India Bans Wheat Exports, Putting More Pressure on Global Food Supplies

NEW DELHI — India says it will ban wheat exports, in a move that will add to global inflationary pressures and further strain global food supplies that have been disrupted by the war in Ukraine. .

“The food security of India, neighboring countries and other vulnerable countries is in jeopardy,” the Directorate General of External Trade said in a statement on Friday explaining the ban.

Global buyers are depending on India – the world’s second-largest wheat producer – for supplies after shipments from the Black Sea region fell since Russia’s invasion of Ukraine in late February. . The United Nations has warned the world faces potential food shortages.

The disruption caused by the crisis has sent the price of wheat and other commodities around the globe soaring. In April, India’s wheat prices hit their highest levels since 2010. After five years of bountiful harvests, a severe heatwave and lack of rain have slashed yields. Authorities say rising prices have prompted some wheat traders to stock up.

Last week, the Government of India lowered its wheat production estimate by 5.7% to 105 million tonnes for the crop year ending June. The government had previously forecast a record wheat production of around 111 million. tons, this will be the sixth consecutive season of surplus production. India produced nearly 110 million tonnes of wheat last season.

“It’s all due to the beginning of summer,” India’s food minister, Sudhanshu Pandey, said last week.

Mr. Pandey said that India experienced its hottest period in March and April in more than 100 years, causing a loss of 6% in production. .

India is an important supplier of wheat to neighboring countries. Afghanistan recently received large shipments of wheat from India for humanitarian reasons. Bangladesh is another major importer of Indian wheat.

India said it will still be allowed to export to countries that require wheat for food security needs. The announcement from the General Department of Foreign Trade said that wheat shipments that have been issued letters of credit will also be allowed to continue.

The Indian government has lowered its wheat production estimate for the current crop year, which runs until June.


Photo:

Channi Anand / Associated Press

About 4 million tons of wheat have been contracted for export this year and about 1.1 million tons were exported in April.

Vikram Singh, joint secretary of the All India Agricultural Workers Union, said the wheat export ban would not prevent private traders from hoarding. “They will continue to hoard to reap huge profits in the domestic and international markets amid high wheat prices,” he said.

India’s agricultural policies – especially the policy of setting minimum prices to subsidize farmers – have long been an area of ​​contention with developed countries, such as India’s government. The United States says it needs to be able to subsidize farmers and stockpile food for the poor and malnourished. citizens, and also as a buffer against the risk of starvation.

Wheat stocks at government-run warehouses stood at 30 million tonnes as of May 1. India says it needs at least 25 million tonnes of wheat a year to run its food welfare program. Mr. Pandey said that after meeting the requirements of the welfare programs, India will have a reserve of 8 million tons of wheat, higher than the minimum requirement of 7.5 million tons.

India had a large food surplus before the pandemic. That excess stock is strained by the free distribution of grain during the pandemic to some 800 million people, particularly vulnerable groups such as returning migrant workers and the poor. The program has been extended to September.

India’s domestic grain distribution system is plagued by problems and inefficiencies. Warehouses in grain-producing states sometimes overflow, while warehouses elsewhere are empty. What doesn’t move often rots in storage. Rice and wheat reaching hundreds of thousands of Indian villages could be maintained in other ways. Local officials are responsible for managing the list of eligible households and distributing the grain to the village shops. In many parts of the country, allegations of bribery and theft are common.

Rising prices of food and other commodities, partly stemming from the war in Ukraine, have weighed on India’s economic recovery from the pandemic, partly stemming from the Ukraine war. Earlier this month, India’s central bank raised interest rates from 4% to 4.40%, along with other central banks starting to tighten monetary policy in an attempt to contain inflation.

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Before the pandemic, India had a huge food surplus.


Photo:

AMIT DAVE / REUTERS

India’s central bank governor Shaktikanta Das said at a press conference last week that inflationary pressures continue to become more acute, especially on food prices.

Inflation based on the consumer price index rose to 7.8% last April, staying above the Reserve Bank of India target for the fourth consecutive month, data released by the Office for National Statistics showed. announced on Thursday. This is higher than 6.95% last month and 4.23% a year earlier.

The skyrocketing prices of food and fuel have made it difficult for consumers – already struggling with losses during the two years of the pandemic – to cover household expenses.

Geeta Goel, a 47-year-old housewife from New Delhi, said she has turned to smaller sizes of clothes or cheaper options of regular brands to save money.

“Things suddenly got expensive,” she said. “Even online grocery stores are barely offering discounts. It started hurting our pockets. It was a difficult time for us.”

Luv Agarwal, 47, who works as a salesman in a clothing company in Kanpur city in Uttar Pradesh state in northern Uttar Pradesh state, said the rising prices of daily food and fuel are eating into his ability to your spending power.

He recently moved from his one-bedroom rented apartment to a place to share with two others, saving about 3,000 rupees a month. He also gave up eating out.

“The prices of everything from around flour to fruit and tea packs have gone up. Where do you cut costs? Agarwal said.

Write letter for Vibhuti Agarwal at vibhuti.agarwal@wsj.com

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Alley Einstein

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