The economic uncertainty fueled by the war in Ukraine has had a particularly strong impact on the global food supply, in particular, the wheat market. Approximately 25% of the world’s wheat supply comes from Russia and Ukraine, and the disruption to the market has sparked fears of a worldwide food crisis. Those concerns have sparked a renewed interest in palm oil. One of the world’s biggest producers of palm oil, Indonesia, has banned exports of the crop. Straight Arrow News contributor Larry Lindsey says history has proven that export bans only wind up hurting the poorest and most vulnerable members of society.

During the 1930s, unemployment was a major problem. In order to protect people from being unemployed, governments around the world, led by the United States, imposed tariffs on imports. The idea was to benefit domestic producers as opposed to foreign producers. 

Well, when you put a tariff on something, it’s price goes up. The producers gain, but the consumers lose. And on net, the consumer loss is more than what the producer gains. That’s mainly because there are lower real incomes when prices go up. So people could afford to buy even less of just about everything. Then other countries followed suit and we had something called beggar thy neighbor tariffs. The idea was that, I don’t care what happens to exporters in another country. I just want to protect myself. Well, the whole process contributed to a great depression that was virtually worldwide.

Well, fast forward to today. Unemployment isn’t the problem; inflation is. But governments still haven’t learned. So what we’re doing now in many countries is to ban exports. The idea is to keep the goods at home that will increase domestic supply and push prices down. The politicians can then claim that they have fought to reduce inflation. Now, of course, when you don’t export, prices overseas go up a lot. Then other countries begin to ban exports as well for the same reason. 

There’s a long-term problem in all this. When you keep domestic prices low over time, the countries that produce those goods go out of business and these… barriers are going to be up for a long time. Again, take America as an example. We imposed a crude oil export ban back during the oil crisis in 1975. We never got around to repealing it until 2015 – 40 years later. So these things tend to stay.