Policy measures taken by governments to reduce the impact of soaring prices

On fears of dwindling domestic supplies and rising prices, large exporter countries such as India, Vietnam, China, Pakistan, Egypt, Argentina, Kazakhstan, Russia and Ukraine selectively banned cereal exports or imposed quotas and increased export taxes as well as minimum export prices. These measures prompted further price increases and volatility in international markets. By early December 2008, over one year later than the introduction of policy responses, virtually the only measures that have started to be reversed are export restrictions. For example, in July 2008, Vietnam removed the ban on rice exports that had been imposed earlier in the year and Pakistan, removed the minimum export price for Basmati rice in early October. India, that banned exports of non-basmati rice at the beginning of 2008, allowed firstly limited exports to some neighbouring countries and, by mid-October, shipment of a premium variety only if the free-on-board prices were at least USD 1 200 per tonne. The Government of India had also banned maize exports earlier this year but the ban was lifted in October amid falling domestic prices. In China, export taxes for wheat and wheat flour have been lowered from 20 to 3 percent and from 25 to 8 percent respectively since the beginning of December, and a 5 percent export tax on maize and soybeans and a 10 percent tax on maize flour and starch have been cancelled. Export taxes for rice were fixed at 3 percent from the previous 5 percent. Similarly, in the second half of 2008, when forecasts of good cereal harvests became firm, Kazakhstan, the Russian Federation and Ukraine, cancelled bans or relaxed export restrictions on wheat that were imposed after the escalation of international wheat prices from mid-2007. In early December, Argentina, export taxes on wheat and maize were further reduced by 5 percent to 23 and 20 percent respectively and will be reduced further if production exceeds a certain volume.

Few other policy measures that have been reversed include the removal of market price intervention on food grains and other food products in China that since 1 December 2008 will be determined by the markets. In Ecuador, the subsidy to wheat flour has started to progressively being removed.