Surging prices for agricultural commodities - and the fear of shortages at home - have prompted some countries to impose restrictions on exports. But their moves threaten to prolong the current global food crisis - and even exacerbate it. Countries such as Argentina, Kazakhstan, India and Vietnam have stopped their farmers selling crops abroad or taxed exports heavily in an effort to keep local markets well-supplied and local prices for those crops low. This means the farmers in these countries are not benefiting from record international prices. At the same time, these farmers are facing higher costs in the shape of higher prices for diesel, seed and fertilizers. The result? Some farmers are cutting their acreage. This is already ringing alarm bells in the developed world. Peter Mandelson, the European Union trade commissioner, warned yesterday that "export taxes, quotas or bans" could "throttle domestic production". Ruifang Zhang, an agricultural analyst at Goldman Sachs in London, says the export bans and other tax increases "can potentially hinder investment and supply growth, which is much needed in the current environment to solve the structural imbalance in global agriculture due to strong demand growth in recent years." In Argentina, the world's third largest soyabean exporter and the sixth largest wheat exporter, local wheat prices are about half the level of the international market. The result is that Argentina's farmers could sow up to 15 per cent less wheat this season because of the impact of export tariffs and continued uncertainty about when the government will permit exports, according to traders and farmers. "It's unfortunate that just as the price of wheat is rising on world markets, we can't take advantage of it," said Alicia Urricariet at the economic research institute of the Sociedad Rural, one of Argentina's largest producer associations. Argentina's wheat planting season starts in three weeks and "we estimate there could be a reduction of up to 15 per cent in areas sown", she said, bringing the total to some 4.6m hectares compared with 5.5m in 2007-08. The reduction in acreage contrasts with sharp increases in the European Union and the US, where local prices reflect the evolution of the international market. Wheat prices in Chicago, the global benchmark, have risen 92 per cent in the past 12 months. Argentina produced 15.8m tonnes of wheat in 2007-08 and a 15 per cent fall in crops planted would bring that down to about 13.4m tonnes, Ms Urricariet said. The government says its planting estimates will be published in May. The Argentine government was one of the first leading commodities producers to use export tariffs to try to insulate its domestic market from the impact of surging world prices. But to the ire of producers, the government last month introduced a new sliding-scale tariff regime that essentially fixed maximum prices. Producers responded with a crippling 21-day strike that caused significant food shortages and price rises. Compounding the problem for farmers in countries with export restrictions or price controls is a sharp increase in the cost of diesel, fertilizer and seeds. Surprisingly, the cost of these inputs is not being controlled in the way that exports are. In Argentina, the cost of wheat seed has jumped by 95 per cent compared with the last season, according to the Buenos Aires Grain Exchange. Corn seeds have gone up 46 per cent, soya 51 per cent and sunflower seeds 56 per cent. Rising crude oil prices, which yesterday hit a fresh all-time high of $115.54 a barrel, is boosting diesel, power and fertilizer costs. The price of a tonne of nitrogen manure, a crucial fertilizer for crops such as corn, has jumped to about $410 a tonne, up from $300 a tonne a year ago. Fertilizer prices have risen at least 200 per cent in the past five years, traders say. In some countries - particularly in those with local price controls - farmers are simply using less fertilizer. Pakistani farmers this season used about 600,000 tonnes of fertilizer, less than half the volume they used a year ago. As a result, the government is forecasting a wheat crop of about 22m tonnes, below the 24m tonnes it expected when farmers started planting last September. Ajith Nivard Cabraal, Sri Lanka's central bank governor, told the Financial Times in an interview that Asian governments were wrong in trying to lower local prices as the policy would prevent farmers from earning a decent living and stop them from increasing acreage. "The farmers will get stronger and that is the best incentive to deal with the problem we are facing," Mr Cabraal said. But he acknowledged that governments were failing to consider the long-term impact because of short-term considerations. "The tendency is [that] as soon as there is a price rise, governments tend to panic," he said. Copyright The Financial Times Limited 2008