Ukraine to Ban Wheat Exports from mid-November

Ukraine will begin restricting wheat exports from 15 November onward, the country’s agriculture minister announced on 24 October. The news comes as the country - one of the world’s largest wheat exporters - attempts to deal with the fall-out of a poor harvest and rising prices for staples.

Both Russia - another major exporter - and Ukraine have restricted exports of wheat in the past, with their 2010-2011 limits prompting vociferous criticism from their trading partners. Both countries scrapped these policies in June of last year.

Unlike Kiev, however, Moscow is not yet expected to impose any new export restrictions on grains of its own, according to recent comments by President Vladimir Putin.

Prices for contracts to purchase wheat in December have risen slightly - but not dramatically - since the news broke last week that Kiev was considering limiting its exports of the staple. Back in 2010 when Russia announced its own restrictions, prices surged to a 23-month high as a result.

Export restrictions in periods of high prices or poor harvests have been blamed for exacerbating hunger for the most vulnerable. Food riots followed such measures in the past and, some analysts say, may have contributed to the ‘Arab Spring’ uprisings. Delegates at the WTO circulated two separate proposals to address export restrictions last year ahead of the WTO’s December ministerial conference, only for both proposals to ultimately be dropped.

Not yet a repeat of 2008 food price crisis, experts say

Ukraine has “very large” stocks, according to Abdolreza Abbassian of the UN Food and Agriculture Organization, and could “easily” export six to seven million tonnes. The FAO official chalked up the ban on exports to domestic politics and an upcoming election.

The fundamentals of the wheat situation, in Abbassian’s view, do not suggest a repeat of “what happened a few years ago.” While stocks, he explained, are very low globally, production both in some importing countries and others, such as France, has improved. This could lead Europe to export more than anticipated and for others to perhaps import less if their domestic production has increased.

However, prospects for agricultural production elsewhere are looking grim. Australia’s harvest is likely to be down by 28 percent when compared with last year, and a key wheat producing region in Russia is facing a drought. Abbassian observed, though, that the Australian comparison was with a record year for the country. Such news, when taken in isolation, could be “horrifying,” but when the numbers are added up there was less reason for immediate concern, he said.

Food importing countries worried

Several developing country trade officials told that countries should have a right to restrict exports in the case of a shortage of critical foodstuffs. However, they observed, such restrictions do affect others and should be taken with caution and consultation. The WTO’s Agreement on Agriculture governing the issue stipulates as much.

WTO rules require that countries imposing export restrictions notify other members, with an exception for developing countries that are not major exporters. One major wheat importer told that consultations with Ukraine have not yet taken place.

Although Ukraine has submitted notifications to the WTO in the past on measures restricting exports, sources told that an announcement for the new measure has not yet been circulated to members.