Do export restrictions reduce domestic price volatility?
Wheat export controls have been implemented many times in Kazakhstan, Russia and Ukraine (KRU) officially aiming to improve food security by combating bread price rises in order to secure low food prices for domestic consumers. Even in those cases in which domestic wheat prices were reduced by the export controls, the stabilising effect upon bread prices is rather low. On top of that, wheat export controls cause high economic costs and create strong disincentives for investments in the grain sector, which could ultimately harm future food security. Nonetheless, export restrictions remain highly attractive to politicians since they make it possible to take action to ensure food security without causing budgetary costs. Furthermore, export controls are beneficial to the livestock sector, the development of which assumes a high political priority in KRU countries. The implementation of grain export controls has to be understood as the outcome of a lobbying process in which the interest groups of the grain sector and of the livestock sector compete. If export controls are implemented, the government acts in the interests of the livestock sector.