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 they would be imposing bans on their product.
Global wheat prices rose 6% on Monday following India’s announcement regarding the wheat export ban. The country is considered the 2nd largest exporter of wheat, whereas the combined Russian and Ukrainian wheat exports are the largest in the world.
The global wheat market is currently facing a supply-demand imbalance, with a trend leading to higher prices for consumers. Russia and Ukraine’s exports account for 29% of the global trade, making them essential players in the supply chain. However, the war between the countries has caused problems with shipments across borders.
The Peterson Institute for International Economics has noted that Russia’s invasion came at the wrong time for global food markets, considering how high prices have already gone because of the COVID-19 crisis.
Wheat is not the only crop exported from Russia and Ukraine. They also export a variety of other products, such as sunflower, sunflower oil, maize, and barley. Other countries followed suit in banning their wheat exports due to recent developments, including Serbia, Kazakhstan, Egypt, and Kosovo.
Fears regarding food security
The global economy is being pulled down as countries continue to experience increases in costs for food products. This can be linked directly back to the recent pandemic and the Russian-Ukraine conflict, which have caused raw material shortages across many regions of the world. Prices of several products have gone up – like palm oil, sunflower oil, fertilizers, and grains.
The intense heat has played a significant role in global inflation. For example, India’s ban on wheat exports was due to low production caused by a wave of temperatures that hit the country hard recently. Increased average temperatures cause US gas prices to go higher as well.
When the war continues in Russia, food shortages will likely happen. More countries may turn to restrictions on trade, according to PIIE analysts. The Financial Times also warned that if the blockades of Russia in Ukrainian ports go on, the shortage of product supplies across countries will only get worse.
Countries banning products
PIIE tracks the list of countries that have banned the kind of product they export. Here are the following countries:
- 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)
Most of the countries scheduled the lift of their respective export bans in the second to the fourth quarter of 2022. However, the lift of the export ban may change depending on the existing global conditions.