Wheat prices spiked to around 6% on Monday after India announced a ban on wheat exports.
Valdis Dombrovskis, the EU’s trade chief, told CNBC that the U.S. and European Union are looking at how to improve food supply chains with export restrictions from India and other nations. G-7 foreign ministers warned that the war in Ukraine is raising the risk of a global hunger crisis.
“That’s something which is very much of concern,” said Dombrovskis. “We agreed with the United States to cooperate and coordinate our approaches in this area, because … as a response to Russia’s aggression against Ukraine and a corresponding increase in food prices and concerns about food security, countries are starting to take export restrictive measures. And we think that this is a tendency which can only actually aggravate the problem.”
Limits on exports are likely to drive up commodity prices and in turn food costs.
India joins several countries to place a ban on such exports, including Russia and Ukraine, Egypt, Kazakhstan, Kosovo, and Serbia.
The International Food Policy Research Institute wrote in April: “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.”
Also in April, the Peterson Institute for International Economics wrote in a note that the war in Ukraine has “taken a shocking toll on the region,” before adding: “It has also contributed to a global food crisis, as Russia is blocking vital fertilizer exports needed by farmers elsewhere, and Ukraine’s role as the breadbasket for Africa and the Middle East has been destroyed.”
The Indian government said it would still allow exports for letters of credit that have already been issued and on the request from countries that are trying “to meet their food security needs.”
Russia and Ukraine are among the biggest exporters of global wheat, accounting for 29% of exports, the World Bank is reporting.
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