WFP - Impacts of the Suspension of the Black Sea Grain Initiative in Eastern Africa (August 2023)

Key highlights include:

- Wheat consumption represents 67 and 38 percent of total cereal consumption in Djibouti and Sudan, respectively; in Ethiopia, Kenya, and Somalia wheat consumption accounts for less than 24 percent of total cereal consumption.
- Local wheat production remains below consumption needs across most countries in the Eastern Africa Region, with in-country production ranging between 0-25 percent of the total annual consumption requirements.
- Djibouti and Somalia rely exclusively on imports to meet their domestic wheat demand. A sizeable portion of wheat demand in Kenya and Sudan is met by imports (86 and 77 percent, respectively). Ethiopia is the only exception as domestic production in 2022 accounted for 82 percent of total wheat consumption needs.
- Considering the high reliance on imports from the Black Sea to meet the domestic wheat demand and weak domestic currencies, wheat availability and prices in Djibouti, Somalia and Sudan are more likely to be influenced by international trade dynamics.
- Somalia and Sudan are largely dependent on imports from Russia and Ukraine to meet their domestic wheat demand. In 2022, Somalia imported 63 percent of wheat required from Ukraine. Sudan imports around 85 percent of its annual wheat requirements from the Russian Federation and Ukraine (accounting for 50 and 20 percent of wheat imports, respectively).
- Since July 2022, almost 876,000 MT of food were shipped to Djibouti, Ethiopia, Kenya, Somalia, and Sudan thanks to the Black Sea Grain Initiative (BSGI), of which more than 343,000 MT of wheat were shipped by WFP.
- The suspension of the BSGI on 17th July 2022, pushed international wheat prices to a five-month high in the following days. Despite the initial spike, international wheat prices eased towards end of July through early August, reaching levels lower than those recorded before the halt of the initiative.
- The favourable production prospects for 2023 in major wheat-producing countries, along with existing carryover stocks from the previous year are likely to offset the suspension of the BSGI initiative.
- However, other factors including the El Niño event forecasted for the end of 2023 add uncertainties on production prospects and the stability of international wheat prices in the medium-to long-term.

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