Saturday, September 23, 2023

Countries restrict food exports. It can exacerbate world hunger.

Must read

Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

Two weeks ago, India, the world’s second largest producer of wheat by volume, announced export restrictions on the commodity. Indian wheat farmers face an estimated loss of 15 to 20 percent of their crops to a devastating heat wave, and the government cited concerns about domestic food security when explaining the move.

While India’s wheat represents only a small percentage of global wheat exports and the government has announced that it still plans to export to countries in needthe restrictions are just the latest in a disturbing global trend that, if continued, will add to already rising levels of global hunger.

Before the war in Ukraine, food prices were already at some of their highest historical levels due to high fuel and energy prices, droughts and the lingering effects of the Covid-19 pandemic. The Russian invasion exacerbated them, pushing prices to record highs in March. People in countries with high food insecurity are at greater risk of hunger because bread is becoming more expensive and scarcer.

The problem is not production. Even with the war in Ukraine – one of the world’s largest wheat producers – there is actually enough wheat to feed everyone in the world. The USDA projects that 2022/2023 production will be 0.6 percent lower than in 2021/2022 – not good, but not catastrophic in itself. Major producers outside Ukraine, including India, Argentina, Australia and Canada, can make up for most of the wheat lost or limited by the war in Russia. The problem is, it’s getting more expensive than ever to get the wheat where it needs to be, and that problem can only get worse.

India is only the last country in recent weeks to restrict exports† Countries like Serbia, Kazakhstan, Kosovo and Egypt have restricted wheat exports this year and other countries have restricted exports from sugar to vegetable oil to corn. While India’s wheat restrictions should only have a limited effect on global food prices, they could encourage even more countries to follow suit. And that would be disastrous, because it could send a volatile global food situation into crisis.

Here’s why experts think so and why the world’s governments must act differently to avoid a humanitarian disaster.

The war in Ukraine, energy and the global food crisis

Food prices are at near record highs and have risen almost continuously for the past two years. The war in Ukraine has exacerbated the situation as Russia and Ukraine produce large percentages of the world’s wheat, sunflower oil and other essential food products. A rise in fuel prices is also a major contributor to the rise in food prices, as food now costs more to store, process and transport.

Rising food prices contribute to hunger crises in countries with already high levels of food insecurity and droughtsuch as Ethiopia, Kenya and Somalia. They also disproportionately affect people in Middle Eastern countries such as Egypt, Lebanon and Yemen, which depend on Russia and Ukraine for most of their wheat. The number of food insecure people in the world has risen from an estimated 768 million in 2020 to 869 million in May 2022.

Many countries outside the Black Sea region export wheat, and about 30 percent of the world’s wheat is stored, so there is enough wheat to feed everyone in the world. But if wheat producers continue to implement export restrictions, experts warn that prices will continue to rise to unmanageable levels and more people will go hungry.

What do export restrictions mean for global hunger?

on 13 MayIndia announced export restrictions on wheat but noted it would honor its pre-ban commitments and still accept requests from governments dealing with food insecurity. In the wake of the announcement, there was a immediate price increase (although that has) since declined somewhat in the past week).

The concern about India’s move is that it could contribute to the world’s looming food crisis. But the biggest problem isn’t necessarily the immediate long-term effects of a global price ban – in fact, that could be negligible. While India is a major global wheat producer, most of the wheat it produces is consumed locally; India good for less than 1 percent of global wheat exports in 2020.

On the contrary, experts are concerned about the example it sets for other producers. Historically, when countries, especially major global players, introduce export bans, follow countries† This leads to higher world prices due to reduced supply, causing panic over shortages, which in turn triggers a vicious cycle of price increases and more widespread hunger as countries with food insecurity struggle to afford food for their populations.

In a previous global food crisis in 2007-’08, which drought and fuel prices also contributed to, isolating trade policy changes be estimated have led to nearly half of the global rice price increase and about a third of the global wheat price increase.

In our current crisis, export restrictions rose at the start of Covid-19, the beginning of a period of price spikes, and are on the rise again this year in the wake of the Russian invasion of Ukraine. It is estimated that pre-Indian trade restrictions contributed to: about a sixth, or 7 percentage points, of the global wheat price rise. For people living in poverty, such an increase could be catastrophic.

Workers stand next to a heap of wheat being loaded onto a ship at the Deendayal Port Authority seaport in Kandla, India, on May 18.
Sam Panthaky/AFP via Getty Images

In March Chris Barrett, a Cornell professor who researches food security, told me about economist Kym Anderson’s comparison of export bans for people standing up during a sports match in a stadium. In the beginning, the standing people can see better, but then everyone follows suit and nobody benefits.

“Ultimately, no one gets a better experience from the match,” Barrett said, “but there is a lot of unnecessary conflict and unnecessary waste of energy to deliver an inferior result, and that’s where we end up with export bans. Export bans don’t accomplish much if nothing permanent for the countries that use them, but they cause real problems for others.”

The potential impact of India’s export restrictions

Economists are critical of India’s restrictions (despite the exceptions), and think the negative impact on both world markets and domestic producers could be similar to what we’ve seen in the past, even if not directly from the loss of Indian wheat.

Ultimately, communication and perception are a big part of the story. If people think there is scarcity, it can become a self-fulfilling prophecy; if countries say they will do one thing and do the other instead, that can also lead to panic. Indian Prime Minister Narendra Modi had announced: in april“We already have enough food for our people, but our farmers seem to have made agreements to” feed the world”, offering to fill some of the export gaps left by the war in Ukraine.

“The exuberance about its ability to feed the world was unrealistic,” Siraj Hussain, an agricultural and rural economics expert at Arcus Policy Research, told me via email.

Although export bans were supposedly introduced to help people domestically, there is little evidence that they have this effect. In the case of India, export bans have ended in the past harms farmers’ income by making one unpredictable market environment and cutting off their access to markets that will give them higher prices† Those bans may help domestic consumers for a while — at least until everyone starts to stand in the stadium — but eventually they’ll hurt domestic farmers. Seen that over 40 percent of the people in India are engaged in agriculture, that is a lot of people who can get injured.

Export restrictions are easy to implement because they don’t cost money, and it “sends a strong policy message of ‘we protect you and keep the food at home,'” said David Laborde, a researcher with the International Food Policy Research Institute. (IFPRI) that uses their . manages Export restrictions on food and fertilizers† But “the reality is that keeping food at home doesn’t mean it ends up on the plates of the people who need it.”

A worker works at a mill producing refined wheat flour in Khanna, India, on May 18.
Sajjad Hussain/AFP via Getty Images

To protect farmers and others who are starving in uncertain times, governments can instead increase social protections, such as cash transfers or school food programs, or increase the minimum support price for farmers. (India provides social protection by continuing food subsidy program reaching about 800 million people which was effective in fight poverty during Covid-19.)

The severity of India’s restrictions will determine how much they ultimately affect global food prices. India has already announced that it will allow exports registered before May 13, and that it will continue to trade with food insecure countriesspecial in the region† In practice, if India ends up exporting what it would have anyway, then the export restrictions themselves should not have too many long-term price implications for the world. “To me, the ban in India is much more of a communication problem and a bad example than something that will traumatize the markets,” Laborde said.

Laborde noted that Argentina, another major global wheat supplier, would be next to watch, given its history of export restrictions. Negative knock-on effects extend not only to global producers, but also to regional producers who might be inspired to ban exports. Tanzania and Uganda, for example, are not big players in the global wheat market, but for a country like South Sudan already suffering from severe food insecurity and conflict, a ban from those two countries could be devastating.

There may also be negative long-term effects of export restrictions on countries that implement them. The restrictions affect “India’s credibility as a reliable supplier of everything to global markets”, wrote agricultural researchers Ashok Gulati and Sanchit Gupta in the Indian Express.

The World Trade Organization (WTO) has no disciplinary action against export bans, Barrett said, because in 1994, when the protocols were written, it was more concerned about import bans. Changes in International Trade Policy may be possible if beginning of Junewhen the postponed 12th WTO Ministerial Conference will take place.

Meanwhile, however, a food crisis looms. An important thing countries can do to avoid this is to resist the temptation to curtail food exports amid the fluctuations of the global economy.


More articles


Please enter your comment!
Please enter your name here

Latest article