Economic Analysis


Central & Eastern Europe
Latin America
Mid-East & Turkey
Northern America
Western Europe
Change sector


  • The sector is relatively resilient to economic shocks, as food needs are not very compressible
  • Comfortable stock levels for the opening of the 2022-23 season, particularly for basic cereals (wheat, etc.)


  • Sector vulnerable to inflationary tensions on energy and input prices
  • Sector highly impacted by protectionist tensions
  • Sector heavily exposed to climatic and biological hazards, aggravated by the increased frequency of extreme events (drought, La Niña, etc.)
  • Volatility of agricultural commodity prices
  • Concentration of stocks in a few countries

Risk Analysis

Risk Assessment

The global agri-food sector has experienced several shocks over the past year – geopolitical, climate and biological. Companies in the sector have had to face the consequences of the war in Ukraine, following Russia’s invasion of the country (two major grain exporters), various epizootic diseases and extreme weather events.

In May 2022, the FAO food price index reached its highest value since September 2011. The increase in energy and fertiliser prices made food prices soar in Q2 2022 and subsequently stabilise at high levels in the second half of the year. Inflationist trends are likely to persist. We expect agri-food companies to be negatively impacted by energy and inputs prices.

According to the sixth IPCC* report, extreme weather events are now occurring at a rate unseen since the beginning of the 20th century, combined with intense meteorological events (La Niña/El Niño), the intensification of epizootics (avian flu, African swine fever) and the occasional appearance of invasive species. The agricultural segment will remain highly vulnerable to climatic and biological components in 2023.

Last, the dilemmas experienced by the agricultural sector have forced the European authorities to delay the advancement of environmental initiatives, while the slowdown in the production of certain cereals and the high production costs are challenges for food supplies on the continent and throughout the world.


El Niño: oceanic-atmospheric meteorological phenomenon, the main manifestation of which is the variation of surface water temperatures in the Central and Eastern Pacific (Pacific South American coast).

La Niña: an oceanic-atmospheric meteorological phenomenon, the main manifestation of which is the abnormal decrease in surface water temperatures in the Central and Eastern Pacific (Pacific South American coast).

*IPCC: The Intergovernmental Panel on Climate Change

Sector Economic Insights
Inflationary pressures and trade contraction weaken the global agri-food sector.

The inflationary trends in agricultural commodities observed since 2021 and exacerbated by the Russian military intervention in Ukraine from 24 February 2022 eased in the second half of 2022. Ukraine is a leading world exporter of cereals (9% of the global wheat exports in 2019) and vegetable oils. As for Russia, which is rapidly being subjected to embargo measures, and is also a major exporter of cereals (16% of global wheat exports). Moreover, Russia, and its ally Belarus, are among the world's largest exporters of fertilizers.

Our forecasts for 2023 nevertheless anticipate high agricultural commodity prices, supported by energy and chemical input prices, and an extremely volatile environment on the financial markets. Mechanised, energy-intensive and dependent on chemical inputs, the world's agro-industrial systems will continue to suffer from the rise in existing chemical production costs. Coface estimates that the price of a barrel of Brent crude oil will average around USD 90 in 2023.

The protectionist reflexes adopted in some countries during the first months of the war in Ukraine to offset price surges, give rise to fears that similar measures will be adopted on an ad hoc basis to address possible inflationary pressures. Access to basic foodstuffs, especially in countries with large populations (India, Nigeria, Indonesia, etc.), is a determining factor in socio-political stability. For example, very early in 2022, India, faced with food security risks felt by some of its population, restricted temporary wheat exports (mid-May 2022), followed by sugar (June 2022), then rice (September 2022) as a response to inflationary surges at the time.

Last, while overall tensions over maritime freight have eased in recent months, the Black Sea remains a major area of friction. The Bosporus strait, the world's grain highway, has positioned President Erdogan as a "mediator" between Kiev and Moscow. The fragility of the compromises and the short deadlines are fueling volatility and uncertainty about the actual volumes that will transit through this corridor. The latest agreement to date, on 18 March, 2023, extending access to the "emergency corridor" by 60 days, thereby allowing the transit of a reduced volume of Ukrainian grain by sea. However, the lack of a viable alternative places undeniable importance on this issue and on Turkey in resolving the conflict and the regional balance of power in the eastern Mediterranean.


Climatic and biological risks, which existed prior to the Covid-19 crisis, persist and are increasing in intensity

Extreme weather events, such as severe heat waves, floods (as in Pakistan), forest fires, and El Niño/La Niña weather events have intensified. At the time of writing, reports of a shift from the three-year La Niña event (which is expected to end in Q2 2023) to an El Niño episode (from Q3 2023) in the course of 2023, raise fears of an exacerbation of extreme weather events in key global agricultural regions (Latin America, US, Australia). Although harvest levels are heterogeneous from one region to another, the FAO nevertheless estimates that cereal production levels for the current season (July 2022-June 2023) will fall short of those in the previous season, marking a slowdown in yield gains and in the area harvested.

Furthermore, the intensity and frequency of epizootics increases the risks to the global livestock segment and to price volatility. Occurrences of epizootics in recent years have seriously weakened livestock yields - such as avian influenza in Europe (46 million poultry units slaughtered in the first half of 2022) and African swine fever in China (240 million pigs eliminated between 2018 and 2019). The consequences are directly noticeable on meat supply (and on price), but also on the price of cereals (especially corn) and fodder, which are driven by sharp demand variations. Although China has returned to its pre-ASF livestock levels, the authorities are closely monitoring these developments, given the strong risks of propagation in intensive livestock structures and the dangers of zoonosis (porosity between animals and humans in the transmission of certain viruses).

In addition to these epizootics, two biological risks of importance subsist in the agri-food sector: the Fall Armyworm (FAW) and locusts. FAW is a caterpillar that feeds mainly on maize, but also on rice, sorghum, and cotton, among others. It was first detected in West Africa in early 2016. FAW has now reached 44 countries, in Asia and Africa, and Australia. China is the world's second largest maize producer, so the presence of FAW could lead to additional inflationary pressures on global maize prices (with a decreasing global production expected in 2022-2023).


The European “best practices” regarding the environment and sustainable agriculture could be questioned while harvest prospects call for maximising production volumes.

The year 2022 marked the return of fears of large-scale food crises in emerging economies and food shortages in advanced economies. 2023 will bring similar concerns, as the northern hemisphere’s corn harvest has been poor in Q3/Q4 2022. While the European Commission has been promoting sustainable agriculture initiatives, it may be forced to curb some of them in 2023. The sharp decline in maize production in Europe, the threat of summer droughts that could threaten harvests - of wheat in the northern hemisphere and corn in the southern hemisphere - in 2023, and yield losses raise the risk of supply shortages in Europe and the weakening of the entire agri-food value chain.

Similarly, customs measures on fertiliser imports might be temporarily lifted to reduce the production costs from imported fertilisers. On that score, the increase in the price of chemical inputs weighed on the 2021-22 season and compromised sufficient production (e.g., of maize) in a context of global inflation. Any action to combat the increase in consumer prices for food products is welcomed at state level.

Last, the increase in the flow of Ukrainian cereals (subject to transit limits via the Black Sea) to neighbouring countries, is likely to create short-term distortions in competition within the European Union. Hence, according to the Deputy Director General of the European Commission, three million tonnes of cereal were exported to Europe in December 2022.  Brussels, which is dealing with this issue at the time of publishing this article, might introduce financial levers to resolve this competitive anomaly.


Last update : July 2023

  • Czech
  • English