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Governments Step In to Protect Food Supplies as Prices Spike

© Reuters.

(Bloomberg) — Governments around the world are taking steps to safeguard domestic food supplies after Russia’s invasion of Ukraine roiled trade and sent prices of key staples soaring.

Argentina and Turkey this week increased their control over local products, and Bulgaria is looking to build its grain reserves. Moldova, albeit a small shipper, temporarily banned exports of wheat, corn and sugar from this month. 

Protectionist measures — which already picked up in recent years as the Covid-19 pandemic sparked worries about local supplies and high prices — could spell more bad news for global food trade. The war in Ukraine has brought crop shipments from much of the crucial Black Sea region to a halt, heightening fears of shortages of grain and sunflower oil.

That’s adding to soaring global food inflation, increasing the chance of export restrictions, said Abdolreza Abbassian, an independent analyst. Harvest setbacks have exacerbated tight supply, with global grain stockpiles expected to drop for a fifth year. 

“It’s something one has to be worried about, because we know it has happened in the past,” said Abbassian, who has tracked agriculture markets for decades. “This is already a perfect storm. You don’t need that one.”

Argentina, a major grain shipper, is creating a mechanism to guarantee wheat supplies for local millers and tame pasta prices. Top flour exporter Turkey boosted the agriculture ministry’s authority over exports of an array of goods, allowing it to make “periodical arrangements” if needed. 

Elsewhere in Europe, Bulgaria is working on a system to buy grain that can be used to meet its population’s needs, the government said after a meeting with producer lobby groups on Friday. 

An association of grain producers in the country — among the European Union’s top sellers — had said cargoes are unofficially being obstructed from leaving ports, although the agriculture minister denied any export ban. That comes as buyers flock to alternative origins with Ukrainian ports shuttered.

“The state has the levers and mechanisms to prepare for a possible food crisis, while respecting market principles,” the Bulgarian group said earlier this week. 

In other measures, top palm grower Indonesia in January moved to curb shipments to bolster domestic supply. Russia also has been taxing grain cargoes since last year and regularly issues quotas for sales. The country’s trade has been further stifled by sanctions and dangers transiting the Black Sea. On Friday, it urged fertilizer producers to halt exports.

©2022 Bloomberg L.P.

Governments Step In to Protect Food Supplies as Prices Spike

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