Following production and shipment exports stemming from the COVID-19 pandemic, some countries adopted restrictions or additional duties on exports of some food commodities. In 2022, poor weather and crops and the fallout of the Russian invasion of Ukraine have now prompted additional export bans, some from significant origins. Per FAO, world food prices were up 30 percent YOY in April, with vegetable oils prices alone up 46 percent YOY.

Per IFPRI, restrictions are now affecting some 17 percent of world food export, which also estimates that Russia and Ukraine account for 12 percent of all calories traded. Poor crops in some countries—such as a six-year low for sugar—will add to world export demand, as well.

Edible oils are an unfortunate example. Thanks to a poor Canadian canola crop and the disruption of sunflower oil exports from Ukraine, edible oil markets have seen some of the most dramatic price inflation over the past year. Indonesia, a major palm origin, has further agitated the market with multiple flip-flops on export policy and finally landed on allowing exports above a planned 10 MMT domestic reserve—full details to follow.

Other food trade policy changes:

  • Russia instituted various bans or quotas on grains like wheat, rye, barley, and corn, officially expected to last through June. A ban on sugar exports is scheduled to end in September.
  • Ukraine has set quotas on exports of wheat, corn, and sunflower oil. The country’s leadership has made it clear that the war is preventing significant in-country stocks from being sold.
  • India, high temps hit key northern wheat-growing regions, prompting an indefinite ban on wheat exports in mid-May. The country had hoped to expand its role as a wheat origin, but 2022/23 is expected to see its first year-on-year decline after six years of production gains. India may still export some wheat to Egypt, traditionally highly dependent on wheat from Russia and Ukraine.
  • India has also set a 10 MMT export limit on sugar, unlikely to have a significant impact on world prices but not more of a factor as Brazil cancels some exports orders and turns more feedstock to ethanol manufacturing.
  • Argentina banned some beef exports in the longer term and most recently announced a one-month ban on all beef exports.
  • Multiple countries in Eastern Europe and the Middle East have set export bans on grains, edible oils, sunflower seeds, and other foodstuffs now, unsurprising as many had already adopted bans in response to pandemic market and shipping disruptions.
  • Pakistan, a regional sugar origin, announced a ban on sugar exports in May.

Elevated crude oil, natural gas, pesticide, and fertilizer prices and even some fertilizer export bans are also complicating the food security picture. In March, Russia banned exports of fertilizers to most of the world. Unsurprisingly, Ukraine has also banned fertilizer exports.

Export bans, licenses, quotas, and additional duties are unpopular with farmers, naturally, but governments feel they must contend with the broader political cost of food inflation and the general cost of living—despite the pleas of trade experts, organizations like the UN, and NGOs working in food security.

Food export restrictions during the Ukraine-Russia crisis

Source: FFPRI
Posted by: Information Services
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