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Risk of more nations banning crop exports as food prices soar – economists

At least 10 export bans, or trade restriction measures, have been developed by countries in over a month. Picture: Reuters

At least 10 export bans, or trade restriction measures, have been developed by countries in over a month. Picture: Reuters

Published May 3, 2022

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There is the risk that more countries will impose export bans on their crops amid heightened global food security concerns and elevated food prices as war rages in Ukraine.

Indonesia this month prohibited the export of its palm oil exports.

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National Agricultural Marketing Council (Namc) agricultural economist Thabile Nkunjana said in an interview last week that between March 10 and April 28, at least 10 export bans, or trade restriction measures, had been developed by countries, all of which were for vegetable oil crops such as palm oil, sunflower, canola, and soybean.

“Surging prices for cooking oil mainly prompted these prohibitions or trade restrictions, as countries attempted to manage their respective inflation. These regulations, unfortunately, have disastrous implications for importing countries,” Nkunjana added.

However, exporting countries had a slim possibility of prohibiting the export of other agricultural products, he said. But if export bans for other crops was imposed by key suppliers – such as the US, India, Australia, Brazil and Paraguay – it would be disastrous, he said.

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Namc said if there was any chance of further bans, it would be for wheat because it was another crop that had been particularly affected by the conflict in Ukraine.

Nkunjana said, however, ample supplies of wheat from countries such as India, Australia and the US were available. Although countries could easily access the crop, it would be relatively expensive due to increased market competition and as ocean freight rates are more expensive currently due to high crude oil prices

“The same can be said for maize and rice. But prices for other commodities are anticipated to stay high, with the exception of rice, which is 7 percent lower than last year.“

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However, there were currently predictions for a greater sunflower oil crop of roughly 900,000 tons for the 2021/22 marketing season, as well as adequate soybean carry-over stockpiles.

“Good weather conditions have supported greater yields for other crops like maize despite fears of excessive rains in some areas. Even Indonesia's prohibition on palm oil exports may not be permanent. As we've seen, the country has been restricting exports since March 2022, but the rules alter frequently,” Nkunjana said.

FNB senior agricultural economist Paul Makube said a further escalation of the Russian-Ukraine war and a resurgence of the Covid-19 wave might force certain countries to behave this way.

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“However, this is unlikely to be widespread as they also depend on others for imports of a variety of products produced elsewhere in the world.”

Makube said the local agriculture sector was dynamic and able to respond by raising output when conditions, such as weather and price, were ideal and so far it remained a net exporter of agricultural produce.

Oxford Economics Africa South African analyst Jee-A Van Der Linde said given that Russia and Ukraine were both salient agricultural producers and exporters, concerns about global food security and elevated prices have become key discussion points following the war and governments were increasingly likely to implement measures aimed at safeguarding national food security.

“We have already seen several African countries implement export bans since the start of the war. For example, Egypt has banned exports of key staples, including flour, lentils, and wheat. Tunisia has banned fresh fruits and vegetables export to all countries, while Morocco banned tomato and chickpea exports,” Van Der Linde said.

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