Could protectionism make food insecurity even worse? | FT Food Revolution
The conflict in Ukraine has exacerbated the world’s food supply crisis. Hoping to counter soaring food prices, some governments have implemented protectionist policies, restricting the export of staples such as rice and poultry. But as the FT’s Benjamin Parkin reports, these policies could destabilise world food supplies further and only increase food insecurity.
A wave of protectionist measures by food exporting nations has given further impetus
to soaring global prices, threatening wider poverty and instability.
Supply chains that were already under pressure from pandemic lockdowns, labour shortages,
rising energy costs and drought have been hard hit by Russia’s invasion of Ukraine.
The two warring countries are among the world’s most important sources of grain,
cooking oil and fertiliser. The combined fallout has pushed
the cost of essentials such as plant oils to record levels.
The average price across ten key oil types has surged well beyond spikes last seen
around the 2008 global financial crisis. In a bid to protect their own domestic food
supply from soaring prices, governments have resorted to protectionism – hoarding produce by
banning or restricting exports, while suspending or reducing duties on staples coming in.
Three months into the war in Ukraine, up to 30 countries
had taken steps to restrict exports. When measured in calories, 17 per cent of
world food trade was subject to restrictions in May 2022 – the highest level since 2008.
In April, Indonesia banned exports of palm oil, as the global vegetable oil price rose 40 per cent
since the start of the year. It has since lifted the ban.
In May, India banned shipments of wheat and put a limit on sugar
exports for the first time in six years. Other countries that have introduced temporary
grain export curbs or bans include Serbia, Hungary and Kazakhstan.
But economists warn it’s the poorest nations that are hardest hit by protectionism,
which artificially inflates prices and fuels global food insecurity.
Members of the VoxEU.org economic policy group have calculated that export limits imposed during
the 2008 financial crisis pushed food prices up by an average of at least 13 per cent.
Restrictions on food shipments can also damage the trading reputation of nations that enforce them,
and rob local farmers of lucrative access to markets when prices are high.
Business leaders and policymakers are calling for urgent negotiations over protectionism.
They warn that escalating restrictions could lead to a trade war, which would
have devastating consequences for the world’s poorest people.
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