World Bank warns vs trade restrictions on food

MANILA, Philippines — The World Bank has warned policymakers against the imposition of trade restrictions that put food security at risk as lockdowns disrupt supply chains.

In its April Commodities Outlook, the bank said while prices of agricultural commodities are expected to remain broadly stable this year amid record high production levels of most staple food, disturbances to trade and distribution of inputs such as fertilizer, pesticides and labor may eventually affect supply.

The multilateral bank noted that disruption of supply chains  have already affected exports of perishable products, such as fruits and vegetables, from emerging markets and developing economies.

“In addition to the devastating human toll, the economic impact of the pandemic will dampen demand and cause supply disruptions, negatively affecting developing countries that rely heavily on commodities,” said Ceyla Pazarbasioglu, World Bank Group vice president for Equitable Growth, finance and institutions in a statement.

“Policymakers can take advantage of lower oil prices by undertaking energy-subsidy reforms to help free spending for urgent pandemic-related purposes. These reforms need to be complemented with stronger social safety nets to protect the most vulnerable segments of society. Policymakers must resist the urge to impose trade restrictions and actions that put food security at risk, as the poor would be hit the hardest.”

The bank noted that whole prices of agricultural goods are expected to be stable in line with high production, concerns about food security remain, prompting some countries to announce temporary trade restrictions such as export bans, while others began stockpiling food commodities through accelerated imports.

The report noted that export restrictions imposed by countries for staples like rice would impact heavy importers like the Philippines.

“Recent announcements of trade restrictions by some key exporters like Russia for wheat and Vietnam for rice, as well as excess buying by some importers like the Philippines for rice, Egypt and Saudi Arabia for wheat, have raised concerns about food security,” World Bank said.

World Bank said that although these measures have not yet been used widely, they could lead to problems if they are used extensively.