Monday 6 April 2020 ★ FINANCIAL TIMES 3
senior research fellow at think-tank the
International Food Policy Research
Institute and former chief economist at
theUSDepartmentofAgriculture.
Some exporting countries, especially
those hit by the turmoil in emerging
market currencies, have taken steps to
limit exports as they become worried
about domestic food price inflation,
which has worsened because of panic
buyingatsupermarkets.
In Russia, the rouble’s 16 per cent fall
against the dollar means farmers do not
want to sell their wheat to domestic
flour millers, instead opting for export
markets where they can earn dollars.
Moscow last week proposed imposing a
quota of 7m tonnes on wheat exports
between April and June, as well as
releasinggrainfromstatereserves.
“The rouble has weakened signifi-
cantly and the authorities were getting
concerned, as many [food] items have
become more expensive,” said Andrey
Sizov at grain consultancy SovEcon.
“There has been a lot of pressure onauthorities to do something as the mill-
ers have been unhappy as well as live-
stock producers who have to feed their
animals.”
While Russia’s cap on grain exports
was regarded as mostly symbolic as it
was in line with analysts’ expectations
of what the country would have
exported anyway, it set many buyers on
edge.
Meanwhile in Vietnam, rice industry
analysts said the government’s decision
to restrict new export contracts was a
precautionary measure in the wake of
panicbuyingbylocalconsumers.
“In some places, people became very
nervous and they went to the market to
buy rice at any price,” said Dang Kim
Son, a former director of Vietnam’s
Institute of Policy and Strategy for Agri-
cultureandRuralDevelopment.
Professor Vo Tong Xuan, one of Viet-
nam’s leading rice experts, said Hanoi’s
decision to restrict exports meant the
country’s rice growers were missing out
on the opportunity to sell at a higher
pricebeforepricesfallback.
The farmers “have been complaining
somuch”inrecentdays,hesaid.
That leaves economists warning of
the potential negative consequences of
any further tightening in international
trade.
“Exportrestrictionsinourperception
areamistake.Itwillonlyexacerbatethe
situation,” said Maximo Torero, chief
economist at the UN FAO. “At this
point countries should be very careful
to assess the situation and keep trade
flowing.”
Additional reporting by Pham Hai Chung in
Hanoiyear’s record high, enough to cover four
months’worthofdemand.
Despite this, export restrictions,
prices increases and a rush to stockpile
could still have a negative effect, ana-
lystswarn.
“We could create a crisis when there
actually isn’t a crisis,” said Joe Glauber,and supplies remain plentiful. Global
wheat inventories for 2019-20 are
expected to be 277m, slightly higher
than the year before and 3 per cent
above the five-year average, according
to the UN Food and Agriculture Organi-
zation.
World rice stocks are close to lastE M I KO T E R A ZO N O— LO N D O N
H E BA SA L E H— C A I R O
J O H N R E E D— B A N G KO K
Reda Hachelaf has had a hectic few
weeks. The chief executive of SOPI, an
Algerian couscous and pasta maker, has
been running flat out to meet increased
demand from retailers who have seen
their shelves stripped bare by panic-
stricken shoppers. The quantities he
supplied in one month are now being
soldintwoweeks.
“The problem is that there is this sud-
den increase in demand because fami-
lies are stockpiling, so demand has been
compressed in a shorter period of time,”
hesaid.
The widespread stockpiling in cities
fromtheMaghrebtoManilabyconsum-
ers looking to ride out the coronavirus
pandemic has driven up grain prices,
pushing food security up the agenda
both for food-exporting countries and
thenationsthatrelyonthem.
Countries like Algeria, Morocco and
the Philippines have stepped up efforts
to top up their grain reserves as big pro-
ducers including top wheat producer
Russia and the world’s third-largest rice
exporter Vietnam imposed restrictions
on overseas sales. Large importers have
also been spooked by logistical bottle-
necks including a lack of truck and train
drivers and port staff in France, another
leadingwheatexporter.
In Egypt, the world’s largest grain
buyer, President Abdel Fattah al-Sisi
last week ordered an increase in the
country’s strategic reserves of staple
goods, while in the Philippines, which
relies on Vietnam as its largest rice sup-
plier, cabinet secretary Karlo Nograles
said the government planned to import
ricetoshoreupsupplies.
Saudi Arabia last week placed extra
ordersforbarley,Algeriapaid8percent
more than it did a fortnight before on
several cargoes of wheat while Turkish
traders paid prices that were 10 per cent
higher than a fortnight ago, according to
Tom Houghton, an analyst at price
assessmentfirmAgriCensus.
Although other commodity markets
have plunged in recent weeks, stockpil-
ing has supported grain prices. Wheat
traded on the futures market in Chicago
has risen 10 per cent since mid-March,
reaching $5.50 a bushel, while physical
prices for French wheat have increased
11percent.BenchmarkVietnameserice
prices have rallied 14 per cent to $410 a
tonnesincethestartoftheyear.
This has brought back memories of
past political instability driven by food
price rises. In 2007-08 severe droughts
around the world drove prices up, lead-
ing to food riots in African countries. At
the time, some countries imposed
export restrictions that also pushed up
market prices of staple goods. A wheat
export ban by Russia in 2010 also led to
asurgeinfoodpricesintheMiddleEast,
contributing to the political unrest of
theArabspring.
The key difference is that now most
producers have had good grain harvests
The global wheat trade
(bn)
Importing
countryWheat exporting
country to its top
five destinationsGraphic: Liz Faunce
Source: International Trade CentreAustralia
Canada
France
Russia
US
AlgeriaAzerbaijanBangladeshBelgiumChinaEgyptIndonesiaItalyJapanMexicoNetherlandsPhilippinesSouth KoreaSpainSudanTaiwanTurkeyUSVietnamTop wheat exporters
and importers
(bn) RussiaCanada US FranceAustraliaImportersExporters Egypt
IndonesiaAlgeria
ItalyPhilippinesCO R O N AV I R U S
M I C H A E L STOT T
L AT I N A M E R I C A E D I TO RFourteen Latin American and Carib-
bean countries have requested urgent
help from the IMF as the region is
braced for its worst recession in 50
years, according to a senior Fund
official.Alejandro Werner, head of the western
hemisphere department, told the
Financial Times that Latin America was
particularly exposed to the impact of
the coronavirus crisis because many of
its economies were struggling even
before they were hit with multiple
shocks from weaker commodity values,
theoilpricecrashandcapitalflight.
“You never had severe recessions in
all the countries together and therefore
this will make for the worst growth year
in Latin America in the last 50 years,”
Mr Werner said. “With high probability
thatisgoingtobethecase.”
The14nationshaveaskedtheIMFfor
helptotalling$4.48bnusingafundfacil-
ity, which allows disbursement of up to
half of a country’s IMF quota per year
with minimal conditions. Mr Werner
declined to name the countries but said
some had discussed requesting a full-
blown IMF programme once the effects
of the virus were better known. Mexico
and Colombia already had in place sub-
stantial flexible credit lines from the
fundbeforethecrisis.
The IMF says it has up to $1tn availa-
ble globally to help countries manage
the financial effects of the coronavirus
crisis and Mr Werner said this would
more than cover requests received so
far, without requiring additional special
drawing rights (SDRs), a proxy for for-
eign exchange reserve assets that are
madeavailabletoIMFmembers.
“There are talks about other
issues... new allocation of SDRs etc,”
he said. “Those are happening simulta-
neously but we in the staff are highly
concentrated on responding to the
requests that we have and for these
requests we have more than sufficient
resourcessofar.”
The coronavirus pandemic hit Latin
America relatively late compared with
Asia and E urope. The first infection was
only recorded on February 25 in Brazil
and the first death on March 7 in Argen-
tina, although a lack of testing means
thatthevirusmayhavespreadearlier.
Most of the region’s governments
responded by imposing lockdown
measures, with the notable exceptions
of Brazil and Mexico, whose populist
leaderstookamorerelaxedapproach.
One of the worst affected countries
has been Ecuador, which already had a
$4.2bn programme with the IMF to
prop up its shaky government finances
before the virus hit. The recent collapse
in global oil prices has wrought havoc
with its dollarised economy and the
country also has one of Latin America’s
highest totals of infections relative to
the size of the population, despite
havingimposedalockdownearlyon.H E N RY F OY— M O S C O W
M A X S E D D O N— N E W YO R K
When it comes to containing coronavi-
rus, the Kremlin has a solid plan: Rus-
sia’s president Vladimir Putin promises
everyone a month-long holiday;
regional governors have to come up
with painful restriction measures to
thenkeeppeopleintheirhomes.
“I have decided to prolong the official
non-work period until the end
of the month,” Mr Putin said in a brief
speech on Thursday. “Let me stress that
wages will be retained. Regional
heads... will have to plan out a set
of specific preventive measures that are
themostrationalfortheirregions.”
As the coronavirus pandemic
presents him with arguably the greatest
challenge of his 20-year rule, the typi-
cally hands-on president has been con-
spicuousbyhisabsence.
As Mr Putin distances himself from a
lockdown that looks set to plunge the
country into a sharp recession, regional
governors and local officials have been
thrustintotheleadershipvacuum.
None more so than Moscow mayor
SergeiSobyanin, who has emerged as
the public figurehead of Russia’s initia-
tives against Covid-19, overshadowing
other officials and shaking up the sys-
temoftop-downgovernment.
In a televised meeting last week, Mr
Sobyanin warned Mr Putin that govern-
ment figures showing low numbers of
infections underestimated the scale of
the outbreak. And last weekend he
announced Moscow would be placed
under near-total lockdown. These
moves have left other parts of the power
structurescramblingtofollowhislead.
“It’s a strange situation for the Rus-
sian government that it has to, in fact,
follow Sobyanin’s measures, and it cre-
ates some uncomfortable positions,”
said Tatiana Stanovaya, founder of
RPolitik,apoliticalanalysisfirm.
The result has been a muddled
approach in which some branches of
government have taken their response
to the extreme, while others have done
nexttonothing.
Ramzan Kadyrov, strongman leader
of Chechnya, has closed off the region
from the rest of Russia, and talked of
killingpeoplewhoviolatequarantine.
Just after Mr Putin ended his national
address on Thursday, three regional
governorstenderedtheirresignations.
Russia’s parliament had to rush
through a law last week making Mr Sob-
yanin’s lockdown measures legal post
facto.PrimeministerMikhailMishustin
saidhebackedthecurbs,butshiedaway
from imposing them nationwide, leav-
ing governors in the 84 other regions toimplement them individually. The
Kremlin rushed out a statement saying
it supported the Moscow mayor’s direc-
tives, and rebuffing claims that by law
only the central government could
imposerestrictionsonmovement.
“Sobyanin is responsible only for
Moscow, but it feels like he acts in a par-
allelrealitycomparedtothefederalgov-
ernment,” said Ms Stanovaya. “On one
hand, Sobyanin is a deputy head of
Mishustin’s co-ordination council, but
on the other hand he has autonomy,
answers directly to Putin and has a
directlinktothepresident.”
That role as the public figurehead,
overshadowing Mr Mishustin, who has
only been in office for 11 weeks, brings
notinsignificantdanger.
Yesterday Russia said it had 5,
cases and 45 deaths. While this is far
lower than other big European states’,experts say a surge in infections could
overwhelm the underfunded medical
system. At the same time, forcing
employers to shut while funding five
weeksofpaidtimeoffforemployeeswill
causemassbankruptcies,sayanalysts.
Mr Putin’s low profile stemmed from
a reluctance to take responsibility for
potentially unpopular measures, said a
former senior Kremlin official, who
addedthatthepresidentinitiallysought
todelegatethemtoMrMishustin.
Kremlin spokesman Dmitry Peskov
has stressed that Mr Mishustin’s cabinet
was given authority to introduce a state
of emergency — normally a presidential
prerogative — because it remained in
chargeofcombatingthepandemic.
“There is a co-ordinating commis-
sion, which is empowered to make the
decisionsthatitconsidersexpedient...
chaired by head of the government Mr
Mishustin,”MrPeskovsaid.
Mr Mishustin, however, was reluctant
to introduce stricter measures earlier,
prompting Mr Putin to act through Mr
Sobyanin,theformerofficialsaid.
Moscow accounts for 72 per cent of
Russia’s Covid-19 cases. After Mr Soby-
anin unilaterally placed the capital
under restrictions tougher than those
imposed by the national government,
MrPutinendorsedthem.
Yet few believe that the mayor acts
withcompleteautonomy.
MsStanovayasaid:“Sobyaninwillnot
moveafingerwithoutPutin’sassent.”Food security pushed up agenda as
stockpiling bottlenecks spook states
Countries top up grain reserves or curb exports after rising prices and demand unsettle markets
Commodity shock
LatAm and
Caribbean
nations call
for IMF aid to
fight recession
Russia.Leadership
Putin leaves tough decisions to regional aides
S I M E O N K E R R— D U B A IThe United Arab Emirates central
bank has doubled its banking stimulus
package to 256bn dirhams ($70bn) as
business sentiment deteriorated in the
Gulf’s commercial centre.TheUAE’scentralbankyesterdaysaidit
would reduce reserve requirements for
demand deposits, injecting Dh61bn to
support banks’ lending and liquidity
management. The measures, which
built on last month’s Dh126bn stimulus
in mid-March, also includes Dh95bn in
assistancetobanksastheUAEextended
a programme to defer retail and corpo-
rate debt payments until the end of
2020.
“The additional measures announced
today will effectively relieve the pres-
sure on financial institutions, offering
the required relief and continued access
to funding for businesses and house-
holds,”saidAbdulhamidSaeed,thecen-
tralbank’snewly-appointedgovernor.
The fresh financial stimulus comes as
the non-oil sectors of the Gulf states’
two largest economies are decelerating
rapidly, according to new business
confidencesurveys.
TheGulf’sprivatesector,whichisreli-
ant on state spending, has been hit by
tumbling crude prices and the curfews
designedtostemthespreadofcoronavi-
rus, that have left businesses reeling asairports close, trade slows and hotels lie
unoccupied.
Saudi Arabia’s non-oil sector saw
businessconditionsdeclineattheirfast-
est pace in more than a decade, record-
ing their lowest level since the IHS
Markit purchasing managers’ index
surveybeganinAugust2009.
The kingdom’s PMI fell to 42.4 in
March—thefirsttimeithasfallenbelow
the neutral value of 50 — from 52.5 in
February.Steepdeclinesinoutputlevels
and new orders weighed on the PMI,
though employment was “relatively
resilient” with staffing falling only frac-
tionally.
In the United Arab Emirates, the
index dropped to a record low of 45.2 in
March from 49.1 in February — its third
monthlydecline.
New orders fell at their quickest pace
on record as tourism, trade and con-
sumer demand were hit by Covid-19,
IHSMarkitsaid.
“The closure of airports in the UAE
and working-from-home policies, as
seen across the globe, are likely to
extend the downturn into April, partic-
ularly as there is no end in sight to the
pandemic,” said David Owen, an econo-
mistatIHSMarkit.
The survey reported the sharpest
decrease in employment on record as
firms made staff redundant and asked
employeestoreducehours.Middle East
UAE central bank expands
stimulus as activity slows
Top wheat producer Russia has
imposed restrictions on overseas
sales. Most producers have had good
harvests and supplies remain
plentiful— Ilya Naymushin/Reuters‘We could create a crisis
when there actually
isn’t a crisis’Joe Glauber, food policy expertFew believe Moscow mayor Sergei
Sobyanin acts with total autonomyMoscow mayor heads virus
battle as president distances
himself from lockdown curbs
APRIL 6 2020 Section:World Time: 5/4/2020 - 17: 35 User: andrea.crisp Page Name: WORLD2 USA, Part,Page,Edition: USA, 3, 1