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As Food Becomes The New Oil, Russia Plans To Seize Control

With food prices rising and riots shaking regimes from Haiti to Egypt, a backlash is growing against global free markets. Governments from Moscow to Buenos Aires are moving to regulate grain prices, supplies and distribution. Like oil, food supply is becoming a strategic commodity that central authorities are keener than ever to command. Top producers including Kazakhstan and Indonesia have slapped total bans on wheat and rice exports, respectively, while Argentina and India have imposed prohibitive export tariffs. Russia may go further. The government is mooting a new state agency that would own Russia’s 28 biggest grain elevators and shipping terminals, including the export terminal in the Black Sea port of Novorossisk. The idea, says analyst Tanya Costello of Eurasia Group, reflects an “emerging anti-inflation strategy of increased use of administrative and prosecutorial powers to suppress prices.”

The results are predictable. Export controls are making global food inflation and shortages worse, while acting as a self-imposed penalty on grain-producing nations that could be capitalizing on high prices. And since history shows that price controls tend to backfire

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