Export Bans on Malaysian Chicken and Indian Wheat Prompt Fears
In Indonesia, President Joko Widodo is almost certainly aware that the price of cooking oil has figured prominently in public surveys of his performance, said Bhima Yudhistira Adinegara, the director of the Center of Economic and Law Studies, a think tank in the capital, Jakarta. So his export ban made sense for “political reasons.”
“The government has to do something or it will be seen as dysfunctional,” he said.
Still, the ban was widely seen as misguided and ineffective, and it did not calm prices, as Mr. Joko’s government had promised it would.
How the Supply Chain Crisis Unfolded
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The pandemic sparked the problem. The highly intricate and interconnected global supply chain is in upheaval. Much of the crisis can be traced to the outbreak of Covid-19, which triggered an economic slowdown, mass layoffs and a halt to production. Here’s what happened next:
A reduction in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the pandemic, manufacturers and shipping companies assumed that demand would drop sharply. But that proved to be a mistake, as demand for some items would surge.
Demand for protective gear spiked. In early 2020, the entire planet suddenly needed surgical masks and gowns. Most of these goods were made in China. As Chinese factories ramped up production, cargo vessels began delivering gear around the globe.
Then, a shipping container shortage. Shipping containers piled up in many parts of the world after they were emptied. The result was a shortage of containers in the one country that needed them the most: China, where factories would begin pumping out goods in record volumes.
Demand for durable goods increased. The pandemic shifted Americans’ spending from eating out and attending events to office furniture, electronics and kitchen appliances – mostly purchased online. The spending was also encouraged by government stimulus programs.
Strained supply chains. Factory goods swiftly overwhelmed U.S. ports. Swelling orders further outstripped the availability of shipping containers, and the cost of shipping a container from Shanghai to Los Angeles skyrocketed tenfold.
Eceu Titi, 50, a street vendor in Jakarta, said that the price of cooking oil in her neighborhood was about 14,000 Indonesian rupiah, or about 96 cents, per liter before the export ban took effect, and has been nearly double that ever since, even though the ban ended last month.
Ms. Eceu has raised the prices of her fried snacks as a result, and she tries to make the same amount of oil last longer in her fryer, she said. But when some customers complained about her recent price increase, she agreed to reinstate her old price for them, at a loss.
“I don’t have the heart to insist on selling at the new price,” she said. “We are in this together, and they are my regulars.”
Article source: https://www.nytimes.com/2022/06/10/business/asia-export-ban-chicken-wheat-oil.html