Banning Cereal Exports Effects
The government is likely to ban exports of cereals due to high domestic inflation, low grain stocks, and uncertainty over the upcoming wheat and rice crops. This is aimed at ensuring food security, but it also has negative consequences for farmers, who will miss out on potential income.
If input prices and other expenses are also high, the terms of trade for farming will worsen, and if the crops fail due to adverse weather, price caps will prevent farmers from recouping their costs. This can lead to political dissatisfaction and reduce rural demand. The government hopes that the benefits of low inflation will outweigh these negative effects.
