Major Exporters Pledge to Avoid Disrupting Global Food Supplies

(Bloomberg) -- Some of the world's largest agricultural exporters are growing concerned that the coronavirus pandemic has caused a worrisome rash of government policies that threaten to disrupt the global supply of food.

In order to prevent a food crisis, a group of nearly 50 governments is preparing to sign a pledge aimed at ensuring supply chains remain orderly and that officials exercise restraint with any trade restrictions.

The initiative is critical, according to the group -- which includes the European Union, Canada, Japan and Brazil -- because the threat of successive export bans aimed at protecting domestic food production could lead to soaring prices and shortages. There's plenty of food to go around, as long as protectionism doesn't become more entrenched, it said.

Export restrictions would “adversely affect food availability and result in price spikes, increased price volatility, and lead to shortages of important food products,” according to a draft of the agreement circulating among World Trade Organization members in Geneva, a copy of which was obtained by Bloomberg.

‘Food Insecurity'

“The adoption by many members of successive export restrictive measures to secure its own food security would lead to a widespread food insecurity crisis due to the disruption in global agricultural trade supply chains,” the document states.

The paper recommends a set of eight policy actions that governments can take, including keeping supply chains open and connected; avoiding export restrictions and unjustified trade restrictions on food; and ensuring any emergency restrictions are targeted, proportionate and temporary.

Participants in the agreement include: the EU, Japan, Brazil, Canada, Australia, Mexico, South Korea, New Zealand, the U.K., Switzerland, Qatar, Chile, Costa Rica, Colombia, the Philippines, Hong Kong, Malawi, Singapore, Ukraine, Paraguay and Uruguay.

As of Tuesday afternoon, the U.S., China, India and Russia had not signed on to the initiative.

Though the measures are non-binding, the pact is viewed as an important initiative aimed at making sure the health crisis doesn't spawn a food emergency.

The coronavirus has already brought into sharp focus the fragility of international supply lines for essentials like food and medical goods, and many governments are actively reassessing the security of their domestic food stockpiles.

What Happens When Bread Is Scarce and Grain Exporters Speak Up

Over the past month roughly a dozen countries have imposed Covid-19-related export bans on agricultural products like buckwheat, onions, garlic, legumes, eggs, beans and certain grains.

Such measures are unwarranted because there's no food crisis, at least not yet, according to the group.

“Lessons from previous crises have taught us that export restrictions increase food insecurity for vulnerable populations,” according to the group's draft agreement. “The world's poor, including agricultural workers, would bear the brunt of increased export restrictions.”

Generally, global food supplies are in good shape and global cereal stocks are expected to reach their third-highest level on record this season, according to the a recent report issued by the Rome-based Agriculture Market Information System.

Last month, EU Trade Commissioner Phil Hogan told G-20 leaders that “there is no global supply shortage at this time” and food export restrictions are “completely unjustified.”

Nevertheless, movement restrictions aimed at curbing the spread of coronavirus could limit the availably of migrant labor to pick crops, disrupt food processing and transportation, increase delivery times, boost prices and reduce availability of even the most basic food items, according to a report issued Tuesday by the UN Food and Agriculture Organization and World Food Program.

©2020 Bloomberg L.P.