The effects of food export restrictions on the domestic economy of exporting countries: A review

Abstract

This review summarizes empirical evidence for the effects of food export restrictions on domestic food prices and the welfare of food system actors in the local economy of exporting countries. Evidence suggests that food export restrictions offer, in some cases, a temporary respite from price surges by boosting short-term domestic supply but have unintended negative consequences for food producers in most cases. The net welfare effect of food price stabilization through export restrictions depends on the net food buyers' share relative to the net food sellers' share in the economy, the relative change in producers' versus consumers' prices and the contribution of the restricted food item to household income and expenditure. In the absence of a generous producer price support program, the short-term welfare effect generated by export bans is minimal and, in some instances, negative particularly for rural residents. Food export restrictions also prevent domestic producers from taking advantage of the high international prices for agricultural commodities, stimulating the agricultural sector and boosting food production. Finally, food export restrictions lead to high economic costs in terms of lost producer revenue, forgone agricultural investments, high enforcement costs, and high fiscal costs for procuring and maintaining larger than normal food reserves.