For exporting countries, domestic reserves of grain and rice are generally good after years of relatively good harvests, according to the US food and agriculture program.
But the reduction in exports could hit countries in Africa, the Philippines, the Persian Gulf and other regions that import a lot of their food.
The price of rice and wheat began to rise because some countries, such as Saudi Arabia and Egypt, made purchases to increase their supply. Other concerns include how long border closures and transportation networks will disrupt global food supplies.
But protectionist measures by some food exporting countries – to defend their products in times of crisis – raise the issue of wider global food security and fierce competition between countries for medical supplies and other goods even when the world faces the same problem. enemy.
Why is the US worried?
“Now is the time to show solidarity, act responsibly,” the US Food and Agriculture Organization said last week in a statement statement.
“We learned from the previous crisis,” the statement continued, “that such measures are very damaging for low-income countries, food shortages and for the efforts of humanitarian organizations to get food for those who are in dire need.”
But when one country acts, another tends to follow.
On March 25, Vietnam, the third largest rice exporter in the world, terminated the new rice export contract, then revised the decision on Tuesday in favor of the quota. Last week, the strong Indian Rice Exporters Association announced it would stop new rice contracts.
Cambodian leader, Prime Minister Hun Sen, on Tuesday ordered a ban on all exports of rice and fish and called on people to grow vegetables and other crops for the local market “during this difficult time.”
In Turkey, the export of lemons is stopped to ensure that it is sufficient to be used in a popular scented lemon mixture that is often splashed on the hands and face. Serbia has announced a ban on the export of sunflower oil. Egypt has banned legume exports for three months.
“If this spreads to more large exporters and more traded products. . . can indeed be very scary, “said Cullen S. Hendrix, senior fellow at the Peterson Institute for International Economics, based in Washington.
More recently in 2011, a ban on food exports in Ukraine and Russia had a devastating effect, caused famine and protests in Africa, and potentially contributed to the Arab Spring riots.
“This is why major exporters [Group of 20 industrialized nations] it needs to be clear in their commitment to maintaining open markets and trade, “he added, calling the export ban” a blunt instrument that causes blunt force trauma. “
Promises to keep food exports flowing
So far, the West and many allies have made no steps to create barriers to food exports – even when border closures and travel restrictions keep agricultural workers from tending to the fields.
President Trump has encouraged American agricultural exports even when the United States became the center of a pandemic. Separately, a number of countries, including Australia, Canada, Chile and New Zealand, have promised to keep trade and food flowing.
David Laborde, senior researcher at the Washington-based Institute for Food Policy Research (IFFP), said there has been no crisis, with relatively high global food stocks. So far less than 1 percent of global food value, in terms of calories, is affected by export restrictions.
But he warned that the dangers of a handful of countries that impose export quotas or moratoriums have a cascading effect that could clog global markets.
“In the last few days, we have a small country like Moldova that says, ‘Oh, because Ukraine and Russia are taking action, we have to do it, even if we don’t really need it.’ This imitation, this domino effect is something we always have to worry about, “he said.
Opposition to export restrictions
The main concerns are Vietnam’s moratorium on new rice export contracts, and Kazakhstan’s move to cut wheat and flour exports, which will hit neighboring countries in Central Asia.
On March 22, the Kazakh government announced a ban on the export of flour and other major food products despite having sufficient reserves.
The country’s wheat farmers and grinders are retreating, especially after finally breaking into the coveted Chinese market in recent years. The total ban was immediately canceled, but the government imposed a limited export quota on flour and wheat.
“The case of Kazakhstan in the restriction of flour may have a very strong regional impact in Central Asia and Afghanistan which gets most of their wheat product supply from Kazakhstan,” Laborde said. “The specific case of Central Asia, in my opinion, is a concern.”
When a Chinese customer called the director of the Kazakh flour mill last week, the director of Dos-Mukasan Taukebayev had to reject it.
“If the restrictions are not lifted, our industry will collapse. “Many companies will go bankrupt, and thousands will lose their jobs,” said Taukebayev, director of the Mutlu Karaganda flour mill, one of the largest in the country. “Exports are very important to us.”
Russia and Ukraine have also reversed or at least partially reversed restrictions on grain exports, although Russia said it was reviewing the situation week by week.
Difficulties in the past
But the two countries have carried out massive interventions in the grain market in the past, leading to price increases and shortages. In 2010, Russia banned wheat exports after a drought and forest fire destroyed 53 million hectares of crops. In 2007 and 2008, Russia imposed a wheat export tax. Ukraine implemented quotas from 2006 to 2008 and again from 2010 to 2011.
High global food prices in 2008 triggered food riots in 48 countries according to the 2011 World Food Program paper. In 2011 a surge in food prices exacerbated famine in East Africa where Somalia faced famine which killed 260,000 according to to the United Nations, almost half of them are children.
On March 20, after that panic buying wheat in Russia, the government announced a 10-day ban on all exports of processed grains, only to cancel orders four days later. Then announced a quota of 7.7 million tons in grain exports from April to June. However, this amount does not appear to be a significant reduction based on Russia’s annual export output, which includes wheat exports of around 35 million tons.
The Eurasian Economic Union (Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan) has banned exports of sunflower seeds, onions and vegetables outside the union.
In Ukraine, President Volodymyr Zelensky announced restrictions on food exports on March 16 without offering details, triggering alarms.
But these measures have limited impact: the ban on buckwheat exports, not the main exports, and the wheat export quota of 22 million tons in 2019-20 which is in line with expected exports.
Alex Lissitsa, president of the Agribusiness Club of Ukraine, said Zelensky seemed to be trying to convince the citizens of Ukraine that he was reducing prices.
“There is no reason to ban wheat exports at this time. . . . Ukraine has an oversupply of many products, “Lissitsa said. “We need to export. Otherwise, we will die with our product here. “
Wheat growers and flour mills in Kazakhstan see the risk of losing years of hard work in cultivating markets in China and Central Asia.
Pyotr Svoik, an independent economist based in Almaty, said the Kazakh government is trying to maintain low domestic prices for socially important items such as bread and flour.
“Kazakhstan produces more wheat and flour than is consumed. Therefore, exports are needed, and now this problem is very acute, amid falling oil prices, on which the country’s economy depends, “he said.
Shibani Mahtani in Hong Kong contributed to this report. Stern reports from Kyiv and Kumenov from Almaty, Kazakhstan.
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