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Pandemic-Driven Hoarding Will Prove Fatal To Nations

5 Apr 2020 4:01 pm
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Mumbai (Commodities Control) – Covid-19 pandemic is fanning the risk of rising food inflation in most of the countries. So the importing nations are busy ensuring enough food grain stocks, while the exporting countries have halted any new deals to secure domestic silos.

Fortunately for India, food grain production along with stocks is comfortable at the moment to avoid any panic of food shortage.

Lockdown and trade-travel restrictions across the globe has led hoarding of food items. Countries like Algeria, Morocco and Philippines are currently working towards ensuring ample food grain supplies for their respective citizens.

However Russia, a prominent wheat producer, and Vietnam, a major rice exporter, have ban any exports to the World. This is likely to create problems for these importing nations if the crisis takes longer than anticipated to resolve.

Nations like France are facing the challenge of shortage of truck, trains and drivers. There’s paucity of laborers at docks-ports.

Egypt, World’s biggest food grains importer, has officially raised the food grains strategic reserves in its country. While Philippines, that is largely dependent on rice imports from Vietnam, is working towards securing its food stocks.

Last week, Saudi Arabia placed additional orders for purchase of coarse cereals. As per Agricensus data, Algeria is paying pay up 8% extra for purchase of wheat as compared with 15 days back. While Turkey had to purchase wheat at 10% higher cost from the World markets.

It is interesting to note that prices of most commodities have declined in past few weeks. However hoarding by consumers and countries alike is making food grains expensive despite ample global supplies.

CBoT wheat prices have shot up by 10% to $5.50 per Bushel in span of 2-3 weeks, while price of benchmark Vietnamese rice has upped 15% to touch $410/Tn.

However experts do not see prices elevated for a long time. Global stocks for rice is at record high levels, while World’s wheat stocks are sitting at 27.8 crore tonnes, 3% higher than 5 year’s average stock.

While some nations are faced with challenge of stocking up adequate food supplies, nations like Russia have hurdles of a different type.

Russia is standing face-to-face with recessions due to crash in crude oil prices. Ruble, the Russian currency, has slipped 16% as compared with USD. Weakness in currency is making wheat exports lucrative for a Russian farmer. In view of this situation, the Russian Government placed an export limit on wheat of 70 Lk Tonnes from April-June.

Similarly lockdown in India has halted rice exports from India. This shortage of rice in world markets and rising demand of Philippines, has taken prices of Thailand rice to 7 year highs.

According to experts India’s food grains situation is comfortable, although millers are facing a shortage of raw material for processing. Although this is only temporary as the market yards are close due to lockdown. The nation has record 10 crore tons of wheat which is with farmers at the moment.

However to avoid a situation of scarcity and panic, UN-FAO has asked the supplier nations to refrain from prohibiting exports.

(Commodities Control Bureau)

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