Food crisis grows as rising prices trigger export bans

The global food crisis triggered by Russia’s invasion of Ukraine intensified on Wednesday, when Indonesia tightened export restrictions on palm oil, joining a growing list of producing countries seeking to keep vital food supplies within their borders.

The conflict in Ukraine is threatening global grain production, edible oil supplies and fertilizer exports, driving up commodity prices and reflecting the crisis in energy markets.

Palm oil is the most widely used vegetable oil in the world, and is used in the manufacture of many products, such as cookies, margarine, detergents, and chocolate. Their prices have risen more than 50% this year.

Indonesian Trade Minister Muhammad Lufti said the export restrictions are aimed at ensuring that home cooking oil prices remain affordable for consumers.

The price increase comes at a time when food affordability is a major challenge as economies seek to recover from the coronavirus crisis and is also helping to drive a broader acceleration in inflation around the world. .

Russia and Ukraine are also major suppliers of edible oils, contributing nearly 30% of world wheat exports.

Ukraine on Wednesday announced a ban on a wide range of agricultural exports, including barley, sugar and meat, until the end of the year.

The conflict has not only disrupted shipments from the Black Sea region, but is also jeopardizing the outlook for crops, as fertilizer prices soar and supplies shrink in response to a sharp rise in the cost of natural gas, a key component in the manufacturing process of many products.

Global food prices hit an all-time high in February, rising 20.7% year-on-year, according to the United Nations food agency, while many markets have continued to rise this month.

Malaysian palm oil futures rose to an all-time high following Indonesia’s announcement, while soybean oil futures hit a 14-year high. Soybean oil has advanced almost 40% this year.

Russia and Ukraine are the world’s top producers of sunflower oil, accounting for almost 80% of exports, leaving customers like India struggling to secure supplies of alternatives such as palm oil and soybean oil.

Wheat futures in Chicago have risen nearly 60% so far this year, threatening to drive up the cost of key staples like bread.

The loss of two major exporters Ukraine and Russia has been compounded by news that the condition of the wheat crop in the world’s top producer, China, could be “worst ever”, according to the country’s agriculture minister. country.

Poor growing conditions in drought-stricken parts of the US plains appear set to further reduce supply.

Global grain production could also decline as production of fertilizers, which help boost crop yields, declines following rising natural gas prices.