Bad weather, droughts, disruptions associated with Govt-19, rising energy prices and now war in Ukraine … threats to the world’s food supply are mounting. Following in the footsteps of Ukraine and Russia, many countries are trying to protect themselves from the shock by introducing restrictions on the amount of food sold abroad.
“When world prices rise, politicians often want prices in their country to be stable, for welfare and social stability. But for that they must isolate their country.”David Laporte, co-researcher at the International Food Policy Research Institute (Ifpri), explains to franceinfo that this trend follows the development of “food securityism”. It can take many different forms: taxation to set a minimum profit on exports or a quota to set an approved maximum level for sale or a complete ban on bringing certain products out of the country.
These measures are widely used. According to Ifpri surveillance, verified by FranceInfo, about 23 states have taken them from the beginning of the war in Ukraine since the end of February, and 19 have maintained them to date. “We see an increase”David Laborde summarizes.
These restrictions threaten to exacerbate the food crisis. “They control the quantities available in the world, which encourages inflationDavid Laborde explains. They make you lose self-confidence and promote ‘every man for himself’. In the long run, they are reluctant to invest because manufacturers do not know if they can sell at a reasonable price..
From the G7 World Food ProgramMany companies sound the alarm. “First victims [du protectionnisme alimentaire] Will be poor countries “David Laborde recalled. In other words, those who rely on these imported foods for their livelihood and those who cannot afford expensive solutions. France, for its part, is not always directly affected by these restrictions, but, like everyone else, is affected by rising prices. Since not all of the activities listed on the map have the same impact, franceinfo has selected some of the four most important products to understand how they can affect France and the world.
Palm oil: Rising prices of processed products
This is one of the strongest restrictions since the beginning of the war in Ukraine. On April 22, the President of Indonesia announced that his country would suspend its palm oil exports altogether and fight the country’s deficit, where this ingredient is one of the basic products in the diet. However, it is essential in many poor countries, and Indonesia produces more than 55% of the world’s palm oil exported. Reuters*.
“The Indonesian president quickly realized that the storage space for national production was running out and that there would be joint damage.”, President of the oil brokerage firm Baillon-Intercor, exhibits at franceinfo Antoine de Gasquet. The Indonesian leader finally lifted the ban a month later. But instead, he forced Indonesian manufacturers to sell a certain amount of their produce exclusively within the country: 10 million tons out of the 53.8 million produced in 2022. Bloomberg*. This sales restriction has affected many importing countries. However, France was less affected.
“Palm oil is consumed very little there. We have greatly reduced its share in the diet, especially in favor of sunflower.”Antoine de Gasquet, director of brokerage firm Baillon-Intercor
Faced with low reserves of this palm oil, some countries are replacing it with other oils such as sunflower, which triggers a general rise in the prices of these products, says Philip Salmin, an economist who specializes in raw materials. Results: “All vegetable oils [soja, tournesol, colza…] Are in a very tense situation “The expert says briefly.
Palm oil is not only used in food. It is also found in many non-food products, where it is often referred to as “vegetable oil”: shampoos, toothpaste, lipstick … as a result, the price of palm oil rises. “May ultimately affect the prices of these products”Antoine de Casquet warns, however he believes the impact should be small.
In France, palm oil is another major industry used in the production of biofuels. In 2019, 89% of synthetic biocosol incorporated in fuel was produced from palm oil. Ministry of Environmental Change. “These rates can be adjusted downwards”Antoine de Gasquet considers.
Wheat: India refuses to fill the Ukrainian vacuum
Another essential resource is the target of restrictions: wheat. On May 14, India decided to stop selling its foreign wheat. The world’s largest producer of this grain wanted to be sure that it would be able to satisfy its massive domestic consumption in the face of a dangerous heat wave that would weaken the harvest.
However, by 2020, India will account for only 0.5% of global wheat exports. Ministry of Commerce of India*, And these exports were mainly levied on its close neighbors such as Bangladesh. “France’s direct effect is therefore zero”Philip Salmin, in short, reminds us that France itself is the net exporter of wheat. But many countries relied on India to make up for the Ukrainian wheat shortage, most of which had been prevented from being stolen by Russian forces since the beginning of the war.
“These sanctions have an indirect impact on triggering global inflation.”Philip Salmin, economist who specializes in products
Since Indian wheat does not compensate for the share of vacancies left by Ukrainian wheat, it will not calm the general price increase that is reflected everywhere. “For breeders, the situation is more complicated because one of their biggest burdens is animal feed.Expert Michel Portier described it to franceinfo in May. Therefore, breeders are forced to stop their activity. As far as consumers are concerned, food prices will go up.Specially processed products (pasta, bread, etc.) that use it.
Sugar: The safest price in the Middle Ages
Within three weeks of its decision on wheat, India struck again, reducing its sugar exports to 10 million tonnes in the October-September season. CNN*. “India is the world’s largest sugar producer and second largest exporter.Reminiscent of Tallage, an agro-economic research firm for franceinfo. Its export potential weighs heavily on the price of sugar. “
New Delhi mainly sells its sugar to Asian or African countries like Indonesia, Bangladesh or Sudan. Ministry of Commerce of India*. The direct impact on France will once again be minimal because it is a net exporter just like wheat. France certainly imports Indian sugar, but in small quantities: step France Agrici (PDF), India will not even be among its top 8 suppliers by 2020. Further, “Long-term deals in Europe between sugar producers and processors and buyers soften price differences”Refers to the Agro-Economic Research Institute Tallage.
“European prices are currently lower than world prices.”Dolge, Institute of Agricultural Economic Research
But here again its effect will be felt indirectly in France. “World prices will actually affect European prices but in the long run, with delays”The agro-economic research firm Tallage expects. “Higher prices will also affect the price of processed products”Note by Philip Salmin.
New restrictions on rice soon?
All of these limitations could push the world economy into a vicious circle. “Some countries may impose additional restrictions as prices continue to rise”David Laborde considers. All eyes are only on the rice, the price of which has not yet exploded. India, the world’s largest producer “Like wheat you may want to protect its stock”, Analyzed by Philip Salmin. The next two countries in the hierarchy of manufacturers, Thailand and Vietnam, have indicated that they can integrate to sell their products at higher prices. Bloomberg*.
However, France is a rice importer and in 2020-2021 22% of its purchases came from these three countries. France Agrici. But above all, “It is the staple food of more than three billion people.”, David Laborde insists. Especially in poor countries, again, very vulnerable.
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