Photo: T. Narayan | Bloomberg | Getty Images
The ongoing conflict between Russia and Ukraine has caused many countries to restrict the exports of their products. India is the latest in a long list of countries that announced export bans. Their government imposed a ban on wheat exports last week.
Wheat prices skyrocketed following India’s announcement. On Monday, global prices went up to 6%. India is the second-largest exporter of wheat in the world. Meanwhile, wheat exports from Ukraine and Russia combined are the largest.
The World Bank reports that 29% of global wheat exports come from Russia and Ukraine. Following their conflict, the supply chain has been negatively impacted, resulting in higher prices for consumers worldwide. Countries dependent on wheat exports expressed concern that with the ban on India and the Russia-Ukraine war, the supply cannot meet the demand.
The Peterson Institute for International Economics (PIIE) has noted that Russia’s invasion came at a bad time for global food markets, considering the COVID-19 crisis caused prices to go up even more than expected.
In addition to wheat, Russia and Ukraine are among the large exporters of other products like sunflower seeds, sunflower, maize, and barley. Countries have experienced inflation, and others have followed suit in banning their wheat exports as well – like Kosovo, Kazakhstan, Serbia, and Egypt.
Food security becomes a problem
The global economy has been slowing down since the pandemic and the recent conflict in Russia and Ukraine. Inflation is on an upswing across many countries due largely from these events with some products affected including palm oil, sunflower oil, fertilizers, and grains. There’s also a looming concern over what else will follow suit if this trend continues.
The intense heat has caused global inflation to worsen. For example, India’s ban on wheat exports was due to low production caused by a recent bout with scorching weather. The same was felt in the United States, which led to the prices of gas to its peak.
The analysts from PIIE believe that as the war continues in Russia and food shortages happen, more countries will “turn to restrictions on trade.” The Financial Times also noted that as long as Russia blocks the ports of Ukraine from operating, supply shortages will continue.
More countries ban export
As the fight and inflation go on, many countries have decided to ban exports of some of their products as well. PIIE keeps track of the list:
- Argentina (Soybean oil, soybean meal)
- Algeria (Paste, wheat derivatives, vegetable oil, sugar)
- Egypt (Vegetable oil, maize)
- India (Wheat)
- Indonesia (Palm oil, palm kernel oil)
- Iran (Potatoes, eggplant, tomatoes, onion)
- Kazakhstan (Wheat, wheat flour)
- Kosovo (Wheat, corn, flour, vegetable oil, salt, sugar)
- Turkey (Beef, mutton, goat meat, butter, cooking oils)
- Ukraine (Wheat, oats, millet, sugar)
- Russia (Sugar, sunflower seeds)
- Serbia (Wheat, corn, flour, oil)
- Tunisia (Fruits, vegetables)
- Kuwait (Chicken meat products, grains, vegetable oils)
Governments imposed the ban due to an increase in local market prices of the products. The increase was prompted by the recent happenings. The bans are scheduled to be lifted within the year but may be subject to change.
Opinions expressed by CEO Weekly contributors are their own.
