Food Panic Recedes for Now as Nations Row Back Export Curbs
(Bloomberg) -- The wave of protectionist measures on agricultural goods that emerged as the coronavirus spread around the world has already begun to recede.
Of at least 17 countries that sought to limit food exports to protect local supplies, about half have backtracked all or some of the measures, according to a tracker from the International Food Policy Research Institute. That includes several major grain shippers such as Vietnam and Romania, although top wheat exporter Russia has kept its curbs in place.
Immediate worries about food shortages have eased in many parts of the world as supply chains continue to flow despite lockdowns. Meanwhile, even short-lived restrictions have resulted in spoiled crops and stranded cargoes. Organizations such as the United Nations have urged against measures that could harm food security and raise prices.
“There wasn’t really any issue with having tight inventories,” said Abdolreza Abbassian, senior economist at the United Nations’ Food & Agriculture Organization. “These measures at the very best would have just harmed the countries themselves.”
Many governments have been encouraged to ease limits after assessing global reserves and being reassured that there is ample supply, according to Joseph Glauber, senior research fellow at the IFPRI. Russia, which hasn’t ruled out future quotas, remains an exception, and any harvest shortfalls from bad weather could mean other curbs are reinstated.
“We hope that we have seen the end of export restrictions,” Glauber said by email. “But people will be watching countries such as Russia to see whether the current quota and restrictions are extended into the new crop year.”
For now, the International Grains Council is forecasting bumper wheat and rice harvests, and rains in the European Union and Black Sea region have helped to ease concern about a dry spell in the heart of the grain-growing period. Ongoing limits also risk derailing exporters’ reputations as dependable suppliers and could negatively impact farmers as local prices diverge from international markets.
Here’s a roundup of major food-export limits around the world:
Romania, the EU’s second-biggest wheat shipper, ended a sudden ban on grain sales outside the bloc a week after it began. That came after the European Commission expressed disapproval of the limits, which stalled at least one wheat cargo destined for top buyer Egypt. The government cited renewed confidence that reserves will last until harvest and said there’s no risk of staple foods going scarce with restaurants closed. Still, it cautioned that a drought could reduce crop prospects and export limits may be revived if needed.
One of the world’s top flour shippers signaled that export limits on the product and other grains may expire in June. It also boosted the quota allowance for May shipments from April, doubling flour availability to 150,000 tons. The country has already seen that lifting restrictions doesn’t guarantee a swift rebound in demand. After removing a monthlong ban on vegetable exports, the Kazakh government ended up buying cabbages for its own reserves after the head of the Turkestan region asked for its help to sell 250,000 tons of the crop as demand dropped in neighboring Russia, driving prices lower, according to state-owned news agency Kazinform.
The world’s third-largest rice shipper will lift export limits at the start of May. The restrictions had helped send benchmark prices soaring amid worries that other producers would take a similar tack and some cargoes spoiled as thousands of containers piled up at ports. Vietnam’s rice-belt farmers collected a sufficient crop despite a drought, and normal sales can now resume, the prime minister said. That’s a relief for exporters suffering financial losses and nearby buyers from Japan to Australia that sounded off on the ban.
The Black Sea nation’s government tentatively decided against imposing a cap on this season’s corn sales after meeting with top traders in late April. Officials will continue to monitor supply, though global corn demand has slumped as the oil rout batters biofuels production and Ukraine’s prices crater to a four-month low. The country is maintaining a ceiling on wheat sales through the end of the season, with 1.1 million tons still available, while recent rain has helped to revive the outlook for the coming crop.
Grain-sales quotas through June have already been exhausted, though exports still have a way to go before supply dries up. The nation still had almost half of the planned 7 million tons to ship in the coming weeks, and global grain demand has fallen as the pandemic slows production of biofuels and meat processing. Russia’s limits are due to be lifted in July, though a bakers union has asked for tighter rules and the agriculture ministry signaled quotas will be used again in the future.
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