Exports of food are being restricted by countries. This could make the global hunger situation worse

Exports of food are being restricted by countries. This could make the global hunger situation worse

India, which is the second-largest producer of wheat in the world, announced restrictions on exports two weeks ago. Due to the destructive heatwave, India’s wheat farmers will lose 15-20 percent of their crop. The government explained the move by citing concerns about national food security.

Although India’s wheat is a small part of global wheat exports, and the government stated that it plans to continue exporting to countries in dire need, these restrictions are just the latest in a disturbing global trend that if continues will only increase the already-rising levels global hunger.

Food prices reached their highest levels in history before the conflict in Ukraine. This was due to high fuel prices, droughts, and the lingering effects of the Covid-19 pandemic. They were made worse by Russia’s invasion, which drove prices to records in March. As bread becomes more costly and less available, people in countries that have high levels of food insecurity are in greater danger of becoming hungry.

The problem is not production. Even with the Ukraine war, one of the largest wheat producers in the world, there is enough wheat to feed the entire world. The USDA estimates that 2022/2023 will see a 0.6 percent drop in production from 2021/2022. This is not a bad thing, but it’s not an entirely catastrophic situation. The major producers outside of Ukraine, such as India, Australia, Canada, and Argentina, are able to make up the bulk of wheat that was lost or restricted due to Russia’s war. It is becoming more difficult to transport the wheat to its destination, and this problem could only get worse.

India is the latest country to limit exports. Serbia and Kazakhstan have restricted wheat exports, while other countries have limited exports of sugar, vegetable oil, and maize. Although India‘s restrictions on wheat exports should not have a significant impact on global food prices alone, other countries may follow their lead. This would lead to a potentially volatile global food crisis.

Here are the reasons experts believe so, and why governments around the world need to do more to prevent a humanitarian disaster.

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The Ukraine war, energy, and the global food crises

Food prices have reached near-record highs and have been increasing almost continuously over the past two years. Because Russia and Ukraine are major producers of wheat, sunflower oil, and other essential food commodities, the situation has become more difficult. The rise in food costs is also due to an increase in fuel prices. Food now costs more to store and transport.

Rising food prices contribute to food insecurity in countries like Ethiopia, Kenya, Somalia, and other countries that already suffer from high levels of food insecurity. These rising food prices are also adversely affecting Middle Eastern countries like Egypt, Lebanon, and Yemen that rely heavily on Russia and Ukraine for their wheat. The world’s food insecurity has increased from 768 million people in 2020 to 869 million by May 2022.

Many countries in the Black Sea region export wheat. Around 30% of all world wheat is stored in storage. This means that there’s enough wheat available to feed the entire world. Experts warn that if wheat producers keep imposing export restrictions, prices will continue rising to an unmanageable level and people will become more hungry.

What does export restriction mean for global hunger?

India announced its export restrictions on wheat on May 13. However, it noted that it would still honor pre-ban commitments, and continue to accept requests from countries dealing with food insecurity. The immediate price spike that occurred in the wake of the announcement was, although it has been somewhat reduced in the last week.

India’s decision to ban global prices is worrying because it could lead to a global food crisis. The problem with India’s move is not necessarily its long-term impact on global prices; that could be negligible. India is a major producer of wheat worldwide, but most of its wheat is consumed locally. In 2020, India was less than 1% of global exports.

Experts are more concerned about the impact it has on other producers. In the past, countries
that impose export bans, especially large global players, have been followed by other countries.
The result is a rise in global prices because of decreased supply. This causes panic and
increases hunger, as people living in food-insecure areas struggle to pay for food.

The insulating trade policy changes were responsible for almost half the global rice price rise
and about a third of the global wheat price growth in previous global food crises.

Export restrictions were high at the start of Covid-19. This triggered a price spike and has been
on the rise since the Russian invasion of Ukraine. Pre-India trade restrictions were responsible
for approximately one-sixth or 7 percentage points of the global rise in wheat prices. An
increase in that magnitude can cause severe poverty for people who live there.

Chris Barrett, a Cornell professor who studies food security, shared with me the comparison
between export bans and people standing up in a stadium sports match. The people standing
first can see better but then everyone follows the example and no one benefits.

Barrett stated that “in the end, nobody is getting a better match experience.” However, Barrett
added, “But there’s a lot more conflict and unneeded expenditure of energy to deliver a poor
result, and that’s why we end up with export bans.” While export bans are not effective and don’t
last, they can cause serious problems for other countries.

What are the potential consequences of India’s export restrictions

Economists are critical of India’s restrictions, despite the exceptions. They believe that the
negative effects for domestic producers and global markets could be similar to past
experiences, even though it is not directly due to the loss of Indian wheat.

Communication and perception are key components of the story. People can believe there is
scarcity and it may become a self-fulfilling prophecy. If countries promise one thing but do the
opposite, it could lead to panic. In April, Indian Prime Minister Narendra Modi announced that
“We already have enough food to feed our people but our farmers have made arrangements to
provide food for the world,” a promise to make up some of the gaps in exports left by the conflict
in Ukraine.

Siraj Hussain (an expert on agriculture and rural economics at Arcus Policy Research) told me
via email that “the exuberance about being able to feed the whole world was not real.”

Although export bans may be intended to benefit domestic consumers, evidence is not strong
that they do. Export bans have historically been harmful to farmer incomes in India by creating
an uncertain market environment and cutting off access to markets that will offer them higher
prices. While these bans can help domestic consumers temporarily, at least until they are all
standing up in the stadium, they ultimately hurt domestic farmers. There are many people who
could be hurt, considering that more than 40% of Indians work in agriculture.

Export restrictions are simple to implement, as they don’t require money. It also “sends a strong
message of, we protect you and leave the food at home,” said David Laborde (International
Food Policy Research Institute) who manages their Food and Fertilizer export restrictions
tracker. However, “the truth is that food doesn’t always go to those who really need it.”

Instead of increasing social protection like cash transfers, school feeding programs, or raising
the minimum support price, governments can protect farmers and other vulnerable people
during volatile times. (India provides social protection by maintaining a food subvention program
that reached approximately 800 million people and was effective in fighting poverty under

Global food prices will be affected by how strict India’s restrictions are. India already stated that
it will allow exports before May 13th and that it will continue trading with food-insecure countries,
especially in the region. The export restrictions shouldn’t have any long-term implications on the
world’s prices if India exports what it would normally. Laborde stated that the India ban was
more of a communication problem than a bad example and will not traumatize markets.

Laborde pointed out that Argentina, another important global wheat supplier, was the next to be
watched due to its history of export restrictions. The negative knock-on effects of export
restrictions can have a ripple effect on global producers as well as regional producers. Although
Uganda and Tanzania aren’t major players in the global wheat market, for now, they could have
a devastating impact on a country like South Sudan, which is already struggling with high levels
of food insecurity and conflict.

For countries that implement export restrictions, there may be longer-term negative effects. The
restrictions have eroded the credibility of India as a reliable supplier on global markets, stated
Ashok Gulati in the Indian Express.

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Barrett stated that the World Trade Organization (WTO), doesn’t have any disciplinary measures
against export bans because, in 1994, when the protocol was written it was more concerned
about import bans. Changes to international trade policies could be possible as soon as June
when the WTO’s delayed 12th Ministerial Conference will take place.

However, there is a growing food crisis. It is possible to stop the urge to limit food exports in the
midst of global economic gyrations.

Exports of food are being restricted by countries. This could make the global hunger situation worse