By: Gracie Rosenbach and David Spielman
How and why is the global food and energy price crisis impacting Rwanda? How does this most recent crisis exacerbate the economic impact of the COVID-19 pandemic? What can Rwanda do to mitigate the impacts of these shocks and prepare for future shocks?
These are just some of the questions discussed in a recent lecture given by the Honorable Dr. Jean-Chrysostome Ngabitsinze, Minister of State of the Ministry of Agriculture and Animal Resources and Dr. Johan Swinnen, the Director General of the International Food Policy Research Institute and the Global Director for Systems Transformation of CGIAR (view their full presentations below).
A key message from Dr. Swinnen is that the commodity price volatility and price shocks observed in global markets have increased in frequency in recent years, indicating that volatility and uncertainty are part of the “new normal” for the global food system. The global economy is currently under siege from the “three C’s” of conflict, climate, and COVID.
The State Minister concurred, observing that international prices of several imported commodities that are important to Rwanda’s economy – fuel, cooking oil, fertilizer, and wheat – have increased steadily since early 2020 when the COVID-19 pandemic began, and have continued their upward climb following the crisis in Ukraine.
So what can be done to mitigate the current impacts and to prevent future shocks from slowing Rwanda’s development progress? Both speakers agreed that access to timely and accurate data is key. Data on commodity prices globally, nationally, and locally can help to identify when a price shock may be beginning and where it is concentrated; and household data on agricultural production and welfare can help to identify who will be the most impacted by various shocks.
Both agreed that strategic interventions by governments – expansion of social safety nets, protection of commodity trade from export bans, and improved value chain management – were critically important. And in the long term, agricultural productivity growth and resilience to climate change are key to ensuring that sufficient food remains available and accessible at affordable prices.
A long and continuing crisis
It is worth stepping back for a moment to understand where we are and how we got there.
Since the early days of the COVID-19 pandemic, the international price of fertilizers has been rising, resulting in a doubling of prices during the past 9 months (Figure 1). At the same time, prices of other strategic commodities have increased due to a host of factors: supply chain disruptions, export bans, rebounding demand trends, and most recently, the crisis in Ukraine.
These price spikes will likely impact the entire food system by increasing costs along the value chain from farm to table. On-farm production costs, commodity transport costs, milling, processing, and value addition activities may all be affected.
Figure 1. Monthly indices of global commodity prices, January 2020 to February 2022
Source: World Bank Commodity Price Data (“Pink Sheets”), March 2022: https://www.worldbank.org/en/research/commodity-markets
Through strategic policy interventions, Rwanda was able to mitigate many of the potentially negative economic effects of the lockdowns and other measures introduced during the COVID-19 pandemic. This included exempting the agriculture sector from many such measures to keep domestic food and agricultural production on track. However, the more recent global food and energy price shocks are exacerbating the pandemic’s lingering economic effects. In Rwanda, the prices of key food items such as wheat, soybean, and rice have been steadily increasing across the country (Figure 2).
Figure 2a. Local commodity prices in Rwanda, January 2020 to April 2022 
Source: MINAGRI, eSoko price database, April 2022
Figure 2b. Consumer price index in Rwanda, January 2020 to April 2022
Source: NISR, Consumer Price Index, April 2022
Taken together, food items produced in Russia and the Ukraine account for nearly 12 percent of all calories consumed globally. In volume terms, Russia and Ukraine together produce around 18 percent of the world’s maize, 35 percent of the world’s wheat, and more than 70 percent of the world’s sunflower oil (Figure 3). Russia also accounts for 20 percent of the global trade in natural gas which is a key input to fertilizer production; it is also a major exporter of several types of fertilizer.
Figure 3. Share of key agricultural exports of Russia and Ukraine in global markets
Note: Intra-EU trade excluded from computations; Chart: David Laborde; Source: COMTRADE
But how important are these Russia and Ukraine exports for Rwanda? In 2020, more than 90 percent of Rwanda’s imported wheat came from Russia. However, wheat and wheat products only account for 2.7 percent of total household food expenditures, and less than 1 percent in the poorest expenditure quintiles. As such, the impact of rising wheat prices is unlikely to affect Rwandan households significantly, although there are expected to be losses in export earnings from wheat flour milled in Rwanda and exported to the Democratic Republic of Congo.
Of more significant concern are the prices of edible oils, fuel, fertilizer, and maize. Edible oils account for 3.5 percent of household food expenditures, and 2.5 percent of food expenditures in the poorest quintiles. Fuel—including gas, petrol, and other products—are also a significant expenditure not just for households, but also for many actors across value chains throughout the food system.
Finally, the rising price of fertilizer is a big cause for concern, especially in light of the government’s input subsidy program. However, fertilizer use in Rwanda remains low, and so although the rising prices will likely deter new farmers entering the fertilizer market, the increasing costs are not anticipated to have serious consequences on crop production.
Maize, on the other hand, is more likely to be affected by regional production and price trends, as most of Rwanda’s maize imports during last 5 years came from Tanzania and Uganda. Tracking regional developments in maize markets will be key to anticipating the economic effects on Rwanda.
The punchline emerging from these figures and the speakers themselves? Analyze, anticipate, and adapt—quickly.
Presentation 1. Global Food Security During Food and Energy (CCC) Crises, Johan Swinnen, IFPRI
Presentation 2. Global Food and Energy Price Volatility: Implications for Rwanda, Jean Chrysostome Ngabitsinze, MINAGRI
About the authors
Gracie Rosenbach is the country program manager of the IFPRI Rwanda Strategy Support Program.
David J Spielman is the program leader of the IFPRI Rwanda Strategy Support Program.
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