Ukraine, one of the world’s top grain exporters, has announced it will ban wheat exports if its sales exceed limits agreed with traders, according to Taras Vysotskiy, the deputy economy minister for agriculture.
The move was preceded by a March call from Ukrainian bakers and millers to limit grain exports to maintain bread prices in light of the coronavirus crisis.
In response, Maria Chaplia, European Affairs Associate, said that banning exports in order to ensure unimpeded and sufficient supply to the domestic market is a well-intended policy but one that will have adverse economic effects in the long-run.
“Export bans are a natural response to the emergency situation caused by the pandemic. The aim is to prevent a shortage of supply and spikes in grain prices. But the worry is that this move will lead to losses in the future in the form of hijacked relationships with trading partners and damaged export capacity,” said Chaplia.
“Grain exports are a crucial part of Ukraine’s economy, and banning or restricting them will hurt domestic exporters. It is likely that they will ask for some kind of subsidy from the state to sustain their production. Ukraine, a country simultaneously at war with Russia and coronavirus, indebted in and out, cannot afford it.
“But it’s not just Ukraine. Multiple countries have signalled their willingness to turn inwards. Recently, Romania introduced a ban on the export of grains and processed grains (including bakery) outside the European Union, and Romanian farmers have already voiced their concerns.
“Though tempting, economic nationalism is incredibly expensive, especially in the long run. It is a wolf in sheep’s clothing that will push the Ukrainian economy even further down.”