Rush to restrict trade in basic foods

Saudi Arabia cut import taxes across a range of food products on Tuesday, slashing its wheat tariff from 25 per cent to zero and reducing tariffs on poultry, dairy produce and vegetable oils.

On Monday, India scrapped tariffs on edible oil and maize and banned exports of all rice except the high-value basmati variety, while Vietnam, the world’s third biggest rice exporter, said it would cut rice exports by 11 per cent this year.

The moves mark a rapid shift away from protecting farmers, who are generally the beneficiaries of food import tariffs, towards cushioning consumers from food shortages and rising prices.

more from the Financial Times (UK)

But economists warned that such actions risked provoking an upward spiral in global food prices, which have already been pushed higher by rising demand from emerging markets like China and India and pressure on land from the growing production of bio-fuels.

“There are so many speculators in the market that when something happens to affect supply, there is an immediate reaction,” said Paul Braks, commodities analyst at Rabobank, one of the largest agribusiness lenders.

“Markets are very tight, and when you see net exporters imposing these export restrictions to stabilise domestic food prices, it makes the market nervous.”