If you thought bread prices were already high, they’re about to go higher.
The United States and the European Union are looking at how to improve food supply chains with export restrictions from India and other nations accentuating global problems, the EU’s trade chief told CNBC.
G-7 foreign ministers warned over the weekend that the war in Ukraine is increasing the risk of a global hunger crisis. This is because Ukraine has been unable to export grains, fertilizers and vegetable oil, while the conflict is also destroying crop fields and preventing a normal planting season.
This has increased the reliance on nations from other parts of the world for these products. But some of these countries, concerned about supplies for their own citizens, have imposed restrictions on exports. This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the overall food security of the country.”
When people can’t get bread, then the riots begin. The Arab Spring was fueled in no small part by wheat prices. Any regime that values its own stability is going to do its best to secure a supply of wheat and gasoline for its own domestic use. Think of it as hoarding on a global scale.
Countries are cutting off food exports to protect their own political survival. All of this is doing interesting things to global markets and the consequences won’t be pretty.