Thursday, April 24, 2008

Food Inflation Watch: Maize export ban by Nepal

The Nepali government has banned export of wheat from the country amidst rising food crisis in the international market. This move comes on the backdrop of shortage of wheat in the country because producers were increasing exports to Bangladesh, where wheat price is much higher than in Nepal. This reduced wheat supply in the Nepali market and shot up prices. Nepali flour mills, bakeries, biscuit, and noodle factories are expected to benefit from this move.

India, Vietnam, China, Bangladesh, Thailand, Philippines, Egypt, and many others have either imposed export ban or quotas and liberalized imports. Meanwhile, there have been riots in Latin America, Asia, and Sub-Saharan Africa. If all countries follow suit, then individual acts would stall international trade. This is going to put another hurdle in passage of the Doha Round, where agricultural sector reform has been a bone of contention between the West and the developing countries. What would be an acceptable solution?

My reaction: now even Nepal is fueling speculative drive in the international market. Prices began to rise rapidly after India impose ban on exports, followed by China, Vietnam, Thailand, and many others. More worse to come. The countries are ruining their own markets!

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