The Impact Of Geopolitical Risks On Global Food Price Volatility

Since the 21st century,with the continuous change of the international political environment,the possibility of the outbreak of conflicts among countries is also increasing,resulting in the international geopolitical risk rising year by year.From the Iraq War in 2003 to the conflict between Russia and Ukraine in February 2022,such frictions among countries have triggered geopolitical risks,among which the rise of geopolitical risks among major international food producers is especially likely to lead to the fluctuation of international food prices.Therefore,by clarifying the transmission mechanism of international food market price fluctuations,understanding and studying the law of international food price fluctuations and the influencing factors of food price fluctuations,and mastering the law of food market price changes at home and abroad,it is of great significance to effectively deal with various market risks and ensure national food security in the future.Firstly,this thesis systematically reviews the relevant theories of food price and geopolitical risk and the relationship between them.Then,based on the external shock theory and supply and demand theory,the thesis analyzes the path of geopolitical risk affecting international food prices from three aspects: demand,cost and exchange rate.Thirdly,through the geopolitical risk events in different periods,the change trend of the geopolitical risk index and the inducement factors of geopolitical risk are deeply analyzed,and combined with the fluctuations and trends of global food prices,the influence of geopolitical risk events such as the Russia-Ukraine conflict on global food prices and Chinese food security is studied.Finally,the effects of geopolitical risk index,demand,cost and exchange rate on major international food price fluctuations were further analyzed by using the TVP-VAR model’s equispaced impulse response and time-point impulse response.It is found that: first,geopolitical risks will affect the fluctuation of food prices through three channels: demand,cost and exchange rate,among which the impact of demand and cost on international food mainly shows a positive impulse response;Exchange rates have a major negative impact on international food prices.Second,geopolitical risks are mainly triggered by economic factors,armed conflicts,power competition,and resource and environmental grabbing.Third,in recent years,global food supply and demand have been in a tight balance,coupled with the impact of the Russian-Ukrainian war,global food prices have risen overall.Fourth,affected by government regulation and self-regulation of the market,there are differences in the impulse response of international food prices in different lag stages,and the larger the lag,the less affected international food prices are.Fifth,in the three periods of the escalation of the Islamic State in September 2014,the Sino-US trade friction in August 2017 and the Russia-Ukraine conflict in 2022,international food prices have different impacts on the impulse response to geopolitical risks,during the escalation of the Islamic State in September 2014,geopolitical risks had the greatest impact on soybean prices,in August 2017,during the Sino-US trade friction,geopolitical risks had a greater negative impact on soybean meal prices,and in February 2022,during the Russian-Ukrainian conflict.Oat prices are more affected by local geopolitical risks.Based on the above research conclusions,the following suggestions are made in this thesis: first,adopt classified policies to deal with risks;Second,we should take multiple measures to prevent risks.Third,establish an international food price monitoring and early warning mechanism;Fourth,we need to maintain a balance between supply and demand in the grain market based on win-win prices.Therefore,China should pay more attention to events such as international conflicts and threats,prevent external shocks in advance,establish a sound protection mechanism,according to the extent of different types of food affected,and thus stabilize domestic food prices.In addition,it is also necessary to establish a grain price early warning mechanism to keep an eye on the state of domestic demand and maintain a good supply balance.