Wrong tools, wrong time: Food export bans in the time of COVID-19

March 30, 2020 5:15 PM
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REUTERS/Alexey Malgavko

In the midst of the COVID-19 pandemic, export controls on medical supplies like face shields and surgical gowns are slowing the global response to the growing threat. But now, major cereal exporters like Russia, Kazakhstan, and Vietnam are flirting with export restrictions that threaten to roil global food markets and—as we learned during the 2007–08 and 2010–11 food price spikes—augur poorly for global hunger and political stability. These are the wrong tools for addressing concerns about domestic food supplies. If major exporters are concerned about domestic food security, there are better and potentially more politically palatable ways of achieving it.

In uncertain times, staple cereals are one of the most hoarded types of food: What they may lack in nutrition they more than make up for in storability and ease of bulk purchase. They are also widely traded. Global markets for cereals, particularly corn and wheat but increasingly rice, are important for meeting the dietary needs of billions of people worldwide, especially in the Middle East and Africa.

And these are certainly uncertain times. The COVID-19 pandemic is causing runs on local food markets worldwide, and business and political leaders are urging calm. But several major food-exporting countries are taking matters farther.

On March 20, 2020, Russia, the world’s largest wheat exporter, announced a ten-day ban on the export of buckwheat and rice due to concerns over panic buying in local supermarkets. Soon after, Kazakhstan and Ukraine followed suit. Vietnam, the world’s third largest exporter of rice, did not impose an export ban but put a moratorium on new export contracts as it assesses domestic stocks. On March 30, Cambodia joined the list of countries announcing limits to exports of certain agricultural products, which will take effect on April 5. This is a particularly painful decision for a country that has been considerably successful in building a market share for rice. More minor exporters, like Serbia, are restricting exports as well. Moreover, these restrictions are coming against a backdrop of high global food prices and rising unemployment worldwide.

We have been here before—and recently. In 2007–08, these same countries and other large exporters instituted some form of export restrictions on staple grains. These restrictions were intended to shield those countries’ consumers from the high prices prevailing in global markets. And they did—to some extent. But they came with massive broader costs: Export restrictions may have added as much as 45 percent to world rice prices and 30 percent to wheat prices during the 2007–08 crisis.

These rising prices plunged at least 100 million people into food insecurity worldwide and came with significant political consequences: Food prices sparked demonstrations and riots in 48 countries in 2007–08. And while prices receded in 2009, they reached historic highs in February 2011—and were once again implicated in political turmoil. High food and fuel prices were among the grievances motivating the demonstrations that led to the various Arab Spring uprisings. Even temporary export bans can have long-lasting effects.

Given rising unemployment and food insecurity, increasing dependence on global food trade, and already high global food prices, the global economy can ill afford these types of self-inflicted market disruptions. Export restrictions are blunt instruments that further exacerbate the problems they were designed to address. Thankfully, governments in major food-exporting economies can take other measures to ensure adequate food supplies, from limiting purchases to reducing taxes on food grains and tapping into domestic emergency stocks to prevent speculative price bubbles from forming and using more targeted transfers—like food stamp programs—to address the needs of the most vulnerable populations. Collectively, governments should continue to advocate for more open, transparent, and well-functioning global agricultural markets.

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