Grain Import Dependency and Food Security in the South Caucasus

Although food security has improved during the transition period, the issue is still prevalent in the countries of the South Caucasus, which are heavily depending on wheat, the most important staple crop in the region, imported from Russia, and to a limited degree from Kazakhstan and Ukraine. Due to their favorable location next to the largest wheat exporting region, trade costs play a relatively small role and wheat markets in Armenia, Azerbaijan and Georgia are relatively well integrated with the Black Sea export market. Nevertheless, Armenia has the least diversified wheat imports among the South Caucasian countries due to its closed border with Azerbaijan. Despite the well-integrated markets, wheat imports and thus food security remain challenged by repeated restriction of wheat exports by the governments of Russia, Kazakhstan and Ukraine, most recently implemented as crisis policy during the COVID-19 pandemic

Agricultural Market Integration in the Commonwealth of Independent States: What Are the Main Driving Forces and Challenges?

Utilizing a price transmission approach, we focus on price relationships between the countries of the Commonwealth of Independent States (CIS) and how price changes on the world agricultural market are transmitted to the domestic CIS markets. In this study, we establish a unique price data set on five different agricultural products (i.e. wheat, pork, beef, poultry and whole milk powder) observed in eight different CIS countries. The results of the price transmission analysis indicate that regional integration within the CIS is strongest for pork and beef, followed by poultry and whole milk powder. The integration of CIS markets in world agricultural markets is strongest for wheat and beef, whereas it is relatively low for pork and poultry. Furthermore, beef markets in the CIS countries are the strongest integrated within the region, with the EU and the world market. Overall, our results indicate that domestic market support and trade policies, physical trade flows between countries, infrastructure, and bilateral or multilateral trade agreements play a key role in market integration of the CIS countries. These determinants should be particularly considered when designing recommendations for improving agri-food supply chain competitiveness in the CIS countries

"The Cradle of Wine Civilization" - Current Developments in the Wine Industry of the Caucasus

Wine has been cultivated in the Caucasus for thousands of years. Caucasian viticulture experienced its greatest evolution and development during Soviet rule. However, Gorbachev's anti-alcohol policy and the transformation processes in the 1990s led to a dramatic decline in wine production. For the last 15 years, the viticulture in this region has experienced rediscovery, renewal, and growth. Although Russia remains the largest and most important export market for the wines from Georgia, Armenia, and Azerbaijan, all three countries try to diversify export destinations and to penetrate non-CIS countries. The following article outlines the developments in the wine industry of these three Caucasian countries and identifies similarities between them

Wie lässt sich das Getreideproduktionspotenzial Russlands mobilisieren?

Russland leistet schon heute als weltweit größter Weizenexporteur einen beachtlichen Beitrag zur globalen Ernährungssicherheit. Zudem birgt Russland großes bislang ungenutztes Potenzial, um die Getreideproduktion weiter zu steigern. Um jedoch das Produktionspotenzial zu mobilisieren, muss zugleich das Exportpotenzial für Weizen erhöht werden. Unter den heutigen Marktbedingungen – mit zum Teil regional entkoppelter Preisentwicklung und hohen Transportkosten – kann das Produktionspotenzial insbesondere Westsibiriens und der Uralregion kaum genutzt werden. Die Mobilisierung des Getreideexportpotenzials erfordert insofern eine Verbesserung der Funktionsfähigkeit des russischen Getreidemarkts. Es sind nicht nur umfassende Investitionen in die Transportinfrastruktur notwendig, sondern auch die Entwicklung von Warenterminmärkten zur Reduzierung des Preisrisikos und der Ausbau von Marktinformationssystemen zur Verbesserung der Markttransparenz

Price relationships along the Norwegian salmon value chains: A comparative study of the leading consumption market in France and the largest processing industry in Poland

This study investigates price relationships along the Norwegian salmon value chains in France, the EU’s leading consumption market for salmon, and Poland, the EU’s largest “processing hub.” Using a vector error correction model framework, our results indicate that the salmon price determination is a supplier-driven process, with the export prices in Norway influencing prices in France and Poland, but not vice versa. Results also suggest that price linkages are strong between the export market in Norway and the retail market in France and the processing industry in Poland; however, the Polish retail sector is separated from markets at the upstream level, while price discovery at the French wholesale market is dominated by the retail market. Our findings imply that the evolved market structures lead to efficiently functioning retail markets in France and wholesale markets in Poland, but put the French wholesale and Polish retail markets at a disadvantage.The research on which this paper is based formed part of the VALUMICS project “Understanding Food Value Chain and Network Dynamics” funded from the European Union’s Horizon 2020 research and innovation programme.Peer Reviewe

Spatial market efficiency of grain markets in the post-Soviet countries and implications for global food security

This doctoral thesis studies the spatial market efficiency of wheat markets in selected post-Soviet countries; particularly in Russia, the largest wheat exporting country in the world, and in the grain import-dependent countries of Central Asia and the South Caucasus. Increased grain production in the Black Sea region, and in Russia specifically, is crucial for meeting increasing global agricultural demand and global food security. Grain production in Russia could be boosted by increasing grain production efficiency and also by re-cultivating formerly abandoned agricultural land. However, to increase Russia's role in global wheat supply, additional grain production potential has to coincide with improving the country's grain export perspectives. On the other hand, the realization of Russia's export capacity largely depends on the performance of its regional grain markets domestically. Using price transmission and panel data analyses in a comparative context, this study finds the wheat market of Russia segmented, with the primary wheat export region poorly integrated into the domestic market. This thesis also demonstrates that regional wheat market integration in Russia is relatively low and heterogeneous and trade costs are relatively high compared to the USA, mostly due to large distances between grain producing regions. In addition, by including the USA as benchmark country, a comparative approach enables a more comprehensive assessment of the spatial market efficiency of the wheat market in Russia. The results also provide evidence on the dissimilarity of the underlying fundamental mechanism of market integration between Russia and the USA. In Russia, the physical trade of wheat mainly fosters market integration at the interregional level, whereas in the USA, in addition to physical trade, information flows induced by commodity futures markets play a major role in the regional grain market integration. (...

How well is the Russian wheat market functioning? A comparison with the corn market in the USAHow well is the Russian wheat market functioning? A comparison with the corn market in the USA

Given Russia’s leading position in the world wheat trade, how well its grain markets function becomes very important question to evaluate the state of future global food security. We use a threshold vector error correction model to explicitly account for the influence of trade costs and distance on price relationships in the grain markets of Russia and the USA. In addition, we study impact of market characteristics on regional wheat market integration. Empirical evaluation shows that distance between markets, inter-regional trade flows, export orientation, export tax and export ban all have a significant impact on the magnitude of wheat market integration

Global Wheat Market Dynamics: What Is the Role of the EU and the Black Sea Wheat Exporters?

Over the last two decades, three countries in the Black Sea Region—Russia, Ukraine, and Kazakhstan—became global leaders in grain production and trade, and replaced the USA and France as the most previous largest wheat exporting countries. In this study we investigate world wheat price linkages and identify the current “price leaders” of the global wheat market. This empirical analysis is focused on the price relationships between eight of the largest wheat exporting countries and uses a cointegration framework and a vector error-correction model. The results show that, regarding price formation on the world wheat market, the French price is more important for transmitting price signals to other wheat export markets compared to the USA. Furthermore, our results indicate that, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine adjust to price changes in France, the USA, and Canada. Albeit unrealistic in the short run, the creation of the futures market in the Black Sea region might significantly improve the participation of Black Sea markets in price formation of the global wheat market

Spatial market efficiency of grain markets in Russia and global food security: A comparison with the USA

Using a threshold vector error correction model approach we find the wheat market of Russia segmented, with the primary grain export region poorly integrated into the domestic market. Results also indicate that trade costs are high, hindering spatial market efficiency of wheat markets in Russia. In addition, our study demonstrates that, by including the USA as benchmark country, a comparative approach enables a more comprehensive assessment of the spatial market efficiency of the wheat market in Russia. The study shows that the distinction between grain production and export potential, especially for markets located in peripheral regions of Russia, is essential to correctly identify Russia's future role for global food security. As a general conclusion, besides raising agricultural production potential it is also essential to strengthen spatial market efficiency in the agricultural sector to boost agricultural export potential and to increase global food security