Any calls to move towards a centrally planned economy or autarky are strongly advised against, as this would only be to the detriment of food security in the Global South.
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.
Strong harvest shortfall and high world market prices prompted the Russian government to implement a wheat export ban in 2010 aiming to dampen domestic wheat prices. Building on regional price and trade data of Russia's wheat producing regions, we find strengthened domestic wheat market integration during the export ban period. Market integration decreased to its pre‐ban level in the post‐ban period; however, higher transaction costs resulting from increased risk of domestic grain trade during the export ban continued to prevail. Although market integration was temporarily strengthened, the export ban generally hampers market development in the long run.
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