Adding Fuel to the Fire: How export restrictions can exacerbate climate change’s impacts on global food security

Climate change affects food security through rising temperatures, changing rainfall patterns, and increasingly frequent extreme weather events.

Although the impacts of climate change on agricultural production will differ from region to region, the Intergovernmental Panel on Climate Change underscores that, overall, higher temperatures mean that most countries will experience lower agricultural yields and production. This result will inevitably impact consumers globally through higher prices.

In response, food-producing countries often impose agricultural export restrictions to ensure that enough food is available domestically-and at lower prices. While this can benefit local consumers in the short term, it can lead to a reduction in the supply of food in international markets. This lower supply can exacerbate the impacts of climate change on global food security by further increasing international food prices and harming consumers in importing countries. The poorest countries, many of which rely on international trade to feed their population, are hit hardest.

This cascading phenomenon highlights the fact that global trade has a key role to play in ensuring food security at the global level.

Take climate variability, for example. Climate variation explains a third of yield variability across the world. Low yield variability is important for food security since it leads to stable farmer incomes and food supply, as well as stable prices for consumers. International trade can help adapt to inter-annual yield variability. Here is how: when one region has a crop failure (for instance, due to a drought or a flood), international trade would allow the reallocation of supplies from regions of abundance, thereby minimizing the fluctuation of food prices.

However, certain trade measures can have the opposite effect, potentially exacerbating food insecurity in vulnerable regions.

For instance, there is a risk that countries could apply trade-restricting policies in response to climate change-related shocks that exacerbate the impact of these shocks on food security at the global level.

During the 2007/2008 food price crisis, several countries applied export bans or restrictions on food and agricultural products to ensure sufficient supply in local markets. These policies exacerbated global supply shortages and price pressures in global grain markets, particularly for rice. Indeed, export restrictions can explain as much as 30 % of the observed increase in food prices over the first half of 2008.

One study shows that the imposition of even a temporary export tax of 30% on wheat and maize exports in response to extreme weather events would increase prices by a further 17 percentage points in the context of raising global demand for these commodities. The study also shows that higher price increases would occur under the assumption of a more widespread use of export taxes, higher export tax rates, or outright export bans.

But big agricultural exporters are not the only players who should exercise restraint during times of high food price volatility: big agricultural importers also have a role to play by not resorting to panic buying and hoarding food.

One study suggests that the 2007/2008 food price crisis was exacerbated by both agricultural export restrictions and import demand surges. If both agricultural exporters and importers avoid overreacting, then prices would, in principle, only rise more modestly on the back of the initial pressures. But once one of them imposes an agricultural export restriction or rushes to buy up food before others do, it is perfectly rational for others to follow suit. Going forward, international cooperation and trust will be key to avoiding exacerbating the impacts of climate change and extreme weather events on food prices.

Governments should take several actions to avoid adding fuel to the fire and exacerbating the impacts of climate change and extreme weather events on global food security.

Big exporters should avoid restrictions.

First, big exporters should act responsibly and refrain from imposing agricultural export restrictions. This recommendation is in line with the World Trade Organization (WTO) Food Security Declaration adopted in June 2022, which underscored the need for agri-food trade to flow and reaffirmed the importance of not imposing agricultural export restrictions in a manner inconsistent with relevant WTO provisions. Importantly, WTO members resolved to ensure that "any emergency measure introduced to address food security concerns shall minimise trade distortions as far as possible; be temporary, targeted, and transparent; and be notified and implemented in accordance with WTO rules."

It is worth noting that, under current WTO rules, agricultural export restrictions are not prohibited per se but are subject to requirements. The General Agreement on Tariffs and Trade allows for certain temporary export restrictions. The WTO Agreement on Agriculture requires the restricting country, including those that are net food exporters, to consider the impact on importing countries' food security and to notify the WTO as early as possible.

Food purchases by least developed countries (LDCs) should be exempted from agricultural export restrictions.

Under the suboptimal scenario in which big exporters end up resorting to agricultural export bans and restrictions, they should exempt food purchases by LDCs from such agricultural export bans and restrictions. This exemption would allow LDCs to buy food from WTO members that have restricted their exports of food products to all other countries and help shield LDCs from global food price increases that result from major producers applying export restrictions. LDCs would still be able to import restricted products from the producing countries, in theory, at the lower prices prevailing in those countries' markets. However, while an exemption may help LDCs to continue to import food, thereby ensuring food availability in LDCs, it will not solve the challenge that poorer consumers in these countries face in being able to afford this food.

Big exporters should also consider exempting food purchases by other vulnerable economies, including net food-importing developing countries and small island developing states.

Big importers should refrain from panic buying.

Third, big importers should act responsibly and refrain from panic buying and hoarding food. Going forward, international cooperation and trust-building actions between big exporters and big importers will be essential to avoiding exacerbating the initial pressures of climate change and increased extreme weather events on global food security.

Governments should strengthen agricultural information systems.

Governments should support agricultural market information systems that provide reliable, accurate, and timely information on agricultural markets, helping to address the trust deficit that characterizes agricultural markets. Since past food crises have showcased that governments do not always trust markets and their trade policy responses tend to exacerbate the initial impacts of climate change and extreme weather events on food prices, it is essential to have reliable, accurate, and timely information on the current state of agricultural markets.

There are some encouraging signs on the horizon. For example, in June 2022, WTO members adopted a ministerial declaration acknowledging the positive contribution of the Agricultural Market Information System (AMIS), an inter-agency platform to enhance food market transparency and policy response for food security. AMIS provides key information on four crops (maize, wheat, rice, and soybean), including on world production, stocks, exports, and imports of each of these crops.

In the past, governments have supported the strengthening of agricultural market information systems worldwide through country work implemented by the Food and Agriculture Organization of the United Nations in Bangladesh, India, Nigeria, the Philippines, and Thailand. Further support by governments could be directed, for instance, to capacity-building projects to streamline the methodologies used for estimating crop areas, production, and stocks according to international best practices.

LDCs should implement domestic policies to protect themselves from global food price volatility.

LDC governments should seek to reduce their vulnerability to global food price volatility through a multifaceted approach to food security. Countries should encourage diversification of the sources of their imports to mitigate the risks that an extreme weather event affecting one major global producer and exporter cuts them off from key food staple crops such as rice or wheat.

Moreover, they could request support from various stakeholders, including development partners, to help them boost domestic agricultural production and productivity. This approach would reverse the decline in domestic and international funding for agriculture, food security, and rural development in developing countries and LDCs, as well as promote new investments in LDCs' agriculture sectors.

Finally, LDCs could look into diversifying diets away from high-risk commodities such as rice and wheat toward more climate-resilient domestic staples to reduce their dependency on imported crops, including by developing domestic supply chains for vegetables and traditional staples.

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