India bans wheat exports after supply cuts

Substitute while the actions of the article are loading

After Russia invaded Ukraine – two countries that together account for nearly a third of the world’s wheat supplies – and sent food prices to record highs, India had to intervene to fill the gap. No longer.

The world’s second-largest wheat producer on Friday banned grain exports amid its own food security concerns, potentially exacerbating the sharp rise in global food prices, affecting billions of people and threatening food security around the world.

In an order from the Ministry of Commerce, Indian officials said they made the decision after looking at India’s own needs and those of neighboring countries. India’s food security is “threatened” by rising international prices, the ministry said.

The announcement marked a sharp reversal weeks after Indian officials and international analysts discussed the possibility of India significantly increasing its exports to fill the gap created in part by the war in Ukraine. International food prices have jumped to record highs in recent months, putting pressure on billions of people, especially the world’s poorest, UN officials have warned.

India is trying to adapt to extreme heat, but is paying a heavy price

But a record heat wave this spring – March was the hottest month for India in history – damaged Indian crops and cut wheat production by up to a quarter in some cases. As traders rush to buy food to sell internationally, the Indian government is struggling to make purchases for its own domestic food bank and ration program, according to Indian agricultural researchers and government statistics.

Like many countries, India is also struggling with rising inflation, which is biting household budgets and even diets. Food inflation rose 8.3 percent in April, the government said.

Egypt, the world’s largest importer of Russian and Ukrainian wheat, recently negotiated with India to import 1 million tonnes. In recent weeks, Turkey and several African countries, which also depend on wheat imports from the Black Sea region, have also been ordered to buy from India. India recently sent trade delegations to nine countries, including Tunisia, Morocco and Indonesia, to discuss increasing exports.

“At a time when the world is facing a shortage of wheat, Indian farmers have stepped in to feed the world,” Prime Minister Narendra Modi said earlier this month during a visit to Germany. “Whenever humanity faces a crisis, India offers a solution.

To help boost wheat exports, the Indian government has rushed to set up 200 laboratories to check export quality, add more railcars and give priority to port exports.

Egypt has approved India as a supplier of wheat in April, trade minister pius goyal tweeted, adding that the country is “ready to serve the world”.

It is not clear now which deals will be concluded. The trade-monitoring ministry said in an order Friday that shipments with irrevocable letters of credit would be allowed. The Indian government may also issue a special export permit to countries “to meet their food security needs”. Otherwise, all exports are frozen.

Tunisia among the countries that see serious economic consequences of the war in Ukraine

Analysts said the decision to suspend exports was the right one in a time of global uncertainty.

“We need to maintain a surplus, given climate anomalies and food security concerns,” said Devinder Sharma, an agricultural policy expert. “We have such a large population to take care of. Who knows [whether] the pandemic may not reappear? “

During the pandemic, the federal government supplied five kilograms (11 pounds) of wheat or rice and just over one kilogram (2.2 pounds) of legumes per person each month in addition to existing food subsidies. Earlier this year, the program was extended to September.

But the stress on the system was clear when the government announced last week that it would provide more rice instead of wheat under the program.

Government orders for wheat fell to a 15-year low this year to below 20 million tonnes after a record high of 43 million tonnes in 2021. Exports were a key factor.

Jumping global wheat prices meant a bonus for traders. The World Bank forecast in April that wheat prices are expected to reach all-time highs this year, rising by more than 40 percent. India’s wheat exports have more than tripled.

Falling production, rising exports and high fuel prices have led to a sharp rise in wheat prices in the domestic market in recent weeks. Wheat is one of the most popular staple foods in the country and rising prices are pushing consumers everywhere.

Experts say the latest wheat crisis in India in 2005 served as a warning. India’s large exports are depleting its reserves, forcing it to import wheat in the coming years.

“India should not make the same mistake,” Sharma said. Next year, if the need arises, “stocks may not be available and prices will be unaffordable.”

Leave a Comment