Impact of agricultural export restrictions on prices in importing countries

During the commodity price spikes in 2007-08 and 2010-11, several countries implemented temporary export restrictions on staple foods in an attempt to protect domestic consumers from rising and volatile prices. The impacts of these policies, however, are not limited to the countries that are instituting them they can also influence consumer prices in their trading partners. This study analyses whether the impact of export restrictions was different in countries that were traditionally more dependent on imports from the restricting country than in countries that imported a smaller share. Four export bans are considered: the maize ban in Argentina, the rice bans in India and Viet Nam, and the wheat ban in the Russian Federation. Using an error correction model in a panel framework, the study identifies the long-run impacts of export bans by showing whether the introduction of these bans caused a structural break in the long-term relationship between prices in international markets and consumer prices in domestic markets. The analysis demonstrates that the effects of an export ban were more pronounced in the group of countries that traditionally imported a higher share from the restricting countries than in countries with a lower import dependency. The results show that, even though export bans are temporary in nature, they can have long lasting effects.