We investigated wheat price relationships between the import-dependent countries in Central Asia and the South Caucasus and the Black Sea wheat exporters to assess wheat market efficiency. This is crucial for ensuring availability and access to wheat and for reducing food insecurity. Results from linear and threshold error correction models suggested a strong influence of trade costs on market integration in Central Asia, while those costs were of minor importance in the South Caucasus. In particular, wheat trade in Central Asia is characterized by higher transportation costs but unofficial payments also play a large role. In addition, wheat price volatility is substantially higher in the wheat importing countries of Central Asia compared to the South Caucasus. To foster market functioning, wheat trade should be facilitated by policies that reduce the costs of trade. These include investments in grain market infrastructure, eliminating unofficial payments, and resolving geopolitical conflicts. Additionally, large distances characterize wheat trade in this region, low scope for import diversification and repeated export restrictions by Black Sea exporters. Therefore, trade-enhancing policies should be complemented with policies that increase wheat self-sufficiency in order to improve food security.
We build on the price transmission framework to identify domestic wheat price effects of wheat export controls. We explicitly take into account that a harvest failure causes domestic price effects. Moreover, the analysis at the regional level provides further evidence of the functioning of export controls in a large country. Results suggest a pronounced regional heterogeneity in the strength of domestic price effects of the 2010/11 export ban in Russia. The wheat price dampening effects amount to up to 67% and are strongest in the major wheat exporting region with direct access to the world market. This effect is transmitted to other regions by increased and reversed interregional trade flows. In contrast, we find that regional variation of export controls’ domestic price effects in Ukraine is rather small.
This article analyzes how the market interventions of the Serbian government, among them an export ban, affected the domestic wheat market during the global commodity price peak in 2007-2008. We choose a flexible Markov-switching error-correction model as the framework for our price transmission analysis. The results show that the price transmission regime was not changed by the export ban. Thus, the export controls were not successful in dampening the domestic wheat price level. We make evident that the expected price decreasing effects of the export ban were offset by inconsistent additional policy measures and their faulty sequencing. Further, the governmental market interventions had even longlasting destabilizing market effects. Market instability was increased particularly after the cancellation of the export ban. [EconLit citation: C22, P22, Q18]. C 2014 Wiley Periodicals, Inc. 1 FOB -The seller has to deliver goods on board of a vessel designated by the buyer (INCOTERMS, 2010).
Kazakhstan, Russia and Ukraine (KRU) are among the grain-exporting countries that implemented wheat export restrictions between 2007 and 2011 during the global commodity price peaks. This chapter provides an overview on the price effects induced by wheat export controls in the KRU region. It becomes evident that the domestic price effects of export controls were heterogeneous among the KRU countries, and that domestic prices were only partially insulated from international price developments. Also, export controls increased, rather than decreased, domestic wheat price volatility. Furthermore, the effectiveness of export controls as an instrument to protect against high food prices is questionable, particularly in the case of wheat, which is transformed to an end consumer product in a complex supply chain. In all three KRU countries, the intermediate milling industry did not transmit the price increases of the wheat price to the flour price. Instead, the milling industry increased the flour price proportionally, which increased bread production costs and led to higher bread prices throughout the KRU region.
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