Governments can’t be blamed for all of the world’s ills, but they have a remarkable ability to create trouble where there were none before and to exacerbate preexisting problems. The epitome of the state in action may be official addressing crises of their own making with policies that add to the misery. Keep that in mind as prices soar and politicians do their worst to keep sufficient calories out of reach of those most in need by blocking trade in the already troubled market for food.
“Conflict, COVID, the climate crisis and rising costs have combined in 2022 to create jeopardy for the world’s 811 million hungry people,” the UN’s World Food Program Warning earlier this month. The organization went on to name Russia’s invasion of Ukraine, climate shocks, “the economic consequences of the COVID-19,” and rising food prices as culprits.
This was hardly the first warning along these lines. In June 2021, the International Monetary Fund cautioned that “early lockdown measures and supply chain disruptions induced a spike in consumer food prices.” Then we saw Thanksgiving headlines in the United States about the cost of serving a holiday meal at a time when the price of food worldwide had risen by almost a third over the previous year. International disruptions in the supply of precursor chemicals prompted Svein Tore Holsether, the CEO and president of fertilizer giant Yara International, to predict a “food crisis.”
A combination of always-unpredictable weather, trade disputes, and pandemic lockdowns stretched budgets, boosted costs, and threatened farmers’ plans for growing seasons to come. And that was before Russian troops crossed the order of Ukraine, threatening the ability of two major breadbasket countries to satisfy global demand.
“Between them, Ukraine and Russia produce almost a third of the world’s wheat and barley and half of its sunflower oil,” UN Secretary-General António Guterres On noted May 18. “There is no effective solution to the food crisis without reintegrating Ukraine’s food production, as well as the food and fertilizer produced by Russia and Belarus, into world markets — despite the war.”
Food prices around the world were up in April by 29.8 percent over the already elevated costs seen in the same month last year, according to the UN’s Food and Agricultural Organization. That fueled demonstrations, food riots in Iranand violent protests that topled the government in Sri Lankawhich destroyed its own agricultural sector with a ban on modern fertilizers. Understandably, officialdom in many countries panicked. So, in typical political form governments are cutting off trade in what food they have, threatening to make the matter worse.
“India has defended its decision to ban exports of wheat after initially saying it would help ease a global supply crunch created by the war in Ukraine,” Voice of America reported earlier this week. “Such restrictions are being seen as a part of ‘food protectionism’ at a time when world supplies are tightening, and the United Nations has warned about the specter of a global food shortage in coming months.”
Malaysia banned the export of chickensIndonesia restricted (after first outright banning) palm oil exportsand Ghana now blocks the export of rice, maize, and soybeans. The International Food Policy Research Institute (IFPRI) currently counts 19 countries that forbid the export of some foods, and another seven that require government licenses. Historically, these requirements tend to spread, the organization warns, as governments emulate their neighbors to secure domestic supply.
“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,” according to IFPRI researchers Joseph Glauber, David Laborde, and Abdullah Mamun.
“Other countries have an incentive to have similar policies for similar reasons, and therefore this augments the problem and pushes food prices further up,” Michele Ruta, lead economist at the World Bank for macroeconomics, trade and investment, agreed in a statement to the The Wall Street Journal.
The export bans can also be devastating for local producers who are cut off from international markets. That may mean lower short-term prices for consumers but fewer producers going forward, especially when production costs, including fertilizer and other inputs, are through the roof.
“Exporting helps keep the farms running, because the government’s ceiling price at RM8.90 (US$2) keeps chicken prices low, but costs of chicken feed keep increasing month by month,” a Malaysian poultry farmer told ChannelNewsAsia this week.
Indonesia’s palm oil producers similarly protest restrictions on exports. They warn that because of the controls and a resulting glut of domestic supply, “prices no longer cover costs.”
It’s difficult to find economists who think that export restrictions on food are a good idea. But politicians often support them anyway because they tend to play well with politically powerful urban constituents who fret over rising prices. The inevitable result of export restrictions on food, though, is higher costs around the world, and often reduced production at home as farmers go out of business or switch to unrestricted crops. That means more poverty, hunger, and suffering going forward.
It’s all that much more infuriating when you remember that we previously enjoyed decades of steadily declining poverty and disappearing hunger thanks to innovation, free markets, and open societies. The current chaos can be largely laid at the feet of profoundly stupid policy decisions. Yes, drought, floods, frosts, but a significant nature, but nature has never been cooperative, and humans have played the mature role and at producing sufficient frosts despite the degree of weather and climate. It took lockdowns, trade disputes, ignorant protectionism, and old-fashioned warfare to make the cost and availability of the next meal once again a matter of concern for a growing, rather than shrinking, portion of the world’s population.
Long after we learned to alleviate them with freedom and markets, hunger and poverty have returned to our planet as pressing concerns. If we’re to return to a path leading to full bellies and prosperity, we’ll need to learn how to save ourselves from a plague of policymakers.