It’s just been announced that Malaysia will now halt sales of live chicken to its neighbour Singapore from June onwards. Malaysia supplies the island nation a third of all its live poultry. This is probably not such a world crisis by itself since food comprises just 21% of a Singaporean’s consumer price basket, and meat- of which chicken is the largest consumed meat, only 0.1%. Food inflation is expected to be in the 4-6% range this year anyway and this will only add that likelihood. What it does highlight is the growing prevalence of emphasis on food security over export earnings. In that sense Malaysia just joins a list of countries that are suddenly placing bans on exports of food items that they fear they may face a domestic shortage of.
Prices of chicken rice- sometimes known as Hainanese Chicken Rice- a dish made with poached chicken, a ginger chilli garlic oil and rice with soy sauce- served in every spot from hawker stalls to 5-star hotels and fine restaurants, are expected to go up, naturally. It’s pretty much the national dish of Singapore and it is ubiquitous. Singapore does import just under half of their chicken supply from faraway Brazil, and they will find alternative sources from amongst their other suppliers undoubtedly, but the move is symptomatic of greater protectionism- especially from food producers.
Indonesia, under pressure to bring down the soaring domestic prices of cooking oil, had instituted a blanket ban on the export of palm oil on 28th April. This sent shock waves through the edible oil markets since Indonesia is the world’s largest supplier of palm oil. Even though the ban has been lifted quite quickly (after only 3 weeks) it does show the panicked responses that governments are having to food inflation that is rippling globally. The prices of edible oils have surged because of the Russia-Ukraine war: Ukraine is a major supplier of sunflower oil and production and supply have suddenly faced disruptions- unsurprisingly. The thing about palm oil is that it comprises one third of the world’s vegetable oil market and is used in a variety of goods- from cooking oil and margarine to soaps and shampoos. Any shortage in supply would cause downstream shortages and price hikes even in the cosmetics industry. The lifting of the ban was announced by the Indonesian President himself but it’s unlikely that shipments would start again immediately until clarifications are received about new rules designed to secure domestic supply first.
India announced an immediate ban on wheat exports on the 13th of May- barely a day after announcing that it would be sending delegates to nine wheat-importing nations to explore the possibilities of boosting wheat exports. On that list were Morocco, Tunisia, Indonesia, the Philippines, Thailand, Vietnam, Turkey, Algeria, and Lebanon. The earlier decision (to export wheat) was taken as a chance to build up markets following the uncertainties surrounding wheat exports from Ukraine- a major producer. And despite India not being a major supplier to world markets the announcement of the ban sent prices soaring. This was attributable to the prevailing tight conditions globally. India’s confidence in being able to export wheat was shaken overnight and a decision was taken to ban all exports (after the honouring of pre-existing commitments). A dozen countries got in touch with the Indian Ministry of External Affairs directly to check whether their orders would be honoured and a further 47 countries have hinted that they would like to import Indian wheat.
The ban came on the back of a severe heatwave through north and central India which sent temperatures to 120 year highs and which caused abnormally high yield losses in Punjab, Haryana, Uttar Pradesh and Madhya Pradesh- the traditional wheat growing areas. Much of the crop has shrivelled in the heat and some has become unfit for human consumption. Estimates are for a 7-10% fall in production this year. The scramble for procuring Indian wheat is illustrative of the desperate situation the world finds itself in: Indian wheat is usually shunned for poor quality but there is a growing food crisis globally and this is no time to be choosy. The problem is also partly manufactured: under the excuse of ensuring domestic food security the Indian government is quietly using wheat exports as a mean of conducting ‘economic diplomacy’- i.e., leveraging food exports to gain influence with other nations by favouring one set of orders over another. The US has already called out India for announcing the ban, as has Europe.
But it isn’t just these three countries that have slapped bans in the very recent past: Hungary banned all grain exports. Serbia restricted the quantities of wheat, corn, flour, and cooking oil slated for export. Bulgaria said it would increase grain reserves and might restrict exports. All this happened in March/April this year immediately after the Russian invasion of Ukraine. Argentina capped the volume of corn and wheat that could be exported in December 2021 in a bid to head off domestic grains shortages and tamp down rising food values in the country. The decision had sent U.S corn prices to their highest in 6-1/2 years. They also said it would establish a mechanism to control domestic wheat prices and temper food inflation.
Food inflation has come unexpectedly. Part of this is because of the Russia-Ukraine conflict but part of this is due to climate change. The combination of the two happening at the same time has created a wave of food insecurity globally that threatens to worsen an already gloomy economic scenario. Sri Lanka is facing food shortages with farmers now producing just enough to cover their own dietary requirements. This is due to the mounting problems of the debt crisis that stares them in the face. It’s evident that the food crisis is not going to disappear immediately and that it could set off unrest in many areas of the world if not addressed with urgency. The chicken rice crisis may be a miniscule part of it but it doesn’t stand in isolation.