Joe Glauber 
Secretary of the Agricultural Market Information System (AMIS) 
Former Chief Economist at USDA

High food prices have triggered a global crisis that is driving millions more into extreme poverty, magnifying hunger and malnutrition. The number of people who are experiencing acute food insecurity and will need urgent assistance is likely to climb to 222 million people in 53 countries and territories, according to a FAO-WFP report. The 2022 Global Hunger Index indicates that overlapping crises have exposed the weakness of food systems and that global progress against hunger has largely stagnated in recent years. The impacts of ongoing regional conflicts, climate change, COVID-19, the war in Ukraine, supply chain disruptions, and high and volatile food, fertilizer, and fuel prices have drastically weakened the world’s already inadequate, unsustainable food systems. As a result, the world is experiencing the third global food crisis in less than two decades.

Since Russia’s invasion of Ukraine began, exports of grain from Ukraine, as well as food and fertilizers from Russia, have been significantly hit. The disruption in supplies pushed soaring prices even higher and contributed to a global food crisis. Both countries are among the most important producers of agricultural commodities in the world. They are net exporters of agricultural products and are leading suppliers of foodstuffs and fertilizers to global markets.

The Black Sea Grain Initiative, which allows for Ukrainian grain exports through the Black Sea, was extended for an additional 120 days beginning November 19, 2022. The renewal of the deal has eased the grain market, however, the ensuing blackouts in the Ukrainian ports, which remain for the most part inoperable due to the shelling by Russian troops of gas and electricity infrastructure across the county, spiked concerns about the actual availability of Ukrainian grain through the ports.

What are the likely effects of a possible termination of the deal? Will the grain market continue to be volatile in 2023? What is the outlook for Ukrainian and global grain production? Is there enough grain supply to feed the world?  

In an exclusive interview to Miller Magazine, Joe Glauber, interim Secretary of the Agricultural Market Information System (AMIS) and former chief economist of the U.S. Department of Agriculture (USDA), answered these important questions. Mr. Glauber is also a senior research fellow at the International Food Policy Research Institute (IFPRI). Glauber spent over 30 years at the USDA including as Chief Economist from 2008 to 2014. He is the author of numerous studies on agricultural insurance, agricultural policy, and agricultural trade issues.

There are concerns over the future of the Black Sea Grain Initiative. Why extension of the deal important for global food security? What are the likely effects of a possible termination of the deal?

The partial re-opening of the Black Sea ports for Ukraine grain exports has helped contribute to lower grain prices in global markets and increased prices for Ukraine producers. Yet, while helpful, trade remains far below a year ago levels. We saw how with Russia’s temporary suspension of the agreement in early November caused wheat prices to spike 6% or more.

We have seen a dramatic increase in the prices of fertilizer. Given that it is the biggest input in crop production, how do you think grain producers will cope with high fertilizer prices? How the current price of fertilizer will affect farmers’ planting decisions? Do you think high fertilizer prices are a risk to world food security?

High fertilizer prices have a negative impact on grower margins. We have already seen how higher fertilizer prices have affected planting decisions (in the US this past spring, for example, producers planted more soybeans and less corn and wheat). The impact on margins has been particularly acute for rice producers who have not seen the increases in output prices that the other cereals have enjoyed.

Do you thin the grain market will continue to be volatile next year? What awaits us in 2023? Do you think agricultural commodity prices would ease in 2023?

Commodity prices should ease, assuming normal weather, but stocks remain tight which means prices will remain volatile.

What will be the key factors/risks -other than the war in Ukraine- affecting the grain prices in the coming months?

 We already have seen some issues develop with the southern hemisphere wheat crop. Argentine production is off significantly from year ago levels. The Australian crop appears to be near record but the quality has suffered some due to heavy rains in the Southeast. All eyes are on the waning La Nina and whether South American corn and soybean crops will be adversely affected. Thus far, conditions look improved over year ago levels.

The World Food Programme says the world is facing its largest food crisis in modern history. The International Monetary Fund has also warned of a catastrophe at least as severe as the food emergency in 2007-08. Do you think the situation is that serious? Is there not enough grain supply to feed the world?

There is ample grain to feed the world, but the question is at what price. Even as prices fall back to pre-war levels, they remain elevated. 

The strength of the dollar means that many poor net food-importing countries are paying very high prices for imports. This puts additional pressures on households, particularly poorer households in countries with limited safety nets.

The Covid-19 pandemic and the war between Ukraine and Russia have changed the settings of the global grain market. The role of the states in the agriculture and food sector is increasing. Food nationalism is on the rise. Prohibitions, quotas and tax practices increase food security concerns. Do you agree that the world is in an era of nationalism and protectionism?

With the outbreak of the war in Ukraine, many countries imposed export restrictions but in the last few months, many of those restrictions have been lifted. I don’t think we will see a reversal in trends away from globalization, but I think COVID and the war have taught importers and merchandisers to be creative and flexible in sourcing grain. 

You have been following the grain market for many years. Can you tell us what have you experienced along the way? What kind of changes you have been experiencing in the global grain market?

Anyone who has followed grain markets knows that markets are highly cyclical. I first started following markets in the 1970s. Every time there is a spike in prices, people bring up the same issues: Are we in a “new normal”? Should the world think about a global grain reserve? But the old adage of “the cure for high prices is high prices” remains true. Productivity gains have largely kept pace or exceeded demand growth over the past 60 years and we have seen prices fall in real (ie, inflation-adjusted) terms. 

Climate change may challenge those trends moving forward, but I don’t think those trends have been yet reversed.

Consumer awareness in health, origin, environment, climate change and animal welfare has been increasing. How these changing global consumption trends will affect the global grain trade flows? 

Climate change will present major challenges as production shifts geographically and yield variability increases. This argues that trade will become even more important in the future.

How will digitalization and blockchain technology affect global trade flows? What are the potential impacts on commodity trading?

I think these technologies already are having some impact though more for identity-preserved crops, specialty crops and livestock products. How fast these technologies are adopted will depend on the cost savings that they ultimately bring to the market.

 Is there anything else you would like to add or share with our readers? 

I am amazed how much I continue to learn about markets. It’s probably why I still haven’t retired!