India’s curbs on wheat exports threaten to send global food prices higher
- Indian wheat usually goes to Bangladesh, Sri Lanka, the United Arab Emirates and Indonesia. New Delhi has said it will consider exports to needy nations
- The decision to halt wheat exports came as a record-breaking heatwave parched India’s crop during a crucial period, spurring estimates of slumping yields
However, New Delhi said on Sunday that it would keep a window open to export wheat to food-deficit countries at the government level despite restrictions announced two days earlier.
India’s Commerce Secretary BVR Subrahmanyam told reporters the government will also allow private companies to meet previous commitments to export nearly 4.3 million tonnes of wheat until July. India exported 1 million tonnes of wheat in April.
The government said in a notification dated May 13 that it will suspend overseas sales to manage its food security. This drew criticism from the agriculture ministers of the Group of Seven nations, who said that such measures make the world’s crisis worse.
Surprisingly, India is not even a prominent exporter on the world stage. The fact that it could have such a major impact underscores the bleak prospect for global wheat supplies. War has crippled Ukraine’s exports, and now droughts, floods and heatwaves threaten crops in most major producers.
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“If this ban occurred in a normal year the impact would be minimal, but the loss of Ukraine volumes exacerbate the issues,” said Andrew Whitelaw, a grains analyst at Melbourne-based Thomas Elder Markets.
“Directing the wheat exports through government channels would not only ensure fulfilling the genuine needs of our neighbours and food-deficit countries, but also control inflationary expectations,” India’s food ministry said in a statement. It added that the country has adequate food stocks.
Traders are frustrated by the policy. A day before the export halt was announced, the government said it was sending trade delegations to countries in Africa, Asia and the Middle East to explore the possibility of boosting wheat exports. The food ministry had also said it saw no need to control exports after reports that authorities were considering the move.
“A lot of exporters and actual users worldwide have commitments of purchase of Indian wheat, which should be honoured,” said Vijay Iyengar, chairman and managing director of Singapore-based Agrocorp International, which trades about 12 million tonnes of grain annually.
The ban could spark frenzied trading when agricultural markets reopen on Monday. Benchmark wheat prices in Chicago jumped 6.2 per cent in the latest week while Paris wheat futures surged to an all-time high on concern that extreme weather is pressuring the global harvest. India’s ban will add to supply risks.
Up to 90 million tonnes of wheat were consumed in India last year out of a total production of 109 million tonnes, Subrahmanyam said, adding that India exported seven million tonnes of wheat last year.
Additional reporting by Associated Press