Export restrictions and food crisis: Recent
developments and responses
Ramesh Sharma
Trade and Markets Division
FAO, Rome
Informal ICTSD seminar
19 November 2010, Geneva
Outline/topics for discussion
1. Current food situation and outlook
2. Incidence of export restrictions (countries,
products, types of measures)
3. Economic and others effects
4. Responses
 Trade rules
 Other responses
1. Global food markets – recent
developments and outlook
(FAO Food Outlook, 17 Nov 2010)
World market price of maize (US$/ton)
2007-2010, and outlook for MY 2010/11
300
Outlook 2011
Maize, US ($/t)
Sup/Disapp (major Xers)
9% 2010/11, vs 15% in
previous two seasons
$/ton
250
200
150
100
Jan 07
5
9
Jan 08
5
9
Jan 09
5
9
Jan 10
5
9
2011
World market price of soy oil and soybeans
(US$/ton) 2007-2010, and outlook for MY
2010/11
1600
800
Outlook 2011
2011
Tight market; prices firm
(oils, seeds, meals)
Soy oil
Soybeans
Soyoil
1200
700
600
1000
500
800
400
600
300
400
200
Jan 07
5
9
Jan 08
5
9
Jan 09
5
9
Jan 10
5
9
2011
Soybean
1400
World market price of palm oil (US$/ton)
2007-2010, and outlook for MY 2010/11
1400
Palm oil, ($/t)
Outlook 2011
2011
1200
Tight market; prices
firm
$/ton
1000
800
600
400
Jan 07
5
9
Jan 08
5
9
Jan 09
5
9
Jan 10
5
9
2011
World market price of rice (US$/ton) 20072010, and outlook for 2011
1000
Outlook 2011
Thai 100% B
Sup/Disapp (major Xers)
17.6% 2011, vs 16.6% 2010,
21.3% 2009, 17.5% 2008
800
600
400
200
Jan 07
5
9
Jan 08
5
9
Jan 09
5
9
Jan 10
5
9
2011
Summary
1) Recent world price rises have at much faster pace than in
2007/08; 2) Unlike in 2007/08, large stocks currently, but will
be drawn-down rapidly; 3) So, for 2011, depends on 2011
crops, and so considerable uncertainty
250
FAO Food Price Index
FAO Cereals Price Index
200
150
100
2. Incidence of export restriction measures
(Based mainly on policy monitoring files at FAO
and other sources)
During 2008-2010, how many countries in a
sample of 105 implemented one or more export
restricting measures?
--------- export restricting sample --------Total
Countries
Measures
countrieswith X
Export
All
covered measures
%
restr. policies
%
Africa
Asia
LAC
Others
Total
All sample
(105 countries)
Total % X
policy restr.
42
30
28
5
9
15
5
4
21
50
18
80
15
49
15
8
44
162
51
25
34
30
29
32
142
210
148
28
11
23
10
29
105
33
31
87
282
31
528
16
Summary:
1) 31% countries (33 of 105) took one or more export restriction measures
2) For export restricting sample, of all measures, 31% was on export restriction
3) For all sample (105), 16% of all measures (528 total) was on export restriction
4) Export restriction meaures most common in Asia
Timeline of export restrictions - example
India –Ordinary rice (non- Basmati)
 9 October 2007 - Ban exports
 31 October 31, 2007 - Ban lifted and replaced with MEP of $425/t
fob
 December 2007 - MEP raised to $500/t
 5 March 2008 - MEP raised to $650/t
 27 March 2008 - MEP raised to $1,000/t
 1 April 2008 - Banned export
 September 2009 – Ban extended
(Note: India sold some rice to neighbouring countries in G-to-G deals – so it
was not an absolute ban, but this was more of a STE trade)
Timeline of export restrictions - example
Argentina – Wheat (also maize, oilseeds)
 March 2008 – Export taxes since 2002 (wheat 28%, maize 25%, soybeans
35%)
 March 2008 – From 12 March, sliding scale or variable export tax above 4
commodities – raised taxes on oilseeds and lowered slightly for wheat
and maize
 June 2008 – Announced monthly export quotas
 July 2008 - Sliding scale tax system abolished – fixed taxes , same rate as
on 11 March 2008
 Dec 2008 - Export taxes reduced (wheat from 28 to 23%, maize 25 to
20%)
 Sept. 2009 - Export restrictions lifted (also for maize) after agreement
with exporters and millers to ensure adequate domestic supplies
 May 2010 – Quota set to allow export = at least 35% of 2010 harvest
 June 2010 – Quota 3 million tonnes for December 2010 onward
Timeline of export restrictions - example
Vietnam - Rice
 July 2007 – Export ban for rest of 2007
 January 2008 – Export target set (4.5 m t for a year) and MEPs ($385 for 5%
broken, $360 for 25% broken) [VFA informally told no sales of 25% brokn]
 March 2008 – Total export quota reduced and quarterly quotas set
 March 2008 – No new export contracts unless exporter is holding as stocks
50% of export sales
 June 2008 – Export ban lifted and MEP raised to $800/t for 5% broken (from
$400)
 July 2008 – Progressive export tax $30/t for export price of $600/t and
maximum tax of $175/t for price =>$1,300/t
 April 2009 – MEPs reduced 25% broken rice to $350/t
 August 2010 – MEPs raised three times by $50/t ($450 for 5%, $410 for 25%)
 October 2010 - MEPs unchanged at $475/t for 5% broken and $445/t for 25%
broken, and again reduced
Timeline of export restrictions - example
Ukraine – Wheat
 Oct 2006 - July 2008 – Export quotas varying between 3,000 t and
1.2 million t
 May 2007 – Export quotas abandoned
 July 2007 – Export quotas reintroduced (for next 12 months, wheat
export quotas were very low, thus export was essentially quasibanned)
 Oct 2007 – Quota increased for the period until March 2008
 May 2010 – Removed quota restrictions on grain exports
 August 2010 – Announced a plan for export caps but postponed
the decision several times as harvest continued
 October 2010 – In media, three versions of plans from different
authorities, confusing traders – in two versions, sharply differing
amounts of quotas on maize, wheat and barley, and the 3rd version
denied that plans have been made
Timeline of export restrictions
Additional illustrations (small exporters)







Chad - Export ban on female cattle (Feb 2010)
Ethiopia – Export ban cereals (May 2008, removed July 2010)
Guinea - Export ban on agricultural products (April 2008)
Kenya – Banned maize export (Oct 2008)
Malawi - Export ban on maize removed (Sept 2009)
Tanzania– Cereal export ban (imposed Jan 2008, lifted April 2010)
Zambia – Maize export ban (March 2008, lifted Oct 2009)
 Bolivia – Export ban on soya and sunflowers oil, raw and refined (May
2008); lifted ban on maize export (Oct 2008); ban on maize and
sorghum export (Feb 2010); ban on sugar export (Feb 2010)
 Ecuador – Ban on rice export (June 2006, lifted March 2009)
 Honduras – Export ban lifted on beans and maize (October 2010)
Many forms of export restrictions used
 Export tax
 Fixed
 Variable
 Differential
 Export quota
 Export license
 State Trading Enterprise (and government to government or
G-to-G)
 Minimum Export Price (=> variable export tax)
 Export ban
Two illustrations of sliding scale or variable export tax
Indonesia palm oil
Reference
band $/t
Tax (%)
< 700
801 - 850
951-1,000
1,051 – 1,100
1,151 – 1,200
> 1,251
0
4.5
10
15
20
25
Argentina, Wheat, March 2008
fob
price $/t
Tax (%)
< 200
201-300
301-400
401-600
> 600
20%
20% to 24%
24% to 30%
30% to 46%
46%
3. Impact/consequences
(trade flow, prices, food security, overall economic
welfare etc)
Types of analyses linking export restriction to impacts
(such as on trade flow, world price, domestic price)
100s of op-eds and newspaper articles, but very few good
studies (unlike the rich literature on import measures)
Only 3-4 model-based analyses found (IFPRI/CGE wheat,
Argentina soy, FAO COSIMO wheat) – elasticity etc needed,
and so divisive
Some disagreement over the role of export restriction –
does it also initiate the spike or just fuels the process
Some analysts link policy to price movements graphically (2
examples below)
Economic model for analysing the impact of
export restrictions
Excess S
RoW excess
demand
Exporter
RoW
Impact of X tax – small country case
(world price does not change)
Exporter
RoW
Impact of X tax – LARGE country case
(world price changes – rises)
Impact/effects of export restriction
Small country case (small exporter, cant change Pw)
Impact on home market
 Prevent price rise (arguments - food security, consumers)
 If raw material, benefit processors, (infant industry, DET)
 Revenue (rather easily) (also, to fund commodity programs)
 Economy wide effects – income distribution, influence output mix
through incentives
 Resource allocation costs (static and dynamic)
 Economic welfare – always negative (Sum of PS, CS, Rev)
Terms of Trade gain (Pw rises and so more revenue)
 Optimum Export Tax argument (not because of a crisis, but purely
for revenue reason)
 Economic welfare – can be positive (Sum of PS, CS, Rev)
Impact/effects of export restriction - negatives
Large exporter case (can raise Pw)
 Impacts on home market – same as for small country
Others
 Terms of Trade gain (Pw rises and so more revenue)
 Optimum Export Tax argument (tax not because of a crisis, but
purely for revenue reason)
 Economic welfare – can be positive (Sum of PS, CS, Rev)
 But collateral damages (not measured above)
 “Beggar-thy-neighbour” – hurt trading partners, lose them to other
exporters, invite retaliation
 Undermined trust in trading system => protectionist policies,
increased production, self-sufficiency goals
 WTO disputes
Thai 100% B rice price movement ($/ton) and key policy
measures, 2007 and 2008
(it says - both export ban/tax and aggressive demand played a role)
1200
US Oks Japan
re-X of stocks
1000
Philippines
tender >$700
800
600
VTNM India
bans
bans
VTNM
bans
Philippines
tender >$1 100
400
VTNM ends
export bans
re-X of stocks
8
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08
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08
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200
Illustration of an attempt to link policies to price
World wheat prices (total world export: 111-116 Mt pa)
Red (with solid vertical line) denotes policy changes that reduce export and
Blue denotes policy changes that should increase export.
Source: Nicolas Brown, Judith Laffan and Mike Wight (2008), DFAT, Australia.
4. Responding to the food crisis
a) Strengthened trade rules
b) Other proposals for curbing volatility
Disciplining food export restrictions
Proposals in WTO agricultural negotiations
Export tax
Prohibit export tax (Korea)
Tariffy export restriction – and bind it (Japan 2000) – bind at 0%
(Switzerland)
Export prohibition
Eliminate all export restrictions on agricultural products
(Switzerland)
Assure some export (quota)
For taxed products, establish tax-exempt quotas for a certain
amount (based on some X/Q ratio) (Japan 2000)
Disciplining food export restrictions
Proposals in WTO agricultural negotiations (2)
Strengthening Article 12 along the current line (Cairns, /AG/NG/93)
 Preserve AoA Article 12.2
 Provide additional S&D provisions to address legitimate needs of
developing countries (comment - “like what?”)
U.S (G/AG/NG/W/15) - objectives
 To strengthen substantially WTO disciplines on export restrictions
to increase the reliability of global food supply.
 To prohibit use of export taxes, including DETs, for competitive
advantage or supply management purposes.
[Comment - Not clear – is it strengthening Art 12 along current line
(notifications etc), or also some kind of prohibition. The 2nd point
also not clear (the terms used, and when a tax is not prohibited).]
What we have now? 2008 Modalities
Part V C - Export prohibitions and restrictions
To strengthen Article XI. 2 (a) of GATT 1994, modify AoA Art. 12
to include following (six) elements






Para 162 - Art XI.2 (a) measures to be notified within 90 days
Para 163 – exporter to give notice of reasons for the measures
Para 164 – AoA CoA to provide annual notification update
Para 165 – any Member can bring counter notification
Para 166 – Eliminate existing restrictions by end of 1st year
Para 167 - New restrictions normally not > 12 months (and >18
months only with agreement of affected importing Members).
[Comment – Only 166 and 167 appear somewhat concrete]
Some proposals after the 2006-08 food crisis
(led by Japan and Switzerland, informal paper April 2008)
 These do not call for prohibitions and bans, but strengthened
disciplines
 Essentially constraining ability to restrict food exports and making
them more responsible (conduct sound analysis of impact on
importers)
 Justification to be based on data (production, stocks, and domestic
consumption etc)
 Notifications required before taking the measure, explaining
nature, duration and reasons
 Mandatory consultation and mandatory explaining
 If differences unresolved, even refer to binding arbitration by a
“standing committee of experts.”
SUMMARY – on disciplining export restrictions
Fading appetite among negotiators for prohibition of export taxes, or
their binding, or prohibiting quotas, MEPs and export bans
[Comment – without binding, tariffication alone will not work ]
 Instead, open to strengthening Art 12 along present lines
[Comment – given the record on notifications, will this ever work?]
[Comment – likewise, how effective will be analyses of impact and
consultations based on that?]
One concrete proposal (Japan 2000) - similar to the TRQ on import
side – require maintaining some level of export, based on historical
X/Q ratio
 Also, define objectively terms like “temporary” (e.g. 2 months), to
prevent market panic as in 2008 and 2010
Proposals/responses to curb price volatility
National policies/responses
 Policies and programmes for increased food self-sufficiency
 Expanding food reserves (emergency and price stabilizing)
 Looking for bilateral/RTA Membership with net food
exporters
 Government to government deals/STEs are more active
 Some looking for leasing lands far away
Comment – Some consider all these to be collateral damages
from reduced confidence on world food markets?
Global responses – proposals (1)
 Globally coordinated food reserves maintained at
regional/national locations, including funds (UN meeting at
Dublin May 2010, IATP – call for studies)
 IFPRI proposal from 2008 - Physical and virtual global food
reserves (some physical reserves, but importantly fund to
curb excessive price movement in futures markets)
 Regulating speculation in food commodities and over-thecounter derivatives (Olivier De Schutter, the UN Special
Rapporteur, France, G20, UNCTAD TDR 2009)
Global responses – proposals (2)
France-Brazil joint position “price volatility and food security”
– Actions (Oct 2010)
 Monitoring global cereal stocks for transparency, avoid
panics, informed national responses (FAO, others should do)
 Encouraging creation of national and regional stocks
 Encouraging creation of innovative financial mechanisms to
protect family farmers from price volatility, including through
the use of price guarantee mechanisms;
 Improving the regulation of agricultural commodity
derivative markets; and
 Attenuating the effect of price volatility on the most
underprivileged
Global responses – proposals (2)
Extraordinary session of the IGGs on rice and grains
24 Sept. 2010, FAO, Rome
Problems identified and where solutions have to be found
 Lack of reliable/up-to-date info on crop S-D, stocks and
export availability
 Insufficient market transparency at all levels (also in futures
markets)
 Growing linkage with and impact of “financialization” on
futures markets
 Unexpected changes triggered by national food security
situations
 Panic buying and hoarding
In conclusion
 High volatility + high food prices more frequent (no longer a 2575 feature of 1970-2004 – it is becoming 40-60)
 Export restrictions by large exporters did play a role in volatility
– but cant conclude what share
 Spikes and restrictions undermining trust in world food markets
 As a result, increased attention to response measures
 Global - better information/data to reduce panic (as in recent
months)
 Global -new instruments (reserves, futures)
 National – reserves, self-sufficiency etc
 Some of these can be costly for long run (collateral damage)
 How much can trade rules contribute to?