenges and seize the opportunities, both the EU and Ukraine need to:

• Invest in research and innovation to improve productivity, quality and resilience of cereal crops.
• Diversify their export markets and products, as well as their sources of supply and transport modes.
• Enhance their cooperation and coordination on trade, agriculture and development policies and programs.
• Promote sustainable and inclusive cereal value chains that benefit all actors and respect human rights and the environment.

Cereal exports are a key component of the economy and food security of both the EU and Ukraine. By working together, they can increase their competitiveness and resilience in the global market, while contributing to the well-being of their people and the planet.

Cereal exports: a global overview

Cereals are one of the most important sources of food and feed in the world, accounting for about half of the global dietary energy supply. The trade of cereals is also a significant factor in the global economy, as cereals are produced and consumed in different regions and countries. In this blog post, we will look at some statistics on cereal exports, focusing on the main commodities, regions and trends.

According to the FAO, the world cereal production in 2023 is forecast to reach a record high of 2 819 million tons, 1.1 percent higher than in 2022. The increase is mainly driven by higher wheat production, especially in the European Union, Canada, Kazakhstan and Türkiye. However, the global cereal utilization is also expected to grow by 0.9 percent to 2 805 million tons, reflecting higher food, feed and industrial uses. This means that the global cereal trade will remain close to the high level of 2022/23, estimated at 465 million tons.

The main cereal commodities traded in the world are wheat, coarse grains (mainly maize, barley and sorghum) and rice. In 2023/24, wheat exports are forecast to increase by 1.4 percent to 188 million tons, with the European Union expected to overtake Russia as the largest exporter. Coarse grain exports are projected to decline slightly by 0.7 percent to 228 million tons, as lower maize shipments from Brazil and Ukraine are only partly offset by higher barley exports from Australia and Türkiye. Rice exports are anticipated to rise by 2.6 percent to 49 million tons, with India likely to remain the leading exporter.

The main regions involved in cereal exports are North America, Europe, Asia and Oceania. North America accounts for about 30 percent of the global cereal exports, mostly maize and wheat from the United States and Canada. Europe contributes about 25 percent of the global cereal exports, mainly wheat from the European Union and Russia. Asia supplies about 20 percent of the global cereal exports, mostly rice from India, Thailand and Viet Nam, as well as wheat from Kazakhstan and Türkiye. Oceania provides about 10 percent of the global cereal exports, mainly wheat and barley from Australia.

The trends in cereal exports reflect the changes in production, consumption and prices of cereals in different regions and countries. For example, the drought in Australia in 2022/23 reduced its wheat and barley production and exports, while the bumper harvests in Türkiye increased its barley production and exports. The COVID-19 pandemic also affected the cereal trade in various ways, such as disrupting logistics, increasing demand for staple foods and stimulating stockpiling behavior.

The trade of cereals is a complex and dynamic phenomenon that involves many factors and actors. The statistics on cereal exports can help us understand the patterns and drivers of cereal trade, as well as its implications for food security, economic development and environmental sustainability.

References:

http://www.fao.org/faostat/en/#data/TP
https://agriculture.ec.europa.eu/data-and-analysis/markets/overviews/market-observatories/crops/cereals-statistics_en
https://www.fao.org/worldfoodsituation/csdb/en/

https://agriculture.ec.europa.eu/news/latest-monthly-agri-food-trade-report-eu-boosts-its-exports-cereals-2022-10-26_en
https://oec.world/en/profile/hs/cereals
https://wits.worldbank.org/trade/comtrade/en/country/UKR/year/2021/tradeflow/Exports/partner/WLD/product/1008

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