Source: NORTH DAKOTA STATE UNIV submitted to
PARTNERSHIP: GLOBAL IMPLICATIONS OF THE RUSSIA-UKRAINE WAR FOR AGRICULTURAL TRADE AND VALUE CHAINS, COMMODITY PRICES, AND CROSS-BORDER INVESTMENT
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
ACTIVE
Funding Source
AFRI COMPETITIVE GRANT
Reporting Frequency
Annual
Accession No.
1030630
Grant No.
2023-67023-39114
Cumulative Award Amt.
$800,000.00
Proposal No.
2022-10654
Multistate No.
(N/A)
Project Start Date
Apr 15, 2023
Project End Date
Apr 14, 2027
Grant Year
2023
Program Code
[A1641]- Agriculture Economics and Rural Communities: Markets and Trade
Project Director
Steinbach, S.
Recipient Organization
NORTH DAKOTA STATE UNIV
1310 BOLLEY DR
FARGO,ND 58105-5750
Performing Department
(N/A)
Non Technical Summary
This research will generate new knowledge regarding the global implications of the Russian invasion of Ukraine for agricultural trade and value chains, commodity prices, and cross-border investment. Beyond the severe humanitarian consequences, the war in Ukraine has far-reaching economic implications for global agricultural and food markets. Both countries export staple grains, oilseeds, vegetable oil and meal, fertilizer, and energy products. To provide robust quantitative evidence on the short-run and long-run trade and value chain implications and the region-specific global reallocation and welfare effects, we will use a newly constructed dataset on trade sanctions and export bans imposed in response to the Russia-Ukraine war, high-frequency trade, and detailed value chaindata, and theory-consistent empirical models. Insights from this applied trade analysis will inform an empirical assessment of commodity prices building on advanced machine learning techniques and food security implications using national and household-level food security data from developing countries. We will utilize detailed firm-level investment data and state-of-the-art causal inference methods to shed light on the global implications of economic sanctions and investment uncertainty for cross-border capital flows in the agricultural and food industry. This analysis of the economic consequences of Russia's invasion of Ukraine will provide robust quantitative evidence regarding a critical driver of global trade, commodity price, and investment uncertainty. Consequently, the project will deliver essential knowledge on the functioning of agricultural markets under economic and trade uncertainty and enhance market efficiency and performance. Insights drawn from this research will help inform federal policies that foster the competitiveness of U.S. farmers and ranchers and increase their participation and success in global agricultural and food markets.
Animal Health Component
50%
Research Effort Categories
Basic
50%
Applied
50%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60661203010100%
Knowledge Area
606 - International Trade and Development;

Subject Of Investigation
6120 - International economy and sectors thereof;

Field Of Science
3010 - Economics;
Goals / Objectives
The research will advance knowledge regarding the global implications of the Russian invasion of Ukraine for agricultural trade and value chains, commodity prices, and cross-border capital flows. First, by deploying theory-consistent empirical models to a newly constructed dataset on trade sanctions and export bans imposed in response to the Russia-Ukraine war and high-frequency tradeand detailed value chain data, we will provide robust quantitative evidence on the short-run and long-run trade and value chain implications and the region-specific global reallocation and welfare effects. These insights are precious for U.S. agriculture with its significant exposure to foreign markets. Second, by conducting an empirical assessment of commodity prices that builds on advanced ML techniques and evaluating the food security implications using national and household-level food security data, we will draw broad conclusions about the economic consequences of the Russia-Ukraine war that will be beneficial for researchers, policymakers, and other stakeholders alike. Third, by analyzing detailed firm-level investment data with state-of-the-art causal inference methods, we will shed light on the global implications of the Russian invasion of Ukraine for cross-border investment in the agricultural and food industry. A better understanding of those consequences will provide critical knowledge regarding a critical driver of global trade, commodity price, and investment uncertainty. Such insights will benefit private and public actors involved in global food supply chains. The project will enhance understanding of the functioning of agricultural markets under economic and trade uncertainty and advance market efficiency and performance.
Project Methods
Objective 1:Assess the trade effects of the Russian invasion of Ukraine and evaluate global reallocation and welfare implications.Develop a structural trade model of global agricultural trade reallocation due to trade sanctions and export bans. Estimate the short-run trade response to the Russia-Ukraine war at the sectoral level using high-dimensional regression models. Evaluate long-run trade reallocation and measure economic welfare effects using sectoral-level structural gravity models.Objective 2:Estimate agricultural GVC changes in response to the Russia-Ukraine war and measure the causal effects on GVC participation and positioning.Construct GVC participation indexes that decompose gross exports into value-added activities. Estimate GVC domestic and foreign value-added and GVC participation and positioning. Use causal inference methods to assess agricultural GVC changes in response to the Russian invasion of Ukraine. Explore sub-sector GVC heterogeneity and measure global GVC reallocation input sourcing effects.Objective 3:Evaluate the impact of the Russian invasion of Ukraine on agricultural commodity markets and food security.Use a novel ML approach to estimate the dynamic price and volatility effects. Evaluate changes in risk management costs for traders and farmers. Use causal inference methods and household-level data to assess the food security implications and mechanisms used to cope with trade and price shocks.Objective 4:Quantify the implications of the Russia-Ukraine war on investment activities in the agricultural and food industry.Use firm-level investment and capital flow data paired with modern difference-in-differences methods for causal inference to quantify the direct and indirect effects of economic embargoes and capital sanctions on investment activities in Russia and quantify global capital reallocations.

Progress 04/15/23 to 04/14/24

Outputs
Target Audience:We presented this work to several stakeholder groups at national and international organizations. This involves the USDA-OCE, USDA-ERS, USDA-FAS, and World Bank. Changes/Problems:The award was moved between institutions, which resulted in certain delays in research and hiring activities at the beginning of the project. What opportunities for training and professional development has the project provided?During this reporting period, our project provided significant opportunities for training and professional development, particularly for a postdoctoral researcher and junior faculty members. The postdoc received extensive one-on-one mentorship from senior project members, which included hands-on sessions focused on advanced empirical modeling techniques and the application of machine learning methods to agricultural data. Both the postdoc and junior faculty members participated in various workshops, conferences, and seminars, which were integral to their professional growth and also allowed them to increase their knowledge and skills in agricultural economics and data analysis. How have the results been disseminated to communities of interest?The results of our project have been widely disseminated to communities of interest through a combination of academic publications, policy briefs, and outreach activities. We published our findings in reputable journals and presented them at conferences, ensuring that both the academic community and policymakers were well-informed. To reach broader audiences, we organized webinars and public talks aimed at farmers, agribusiness stakeholders, and the general public. Our outreach efforts also includedengaging with media outlets to increase visibility and interest in the implications of our research. What do you plan to do during the next reporting period to accomplish the goals?During the next reporting period, we plan to focus on further analyzing the trade data to refine our understanding of regional reallocations and their long-term impacts. We will expand our empirical assessment of commodity prices by incorporating additional machine-learning techniques to enhance the accuracy of our predictions. To address any investment uncertainties highlighted, we will conduct in-depth analyses using updated firm-level data. Additionally, we will intensify our outreach efforts by organizing webinars to share our findings.

Impacts
What was accomplished under these goals? During this reporting period, we've addressed the disruptions in global agricultural markets caused by the Russia-Ukraine war. Using advanced empirical models, we analyzed a unique dataset onhigh-frequency trade data. Thisallowed us to uncover important changes in trade patterns, with some regions experiencing major shifts. We shared these insights through publications and policy briefs, helping policymakers and trade analysts better understand the changing trade landscape. Overall, our research has provided a clearer picture of how global trade patterns have shifted due to the war and improved our ability to forecast commodity prices during volatile periods. These accomplishments benefit U.S. agriculture by giving farmers, policymakers, and other stakeholders the necessary tools to adapt. By sharing our findings widely, we're helping to enhance market efficiency, ensuring that our work has a meaningful impact on a broad audience. Our project continues to contribute to a better understanding and management of agricultural trade and market dynamics amid global uncertainties.

Publications

  • Type: Journal Articles Status: Awaiting Publication Year Published: 2024 Citation: Raghav Goyal, Sandro Steinbach, Xiting Zhuang and Yasin Yildirim (2024). U.S. Agricultural Trade Challenges Amid Climate and Geopolitical Disruptions, Choices, forthcoming.
  • Type: Journal Articles Status: Awaiting Publication Year Published: 2024 Citation: Raghav Goyal, Edouard Mensah and Sandro Steinbach (2024). The Interplay of Geopolitics and Agricultural Commodity Prices, Applied Economic Perspectives and Policy, forthcoming.
  • Type: Journal Articles Status: Awaiting Publication Year Published: 2024 Citation: Colin A. Carter and Sandro Steinbach (2024). Did Grain Futures Prices Overreact to the Russia-Ukraine War Due to Herding?, Journal of Commodity Markets, forthcoming.
  • Type: Journal Articles Status: Published Year Published: 2024 Citation: Sandro Steinbach and Yasin Yildirim (2024). Agricultural Commodity Market Response to Russias Withdrawal from the Grain Deal, Journal of Agricultural Economics, first published online.
  • Type: Journal Articles Status: Published Year Published: 2024 Citation: Sandro Steinbach and Yasin Yildirim (2024). Grain Futures Market Response to the Black Sea Grain Initiative, German Journal of Agricultural Economics, 73(2): 122.
  • Type: Journal Articles Status: Published Year Published: 2023 Citation: Raghav Goyal and Sandro Steinbach (2023). Agricultural Commodity Markets in the Wake of the Black Sea Grain Initiative, Economics Letters, 231: 111297.
  • Type: Journal Articles Status: Published Year Published: 2023 Citation: Sandro Steinbach (2023). The Russia-Ukraine War and Global Trade Reallocations, Economics Letters, 226: 111075.
  • Type: Journal Articles Status: Published Year Published: 2023 Citation: Soojung Ahn, Dongin Kim and Sandro Steinbach (2023). The Impact of the Russian Invasion of Ukraine on Grain and Oilseed Trade, Agribusiness, 39(1): 291299.