Global turmoil and supply shocks can increase a country’s vulnerability to food shortages. In the past, countries have often resorted to restrictive trade policies to address food supply disruptions. The Ukraine-Russia crisis is no exception; a number of countries have imposed export restrictions in various forms.
With food prices already high due to COVID-related supply chain disruptions and drought-reduced yields last year, Russia’s invasion came at a bad time for global food markets. Russia and Ukraine alone account for 12% of total calories traded. As the war continues, there is a growing likelihood that food shortages, particularly of grains and vegetable oils, will become acute, leading more countries to turn to restrictions on trade.
Thus this is a dangerous moment. Such measures benefit those in domestic markets, but at the expense of net food importing countries. Past experience suggests that these trade measures will put additional pressure on available food stocks, push prices up and potentially threaten food security for the poor.
In past crises, including the COVID-19 pandemic and the grain price spikes in 2007-2008 and 2010-2011, many countries restricted the trade of food, including grains and vegetable oils. Worse, export restrictions often had a cascading effect—when one country announced restrictions, others often followed suit, further exacerbating supply problems and creating a panicked atmosphere in global markets as importers sought to secure new suppliers, sending prices even higher.
To help understand the extent and scope of current export restrictions, we use IFPRI’s food export restriction tracker to analyze how the war in Ukraine has affected global trade. This tool has been used extensively to track restrictions put in place during the COVID-19 pandemic. The new version of the tracker includes additional data that tracks the share of restricted exports in terms of kilocalories and U.S. dollars and to include restrictions on exports of chemical fertilizers (though we do not discuss the latter here). The online tracker can be found here, with its documentation.
Food export restrictions in response to the war in Ukraine
Since the Russian invasion of Ukraine on Feb. 24, the number of countries imposing export restrictions on food has climbed from 3 to 16 (as of early April 2022) (Figure 1). The total amount of exports affected by the restrictions represents about 17% of total calories traded in the world. Those restrictions include export bans implemented by 16 countries covering 29 separate measures, and account for 12.4% of traded calories; and export licensing requirements implemented by seven countries covering 10 separate measures and accounting for 4.6% of trade calories.
Figure 1
For comparison purposes, we consider the extent of export restrictions in 2008 and 2020. The food price crisis in 2007-2008 was driven by a number of factors that pushed agricultural prices to (nominal) record highs, including back-to-back poor wheat crops in Australia, strong demand for biofuels, high energy prices, a weak dollar, and growing demand in developing economies such as China. By the start of 2008, eight countries had implemented export restrictions covering approximately 7% of trade. By the end of March, some 15 countries representing 16% of trade had implemented restrictions (Figure 1). Restrictions remained in place throughout most of 2008, with the number of countries implementing them rising to 35 during that summer. A number of commodities were affected, principally wheat and rice.
During the first four weeks of the COVID-19 pandemic, 21 countries implemented export restrictions on a wide range of products. At its peak in May and June of 2020, about 8% of total calories traded were affected. By late summer, most countries had relaxed export restrictions.
Who is imposing export restrictions?
Countries that have implemented export restrictions (figure 2) represent large shares of some of the key commodities traded in the world. Starting with the epicenter of the conflict, Ukraine has restricted exports to ensure adequate supplies for its population during the conflict; Russia’s export restriction on wheat predate the war and include a floating export tax and export quota. The two countries together account for around 35% of the dollar value of total global trade in restricted items. Measured in terms of caloric value, an important indicator of nutrition and food security, the percentage share is even higher—around 42% of total calories in restricted products. Other notable suppliers imposing export restrictions include Indonesia (ban on palm oil exports), Argentina (ban on beef exports), and Turkey, Kyrgyzstan and Kazakhstan (bans on a variety of grain products).
Figure 2
As food price inflation grows around the world, and no quick resolution to the Ukraine war in sight, past experience suggests that more countries will impose restrictions. This could further boost prices and increase price volatility. Previous research on the impacts of export restrictions during 2007-2008 food price crisis suggests that such policies contributed to 40% of the increase in agricultural prices over the period.
Which products are impacted?
Five agricultural products account for almost 90% of imported calories currently affected by export restrictions: Wheat (31% of total calories affected), palm oil (28.5%), corn (12.2%), sunflower oil (10.6%) and soybean oil (5.6%). In terms of total trade in individual products, export restrictions affect 35.9% of wheat exports, 55% of palm oil exports, 17.2% of corn exports, 78.2% of sunflower oil exports, and 5.8% of soybean oil exports. The remaining 10% of traded calories under export restrictions include a diverse basket of commodities such as tomatoes and other vegetables, beef and poultry.
Which countries are the most affected?
With grains and vegetable oils dominating the list of affected products, it is not surprising that larger importers of wheat, corn, and vegetable oils are most affected. Figure 3 shows the share of imports affected by export restrictions as a share of total agricultural imports of each country (calculated on a caloric basis). Unsurprisingly, import-dependent countries that import wheat and corn from Russia and Ukraine show a relatively high share of restricted calories in their import mix (including Central Asian countries like Mongolia, and North African countries such as Egypt and Sudan). Likewise, export restrictions on vegetable oils including palm and sunflower oils, have important impacts on countries such as India; Pakistan and Bangladesh are affected both by grain and vegetable oil restrictions.
Figure 3
It is important to recall that many export restrictions are not absolute bans, but rather taxes or other transaction costs that raise the prices of commodity imports but do not prevent them per se. These kinds of restrictions increase consumer prices, but are preferential to outright bans that effectively remove those supplies from the global market.
Conclusions
The principal risk of commodity export restrictions is higher global prices that make it even more difficult for net food importing countries to purchase food. Moreover, export bans tend to be contagious, as other exporting countries follow suit and implement their own bans. The way the global community handled this issue in early 2020, at least for food products, should be an example to follow—most countries refrained from implementing bans and where implemented, such restrictions were relatively short-lived.
However, the war in Ukraine is taking place in a very different landscape: Initial stocks are low, except for rice, international policy coordination is wavering due to geopolitical tensions and governments and households are financially exhausted after two years of pandemic—making first-best policies, like the use of social safety nets to compensate domestic food price increases, more difficult to promote and implement.
Currently, the World Trade Organization (WTO) lacks rules to effectively discipline the use of export restrictions. In the past, WTO members have tried, but failed, to get agreement on disciplining export restrictions on agricultural products, even when trying to create exemptions for basic needs such as humanitarian shipments. The upcoming June WTO Ministerial Conference (MC12) provides an opportunity to address this shortcoming.
In the meantime, countries should cooperate to avoid a wave of detrimental policy like that seen in the 2007-2008 food price crisis. Food trade policy can move quickly, but it can have lasting impacts on global poverty and hunger. The Food and Fertilizer Export Restrictions Tracker project provides publicly available data on the global food trade policy environment in the context of the ongoing Ukraine-Russia crisis to aid in curbing this potential problem.
Joseph Glauber and David Laborde are Senior Research Fellows with IFPRI's Markets, Trade, and Institutions Division (MTID); Abdullah Mamun is an MTID Senior Research Analyst. Opinions expressed are those of the authors.
