This paper was authored by Koen De Backer and Dorothée Flaig of the OECD Secretariat. The Committee on Industry, Innovation and Entrepreneurship (CIIE) approved and declassified the paper on 27 April 2017 as part of its work on "Seizing the Opportunities of GVCs". Because of the joint work between STI and TAD, the paper has also been discussed at the Working Party of the Trade Committee (WPTC) of 15 June; comments of the WPTC delegates have been taken into account in this version of the paper. Note to Delegations: The paper is also available on OLIS under the reference cote: DSTI/CIIE(2017)2 This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

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In light of Russia’s war in Ukraine, three widely used trade and sector models were applied to assess: i) global food and nutrition security, ii) the effects on the bioeconomy, and iii) the implications for the European Common Agricultural Policy (CAP). Simulation results show that an export stop of agri-food commodities in Ukraine and Russia results in a substantial increase in global agri-food prices under short-term assumptions. However, the longer-term effects are much smaller due to global supply responses. The effects on food security depend on the importance of cereals in countries’ diets. Furthermore, due to subsequent Gross Domestic Product declines, there may be further negative long-term implications for food security, especially in Africa. An additional scenario with a 10% increase in the global oil price shows that European Union (EU) biofuel production is heavily affected. The implementation of the initially envisaged CAP requirement of a set-aside of 4% of the farmed area would have little effect on EU cereal production, whereas a 10% reduction in fertiliser availability in the EU would lead to a decline in net production of cereals. A joint reduction in pig herd size and pork consumption could partly mitigate the negative consequences of reduced fertiliser availability, otherwise leakage would occur either through the import of pork into the EU for consumption or the production of EU pork meat for export markets. To mitigate the market effects of the war, EU policymakers should: i) encourage efficient (animal) nutrient use to offset fertiliser shortages and land use choices that increase market availability of food crops, ii) encourage restructuring of animal production in line with consumption developments to prevent leakage effects and ensure that non-food products are used efficiently as feed products, and iii) support vulnerable households to secure short-term food access.

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