The across-the-world food crisis, currently affecting consumers in both poor and rich nations at varying levels, is worsened by growing food protectionism in the developing world.
Just as governments are trying to safeguard local supplies, the effects are threatening to spill over into richer economies.
Countries are restricting exports to cope with high prices that have been exacerbated by the war in Ukraine.
India has moved to curb wheat and sugar shipments, Indonesia has limited palm oil sales, and some other nations have issued grain quotas.
Malaysia has announced a ban on chicken exports, causing consternation in Singapore, which gets a third of its supplies from there.
The poorest countries are most vulnerable to surging food prices and shortages, but wealthier economies aren’t immune too.
Almost 10mn Britons are estimated to cut back on food in April amid a cost-of-living crisis.
The UK government last week announced a new £15bn support package aimed at the most vulnerable, ahead of an expected 42% jump in energy bills in October, which follows a 54% hike last month.
US restaurants are shrinking the size of their portions, while France has pledged to issue food vouchers to some households.
A United Nations gauge of world food prices has jumped more than 70% since mid-2020 and is near a record after the invasion of Ukraine choked off crop exports and rattled supply chains.
More food protectionism could push costs even higher, further hurting consumer purchasing power and creating headaches for central banks trying to curb inflation while maintaining growth.
German Agriculture Minister Cem Oezdemir was critical of India’s recent move on wheat, saying that it worsens the global food crisis.
Rice may be India’s next food protectionism target, analysts say. It could have a devastating impact on global food security as it’s an important staple. The country is the world’s No 1 exporter of the commodity.
Around 30 countries have taken steps to restrict food exports since the start of the war in Ukraine, with agricultural protectionism at the highest level since the food price crisis in 2007 and 2008, according to Sabrin Chowdhury, head of commodities at Fitch Solutions.
That’s setting the stage for some of the most important staples to become more expensive. Benchmark wheat futures have surged by around half this year, palm oil has risen almost 40%, while a UN gauge of dairy prices is up 14%.
Export restrictions aren’t just bad news for importing countries. They also penalise farmers in the producing nations by stopping them from taking advantage of high international prices.
Surging international food prices will hit Africa’s economies the hardest and may trigger social unrest if governments fail to cushion the blow, according to Oxford Economics Africa.
Food has a heavier weighting in the inflation baskets of African nations than advanced economies, often exceeding 25% due to purchasing patterns.
With memories of the Arab Spring unrest in the early 2010s in mind, investors are fleeing emerging market nations threatened with crippling food shortages and uprisings.
For these nations, food is almost a third of current year-on-year headline inflation gauges; in the US, UK and much of Europe, food accounts for 10% or less of similar measures.
“Protectionism is the worst thing to do for food security as it prevents the markets from working to smooth things out,” says David Adamson, a senior lecturer at the Centre for Global Food and Resources at the University of Adelaide.
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