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Russia wheat ban raises food security fears

Woman passes by a church while heavy smoke from fire caused by severe heat is seen in the background, outside the town of Vyksa Reuters

Russia, the world's third largest wheat exporter, has banned grain exports until December after drought and the worst heatwave on record ravaged millions of hectares. The UN food agency has warned of a “serious” situation on world food markets. However, experts disagree on the ban’s impact on world food security.

Wheat prices are hitting two-year highs in commodities markets after Prime Minister Vladimir Putin announced a ban on wheat exports until December 31, to keep prices down at home. The drought in Russia has destroyed some ten million hectares of land.

Buoyed by bumper harvests in 2008 and 2009, cheap Russian wheat has massively expanded sales to global markets in recent months and a ban could raise bread and flour prices across the globe.

Abdolreza Abbassian, economist and secretary of the Intergovernmental Group
on Grains at the UN Food and Agricultural Organisation says "a situation which was not serious has now become serious."

In Johannesburg, marketing director Christou Booyens of the company Grain Link says that the crisis in Russia threatens food security in Africa.

“Not in terms of the availability of food but in terms of the price that the food is available at,” Booyens says. “It’s definitely a threat, I think that a lot of poor people will find in difficult to find what they need compared to four weeks ago.”

The world is still haunted by the global food price crisis of 2007-2008 when food prices rocketed on the back of droughts in developed countries and concerns about rapidly expanding global demand.

However, the director of the Washington-based International Food Policy Research Institute, Maximo Torero, says food security fears are exaggerated.

Terero does not expect prices to increase much in East Africa. “In East Africa, I don’t see much of a problem,” he says, “We know from previous cases that wheat is not an important commodity in terms of import.” He adds that the only “sensitive” commodity is rice because East Africa imports substantial amounts of rice.

Torero believes prices will spike in Egypt because it imports from Russia. However, the country has wheat reserves and if it handles the situation correctly, the spike will phase out, he says.